Failure of Tax-Exempt Organizations to File Employment Tax Returns

GGD-77-48: Published: Apr 20, 1977. Publicly Released: Apr 20, 1977.

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Analysis of the employment tax filing requirements and payment records of a random sample of 499 tax exempt organizations located throughout the country indicated that between 6,203 and 17,091 such organizations liable for employment taxes failed to file a tax return in 1975 and to pay the taxes. The dollar amount associated with these delinquent returns is between $1.1 million and $7.0 million.

The annual information returns filed by tax-exempt organizations required to do so contain specific data on the amount of compensation paid to officers and employees by the organization in the tax filing year. This data could be incorporated in each tax-exempt organization's record on the exempt organization master file and then matched against the organization's tax account on the business master file.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Commissioner of the IRS should: institute a delinquency program that would identify tax-exempt organizations which are reporting wages, salaries, and compensation to officers on their annual information returns and record this data in the appropriate exempt organization master file accounts; determine whether organizations reporting wages are filing the necessary employment tax returns by comparing wage data on the exempt organization master file with similar data on the business master file; and initiate followup action on those tax-exempt organizations which appear not to be filing the required employment tax returns. The Commissioner should also take action to explicitly state in the annual information return instruction booklet which items should be included in the gross income of officers, trustees, or employees.

    Agency Affected:


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