April 23, 2009 | Read Time: 1 minute
The Internal Revenue Service is working to help “protect the trust and confidence” in nonprofit organizations during the current economic crisis and will be watching for possible abuses, says Lois G. Lerner, who oversees the IRS office that monitors charities and foundations.
“During hard times, there is often a rise in questionable or fraudulent activity, in overly aggressive or inappropriate fund raising, and in tax-avoidance accommodation schemes of less-than-sterling character,” Ms. Lerner told a conference on tax-exempt organizations in Washington held by the Georgetown University Law Center.
“We are trying to stay ahead of the curve to curtail predatory abuse of tax-exempt organizations,” she said. For example, Ms. Lerner said, the IRS is seeing “a number of” applications for tax-exempt status from organizations that offer mortgage-foreclosure counseling and assistance.
Ms. Lerner noted that the revenue service in the past has cracked down on many organizations that counsel people who amass big credit-card debts.
“Based on our experience with abusive credit-counseling organizations, we are concerned that some of these [mortgage counseling] applicants may be using the guise of an exempt organization to profit from individuals who have been harmed by financial upheaval,” said Ms. Lerner. “Consequently, we are looking very closely at applications from new organizations, and at activity being conducted by established organizations.”
Ms. Lerner’s remarks are available online.
