Senate Continues Nonprofit Tax Probe

The Senate Finance Committee is seeking an update from the Internal Revenue Service about the latest tax-avoidance techniques involving nonprofit groups, a move that often precedes legislative action, reports Reuters.

The IRS scrutinized the tax records of 30 charities last year, the majority of them hospitals, and plans to expand its investigations in 2007. In addition, the agency will examine nearly 500 tax-exempt bonds this year.

The Senate began probing nonprofit groups in early 2006, although the latest inquiries have a different angle than those in the past. “We’ve worked to crack down on scams, but we’re not done,” said Sen. Charles E. Grassley, a Republican from Iowa. “Until recently, there wasn’t much scrutiny in the tax-exempt area.”

Sen. Max Baucus, a Democrat from Montana who chairs the committee, emphasized that the crackdown on those taking advantage of current laws was necessary to protect the integrity of “the vast majority of tax-exempt organizations that are doing so much good.”

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