Medical Research Charities > News > Report: IRS Nonprofit Office Needs Improvement, Associations Now

Report: IRS Nonprofit Office Needs Improvement, Associations Now

Recent reports say that due to low resources and personnel, outdated technology, and declining budgets, the IRS’s Exempt Organizations office is having trouble “regulating the tax-exempt community consistently and effectively,” but here at MRC, we’re committed to ensuring that every donation supports medical research and making a difference. We thoroughly screen research-driven charities and select only organizations that meet our stringent review process, so the maximum amount of donors’ contributions can go directly to funding research. We put our charities under a microscope so you don’t have to.

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A new report looks at the IRS’s Exempt Organizations office, and the findings say it could use some help.

A new report from the Advisory Committee on Tax Exempt and Government Entities (ACT) found that the IRS office that oversees tax-exempt organizations isn’t prepared to do its job.

The ACT report [PDF], based on extensive interviews with the nonprofit sector, says it’s clear that the role and function of the Exempt Organizations (EO) office has been fundamentally hindered by various critical factors, including dwindling resources, declining budgets, loss of historical knowledge and personnel, and antiquated technology.

“Taken together, these critical factors contribute to a widely held perception that the IRS is not able to regulate our tax-exempt community consistently and effectively,” the ACT report states. “A lack of visibility on the part of the EO is not a neutral position—it is detrimental to the sector it regulates. A lack of responsiveness or guidance inexorably leads to an undermining of the public trust.”

The panel presented its findings and annual recommendations to the IRS on June 8 with some specific areas where the EO office might focus its attention beginning next year.

A 2015 realignment of EO staff and responsibilities contributed to the current status of the office, ACT said. In January 2015, the IRS announced that all formal guidance for nonprofits would now come from the IRS Office of Chief Counsel, which caused EO to lose personnel.

In addition, the report argues that the adoption of Form 1023-EZ—an abbreviated application for tax-exempt status that helped the agency process a backlog of 60,000 tax-exempt applications—demonstrates that while EO is focused on improving efficiencies, it hasn’t addressed examinations or oversight of the tax-exempt sector.

Click here to read the full article by Chris Vest, CAE