March 22, 2007 | Read Time: 1 minute
The IRS’s annual list of the “dirty dozen” tax schemes includes the use of tax-exempt organizations to improperly shield income or assets from taxation.
But two leaders of the Senate Finance Committee say the IRS needs to do more to crack down on nonprofit tax cheats.
The IRS’s list, which is made public each February, seeks to highlight the 12 most blatant scams that affect American taxpayers. The 2007 list includes the abuse of charitable organizations by people who move assets to tax-exempt supporting organizations or donor-advised funds, but maintain control over those assets.
Sen. Max Baucus, a Democrat from Montana who is chairman of the finance committee, and Iowa Sen. Charles E. Grassley, who is the committee’s top Republican, say publicizing the existence of such scams isn’t enough. The agency, the senators say, needs a strategy for curbing these abuses.
In a letter to Donald L. Korb, the IRS chief counsel, Mr. Baucus and Mr. Grassley ask the agency to outline strategies for thwarting charitable scams, offer recommendations for legislation that would halt the abuses, and quantify the amount of money the federal government is losing through such scams.
The senators also asked Mr. Korb to provide an updated list of the newest, biggest tax schemes, including those that involve nonprofit groups.
“We’ve worked to crack down on scams, but we’re not done,” Mr. Grassley said. “Until recently, there wasn’t much scrutiny in the tax-exempt area. Some people continue to use nonprofits to enrich themselves. We need to make sure charities serve the needy, not the greedy.”
The IRS’s Dirty Dozen tax-scam list can be found online.
