Soaring Assets and Revenues May Invite Look by Congress

The Internal Revenue Service will soon issue a report showing that from 1975 to 1995 the assets and revenues of tax-exempt organizations tripled — to $1.9-trillion and $899-billion respectively.

“During that same 20-year period, the gross domestic product increased by 74 per cent,” said Marc Owens, director of the service’s Exempt Organizations Division, “so the tax-exempt sector is expanding at a rate that exceeds the overall gross domestic product.”

Mr. Owens told lawyers who represent non-profit groups at an American Bar Association seminar in Washington: “You are getting bigger. You are getting more important.”

In fact, the report, to be published by the I.R.S.’s Statistics of Income Division, is expected to show that tax-exempt organizations account for as much as 10 per cent of the nation’s gross domestic product, he said.

Mr. Owens said the statistics are likely to get attention on Capitol Hill and he urged lawyers for non-profit organizations to be sure that their clients are following the law. “When you get that much economic activity outside the tax system, it inevitably invites periodic review by Congress,” he said.

“I can assure you that as the periodic reviews inevitably come, it’s going to be very important for the sector to demonstrate that it is composed of good tax citizens and that they are providing something of value for the community,” Mr. Owens continued. “Because if those findings aren’t made, I think the chances are very high that the nature of organizations that can be tax-exempt will be adjusted by Congress. You will have fewer organizations, fewer activities fitting into that tax-exempt sector.”