June 24, 2004 | Read Time: 1 minute
An IRS advisory panel urged the revenue agency to strengthen its enforcement of charities in its report to the IRS this month.
At the meeting of the Advisory Committee on Tax-Exempt and Government Entities, Karl Emerson, director of the Pennsylvania Bureau of Charitable Organizations, said the IRS needs to create “the perception and reality” of effective oversight.
First, the revenue service needs to do a better job of selecting charities to audit, both by paying greater attention to news reports about nonprofit groups that abuse the law and by developing more-sophisticated ways to analyze charities’ informational tax returns, the panel said. It also urged the IRS to do more full-scale audits and make sure its auditors have up-to-date training, as well as to conduct more partial audits and to contact all charities, either by phone or letter, if the agency has any specific questions about their work as a way to reinforce that the agency is paying attention to what nonprofit organizations are doing.
Mark W. Everson, commissioner of internal revenue, said at the meeting that enforcement of charitable tax laws is one of his agency’s top priorities. He said too many recent cases of charity malpractice had been brought to light, and agreed that if the IRS can’t show people that its enforcement is correcting the problems, “Americans over time will lose faith in charities, and they won’t believe that giving to a charity or trusting a charity is possible.”
A copy of the report, called “The ‘Ripple’ Project,” is available online at http://www.irs.gov/charities/article/0,,id=98353,00.html.
