November 27, 2008 | Read Time: 1 minute
Two key Internal Revenue Service officials told nonprofit leaders that the agency will continue efforts to ensure that tax-exempt organizations are following federal laws. “We are going to continue to insist that the sector is squeaky clean,” Douglas Shulman, the commissioner of Internal Revenue, told attendees at Independent Sector’s annual meeting.
Mr. Shulman said it was not the IRS’s job to determine how charities fulfill their individual roles, but he explained his concern that the poor economic conditions could tempt tax-exempt organizations to bend the rules by, for instance, using money for capital expenses on operating needs.
At the same time, the agency is trying to use less-onerous ways to encourage charities to follow federal tax rules, Mr. Shulman said. For example, the IRS is “checking up” on new nonprofit groups, instead of conducting a full-blown audit, to make sure they’re following rules, he said. That kind of action mirrors “soft” notices from the agency asking individual taxpayers to amend their tax returns if there is a problem with their original filings.
As new disclosure requirements go into effect in 2009 with the revised Form 990, the IRS is considering expanding disclosure rules for private foundations, said Steven T. Miller, head of the tax-exempt division at the tax agency. That may be done even though an overhaul of the current Form 990-PF for private foundations is unlikely because of staff and budget constraints, Mr. Miller said.
