IRS National Taxpayer Advocate: Report to Congress, exempt organization items

IRS National Taxpayer Advocate: Report to Congress

The National Taxpayer Advocate’s annual report (for 2015) to Congress identifies “serious problems” encountered by taxpayers and makes administrative and legislative recommendations to address those problems.

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The annual report includes:

Legislative recommendations

  • Require more frequent updates to publicly available databases—i.e., IRS Exempt Organizations Select Check and Business Master File Extract (EO BMF). The Taxpayer Advocate notes that many private foundations and donors rely on the databases before making grants or contributions to an organization. Because the database is not updated in a timely fashion, many organizations may lose out on grants or donations (particularly during the critical end-of-year giving season). The Taxpayer Advocate recommends that Congress require the IRS to update EO BMF and Select Check on a weekly basis and implement an emergency process that allows for manual updating of the databases within 24 hours. While the appropriate programming is being implemented, it was recommended that the IRS be required to make such updates manually.
  • Treat Indian tribal governments as states for social security tax purposes.

Administrative recommendations

  • Revise Form 1023-EZ to require applicants to submit organizing documents, a description of actual or planned activities, and financial information. The Taxpayer Advocate reviewed organizing documents of a sample of organizations in 20 states making articles of incorporation available online, at no cost, when Form 1023-EZ was approved by the IRS. As a result of this study, the Taxpayer Advocate found that 37% did not meet the organizational test for qualification as a section 501(c)(3) organization; 30% did not have an acceptable purposes clause; and 23% did not have a satisfactory dissolution clause.  

 

For more information, contact the Managing Director-in-Charge of KPMG's Washington National Tax Exempt Organizations Tax group

D. Greg Goller |  +1 (703) 286- 8391 | greggoller@kpmg.com

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