IRS releases work plan for Exempt Organizations.It's no secret that the Internal Revenue Service Exempt Organizations (IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. ) division is ratcheting up its enforcement role. Nonprofit A corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive. Nonprofits are also called not-for-profit corporations. Nonprofit corporations are created according to state law. officials can expect to see more of this trend in the coming year, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the division's 2005 work plan. "We now must balance customer service with an enforcement program to stem the growing tide of abuses within the tax-exempt community," wrote Exempt Organizations (EO) Director Martha Sullivan, who outlined the EO's priorities in a letter prefacing the work plan. Specifically, Sullivan wrote, the IRS will focus on anti-terrorism, abusive Tending to deceive; practicing abuse; prone to ill-treat by coarse, insulting words or harmful acts. Using ill treatment; injurious, improper, hurtful, offensive, reproachful. tax avoidance The process whereby an individual plans his or her finances so as to apply all exemptions and deductions provided by tax laws to reduce taxable income. Through tax avoidance, an individual takes advantage of all legal opportunities to minimize his or her state or federal transactions, credit counseling Credit counseling (known in the United Kingdom as debt counselling) is a process offering education to consumers about how to avoid incurring debts that cannot be repaid. This process is actually more debt counseling than a function of credit education. organizations and excessive compensation. Under the anti-terrorism area, the IRS "will examine a sample of returns to determine the effectiveness of controls put in place to monitor overseas grants and other assistance," according to Sullivan's letter. The federal tax agency will also establish a unit dealing with complex financial fraud cases, and monitor information given during the determination process to identify organizations potentially involved in supporting terrorist activities, according to Sullivan. The EO will take a close look at perceived abuses involving 509(a)(3) supporting organizations, 501(c)(15) entities and producer-owned re-insurance companies, donor-advised funds and organizations involved with HUD Hud (h  d), a pre-Qur'anic prophet of Islam. Hud unsuccessfully exhorted his South Arabian people, the Ad, to worship the One God. programs, according to Sullivan.
The IRS will continue its Tax Exempt Compensation Enforcement Project, which is in the process of contacting 2,000 nonprofits about compensation practices. A new Dedicated Determinations Screening Group will improve the screening of exempt applications with an eye to credit counseling organizations and tax avoidance schemes, and people who use tax-exempt status for personal gain, according to Sullivan's letter. The IRS would like to expand its electronic filing program, originally launched last year. During 2005 the IRS hopes to include forms 990-PF and 990-T in the program and also develop an interactive Form 1023, the IRS said. Also, the IRS will release a revised Form 1023 in the first quarter of 2005, and is still "revamping" the Form 990, according to the EO work plan. |
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