IRS' Information on Revoked Charitable Tax-Exempt Organizations Could Be Improved

GGD-85-36: Published: May 14, 1985. Publicly Released: May 14, 1985.

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GAO reviewed information on the Internal Revenue Service's (IRS) enforcement of tax exemption provisions governing charitable organizations.

GAO found that: (1) IRS information systems did not contain compatible information on all the organizations that had their charitable tax exemption revoked; (2) IRS procedures call for updating its internal information sources and notifying the public whenever an organization's charitable tax-exempt status is revoked; and (3) nonadherence to prescribed system input procedures resulted in inaccurate and inconsistent data. GAO also found that: (1) published IRS information did not identify those organizations which were appealing revocation; (2) an organization is entitled by law to receive tax-deductible contributions during an appeal litigation although its tax-exempt status has been revoked; (3) current IRS publications do not distinguish between organizations that have filed to challenge the revocation action and organizations that have not; and (4) the inconsistencies between IRS information sources and information obtained from the Department of Justice show that a complete and accurate listing of revoked organizations does not exist.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS has implemented the necessary action to correct the deficiencies noted in this report.

    Recommendation: To improve control over the recording and publicizing of information on revoked tax-exempt charitable organizations, the Assistant Commissioner of Internal Revenue for Employee Plans and Exempt Organizations should establish procedures to reconcile revocations shown in the IRS Bulletin, the Exempt Organizations/Business Master File, and the Audit Information Management System. If data in these sources continue to disagree, IRS should take further steps to identify and correct the cause of the inconsistencies.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: IRS has modified the language in the current Internal Revenue Bulletin announcement.

    Recommendation: IRS should revise the Internal Revenue Bulletin and the information presented in Publication 78 and its supplements so the public can clearly determine which revoked organizations are appealing IRS decisions and are thus entitled to continue receiving tax deductible contributions during the appeal.

    Agency Affected: Department of the Treasury: Internal Revenue Service


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