March 21, 2002 | Read Time: 2 minutes
Amid concern over how charities responding to the September 11 terrorist attacks may be spending donations, the Internal Revenue Service has sent a letter to the groups to say it is keeping tabs on them.
“In light of the considerable funds contributed for September 11 disaster relief and the importance of the issues involved, please be aware that as relief efforts progress we will be reviewing information returns from your organization and contacting at least certain organizations for additional information about activities,” wrote Steven T. Miller, director of the exempt organizations division, in a letter last month to the charities.
Mr. Miller also reminded the groups of a new law that affects those charities. Under one provision of the law, charities providing aid to victims of the terrorist and anthrax attacks need not establish that the victims are financially needy. Instead, they should make payments “in good faith using a reasonable and objective formula which is consistently applied,” the IRS said. In the past, the revenue service has required charities to show that charity recipients were needy. The exception applies only to victims of the terrorist and anthrax attacks (The Chronicle, November 29).
The IRS has granted tax-exempt status to 257 new charities under a policy expediting the approval process for any organization formed to respond to the terrorist assault. Some news reports have questioned whether donations given to some of the groups are truly going to victims of the attacks. Questions have also been raised over whether some organizations received approval as charities under the expedited service when their missions are unrelated to the attacks (The Chronicle, March 7).
Mr. Miller of the IRS told reporters that the revenue service was concerned about charities improperly using the expedited service. He said the IRS was unsure what its recourse against such groups would be, but added, “I do know that people who took this step are buying themselves more scrutiny. I want to make sure that in the future, groups don’t abuse this kind of privilege.”
A copy of the letter sent to September 11 charities, as well as an updated version of the IRS’s guidance to such organizations — “Disaster Relief: Providing Assistance Through Charitable Organizations — are available online at http://www.irs.gov/exempt/display/0,,i1=3&genericId=
15048,00.html.
