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Highlights

GAO assessed several administrative steps the Internal Revenue Service (IRS) could take to better use its resources and improve its efficiency in recognizing tax-exempt status.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service 1. Given the lack of clear guidance and the inconsistency in application across the districts, IRS may not be benefitting as much as it could from the expedited determination process. Accordingly, the Commissioner of Internal Revenue should direct the Assistant Commissioner, Employee Plans and Exempt Organizations (EP/EO), to evaluate the current use of the expedited determination process, as a basis for developing a national program that will include clear guidance on when the process is to be used.
Closed - Implemented
IRS issued program guidelines in IRM 7662.8, published September 17, 1990.
Internal Revenue Service 2. Given the lack of clear guidance and the inconsistency in application across the districts, IRS may not be benefitting as much as it could from the expedited determination process. Accordingly, the Commissioner of Internal Revenue should direct the Assistant Commissioner, EP/EO, to assess the possibility of redirecting resources between determinations and examinations as increased use of the expedited determination process results in more efficient use of determination resources.
Closed - Implemented
IRS has incorporated a continuing evaluation of the expedited determination process into all its general and special purpose case evaluation visits.
Internal Revenue Service 3. IRS presently considers only revenue data in following up on its advance rulings for tax-exempt status. To better ensure compliance with tax-exempt status requirements, the Commissioner of Internal Revenue should direct the Assistant Commissioner EP/EO to obtain and analyze both expenditure and revenue data during the advance ruling follow-up process.
Closed - Implemented
IRS sent out 100 questionnaires in 2 districts, conducted examinations, and analyzed the results. IRS concluded that costs outweighed benefits.

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