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Treasury Inspector General Report IRS non-disclosed political 501(c)4 groups

Treasury Inspector General Report IRS non-disclosed political 501(c)4 groups

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Published by: mary eng on May 16, 2013
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01/26/2014

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none had been denied, and 160 were open from 206 to
Treasury Inspector General
1,138 calendar days (some for more than three years
for Tax Administration
and crossing two election cycles).
Office of Audit
More than 20 months after the initial case was identified,processing the cases began in earnest. Many
INAPPROPRIATE CRITERIA WERE USED TO
organizations received requests for additional
IDENTIFY TAX-EXEMPT APPLICATIONS FOR
information from the IRS that included unnecessary,
REVIEW
burdensome questions (
e.g.
, lists of past and futuredonors). The IRS later informed some organizations thatthey did not need to provide the information that was
Issued on May 14, 2013
 
previously requested. IRS officials stated that any donor
Highlights
 
information received in response to a request from itsDeterminations Unit was later destroyed.
WHAT TIGTA RECOMMENDED
Highlights of Report Number: 2013-10-053 to the TIGTA recommended that the IRS finalize the interimInternal Revenue Service Acting Commissioner,actions taken, better document the reasons why Tax Exempt and Government Entities Division.applications potentially involving political campaign
IMPACT ON TAXPAYERS
intervention are chosen for review, develop a process totrack requests for assistance, develop and publishEarly in Calendar Year 2010, the IRS began usingguidance, develop and provide training to employeesinappropriate criteria to identify organizations applyingbefore each election cycle, expeditiously resolvefor tax-exempt status to review for indications of remaining political campaign intervention cases (some of significant political campaign intervention. Although thewhich have been in process for three years), and requestIRS has taken some action, it will need to do more sothat social welfare activity guidance be developed by thethat the public has reasonable assurance thatDepartment of the Treasury.applications are processed without unreasonable delayin a fair and impartial manner in the future.In their response to the report, IRS officials agreed withseven of our nine recommendations and proposed
WHY TIGTA DID THE AUDIT
alternative corrective actions for two of ourrecommendations. TIGTA does not agree that the TIGTA initiated this audit based on concerns expressedalternative corrective actions will accomplish the intent of by members of Congress. The overall objective of thisthe recommendations and continues to believe that theaudit was to determine whether allegations wereIRS should better document the reasons whyfounded that the IRS: 1) targeted specific groupsapplications potentially involving political campaignapplying for tax-exempt status, 2) delayed processing of intervention are chosen for review and develop andtargeted groups’ applications, and 3) requestedpublish guidance.unnecessary information from targeted groups.
WHAT TIGTA FOUNDREAD THE FULL REPORT
 
 To view the report, including the scope, methodology, The IRS used inappropriate criteria that identified forand full IRS response, go to:review Tea Party and other organizations applying fortax-exempt status based upon their
 
names or policy
http://www.treas.gov/tigta/auditreports/2013reports/201310053fr.pdf .
positions instead of indications of potential politicalcampaign intervention. Ineffective management:1) allowed inappropriate criteria to be developed andstay in place for more than 18 months, 2) resulted insubstantial delays in processing certain applications, and3) allowed unnecessary information requests to beissued.Although the processing of some applications withpotential significant political campaign intervention wasstarted soon after receipt, no
 
work was completed on themajority of these applications for 13 months. This wasdue to delays in receiving assistance from the ExemptOrganizations function Headquarters office. For the296 total political campaign intervention applications TIGTA reviewed as of December 17, 2012, 108 hadbeen approved, 28 were withdrawn by the applicant,
E-mail Address: TIGTACommunications@tigta.treas.gov Phone Number: 202-622-6500 Website: http://www.treasury.gov/tigta 
 
none had been denied, and 160 were open from 206 to
Treasury Inspector General
1,138 calendar days (some for more than three years
for Tax Administration
and crossing two election cycles).
Office of Audit
More than 20 months after the initial case was identified,processing the cases began in earnest. Many
INAPPROPRIATE CRITERIA WERE USED TO
organizations received requests for additional
IDENTIFY TAX-EXEMPT APPLICATIONS FOR
information from the IRS that included unnecessary,
REVIEW
burdensome questions (
e.g.
, lists of past and futuredonors). The IRS later informed some organizations thatthey did not need to provide the information that was
Issued on May 14, 2013
 
previously requested. IRS officials stated that any donor
Highlights
 
information received in response to a request from itsDeterminations Unit was later destroyed.
WHAT TIGTA RECOMMENDED
Highlights of Report Number: 2013-10-053 to the TIGTA recommended that the IRS finalize the interimInternal Revenue Service Acting Commissioner,actions taken, better document the reasons why Tax Exempt and Government Entities Division.applications potentially involving political campaign
IMPACT ON TAXPAYERS
intervention are chosen for review, develop a process totrack requests for assistance, develop and publishEarly in Calendar Year 2010, the IRS began usingguidance, develop and provide training to employeesinappropriate criteria to identify organizations applyingbefore each election cycle, expeditiously resolvefor tax-exempt status to review for indications of remaining political campaign intervention cases (some of significant political campaign intervention. Although thewhich have been in process for three years), and requestIRS has taken some action, it will need to do more sothat social welfare activity guidance be developed by thethat the public has reasonable assurance thatDepartment of the Treasury.applications are processed without unreasonable delayin a fair and impartial manner in the future.In their response to the report, IRS officials agreed withseven of our nine recommendations and proposed
WHY TIGTA DID THE AUDIT
alternative corrective actions for two of ourrecommendations. TIGTA does not agree that the TIGTA initiated this audit based on concerns expressedalternative corrective actions will accomplish the intent of by members of Congress. The overall objective of thisthe recommendations and continues to believe that theaudit was to determine whether allegations wereIRS should better document the reasons whyfounded that the IRS: 1) targeted specific groupsapplications potentially involving political campaignapplying for tax-exempt status, 2) delayed processing of intervention are chosen for review and develop andtargeted groups’ applications, and 3) requestedpublish guidance.unnecessary information from targeted groups.
WHAT TIGTA FOUNDREAD THE FULL REPORT
 
 To view the report, including the scope, methodology, The IRS used inappropriate criteria that identified forand full IRS response, go to:review Tea Party and other organizations applying fortax-exempt status based upon their
 
names or policy
http://www.treas.gov/tigta/auditreports/2013reports/201310053fr.pdf .
positions instead of indications of potential politicalcampaign intervention. Ineffective management:1) allowed inappropriate criteria to be developed andstay in place for more than 18 months, 2) resulted insubstantial delays in processing certain applications, and3) allowed unnecessary information requests to beissued.Although the processing of some applications withpotential significant political campaign intervention wasstarted soon after receipt, no
 
work was completed on themajority of these applications for 13 months. This wasdue to delays in receiving assistance from the ExemptOrganizations function Headquarters office. For the296 total political campaign intervention applications TIGTA reviewed as of December 17, 2012, 108 hadbeen approved, 28 were withdrawn by the applicant,
E-mail Address: TIGTACommunications@tigta.treas.gov Phone Number: 202-622-6500 Website: http://www.treasury.gov/tigta 
 
TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION 
Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review 
May 14, 2013
Reference Number: 2013-10-053
 This report has cleared the Treasury Inspector General for Tax Administration disclosure review processand information determined to be restricted from public release has been redacted from this document.
Redaction Legend
:1 =Tax Return/Return Information
Phone Number | 202-622-6500 E-mail Address TIGTACommunications@tigta.treas.gov  Website | http://www.treasury.gov/tigt

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