IRS revoking exempt status of "sizable number" of small organizations

Feb 07, 2012

Aug 31, 2011

The IRS Exempt Organizations (EO) Office will be revoking the tax-exemptions of a "sizable number" of small exempt organizations, according to the agency.  The IRS has  not provide any figures but said that the list of revoked organizations should be out in the next month. When it releases the list, EO will also issue Frequently Asked Questions about the effect of the revocation and how organizations can obtain reinstatement of their exempt status.

The EO is currently checking whether the organizations' exempt status being revoked should be revoked. She also noted that some larger organizations required to file Form 990 have attempted to meet their filing requirements by filing the electronic postcard, Form 990-N. EO is therefore checking the eligibility of filers of Form 990-N.

A governance check sheet is being used by EO agents who examine Code Sec. 501(c)(3) organizations. EO will use the information to study the relationship between governance and tax compliance. The EO will release its findings on a rolling basis. She added that EO is coordinating audits of large foundations with the IRS Large Business and International Division.

Guidance that may be issued in the coming months includes regulations on the public support test, appraisal standards, church audits and information-sharing.  The Treasury and EO are also working on guidance under the 2010 health care laws, such as the new requirements under Code Sec. 501(r) for hospital organizations.

Source:  CCH