Write-Offs

May 13, 2004 | Read Time: 1 minute

Some charities with low fund-raising expenses have been confused by letters they’ve received recently from the IRS noting that fact, says Harvey J. Berger, an adviser to the American Institute of Certified Public Accountants. “Exempt organizations often receive and properly report contributions, but have little or no fund-raising expenses,” he said in a letter to the IRS. “The educational letters do not indicate what action the recipient should take,” he added, and “organizations are not comfortable ‘doing nothing’ in response to an IRS contact.” In the wake of revelations that many charities are misrepresenting their fund-raising expenses on their federal informational returns, the IRS has been sending letters to charities that report fund-raising expenses that are less than 5 percent of contributions. Mr. Berger suggested that such letters should include an IRS contact and a specific course of action.
The IRS has appointed two new members to the tax-exempt section of its Advisory Committee on Tax-Exempt and Government Entities: Julie Floch, a certified public accountant from New York; and Suzanne Ross McDowell, a Washington lawyer. Both represent nonprofit groups. The committee has a total of 18 members.