IRS’ Corrections Regarding Tax-Exempt Status

The IRS is correcting its practices after it was found that the agency was biased towards certain political groups. According to Treasury Inspector General for Tax Administration (TIGTA), "Early in Calendar Year 2010, the IRS began using inappropriate criteria to identify organizations applying for tax-exempt status to review for indications of significant political campaign intervention. Although the IRS has taken some action, it will need to do more so that the public has reasonable assurance that applications are processed without unreasonable delay in a fair and impartial manner in the future."

In response to the findings, the IRS has imposed improvements to the process to ensure fairness in reviewing application for tax-exempt status, such as:

  1. The installation of new leadership across all five executive management levels regarding tax-exempt status. An Accountability Review Board was created that will give recommendations within 60 days on any additional personnel actions that need to be taken to prevent management and judgement failures the TIGTA found.
  2. A review of the entire agency to ensure compliance of the selection criteria in cases of offering of tax-exempt status.
  3. The initiation of internal and external education and outreach on the role of the National Taxpayer Advocate, helping taxpayers resolve problems they have with the IRS.

The TIGTA report has suggested various measures that can be taken to review tax-exempt applications effectively. The results of the new methods initiated by the IRS will be reviewed with the Department of the Treasury, the Senate Finance Committee, the Chairpersons of the House Ways and Means Committee, and the IRS Oversight Board.

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