Thursday, August 26, 2010

Is IRS Unable to Effectively Oversee Reporting by 527s?

The Treasury Inspector General for Tax Administration issued a report titled "Improvements Have Been Made, but Additional Actions Could Ensure That Section 527 Political Organizations More Fully Disclose Financial Information."  While the title is relatively mild, the criticisms are not.  TIGTA found that :

  • "[O]ne out of every four Political Organization Report of Contributions and Expenditures (Form 8872) that we reviewed had incomplete or missing contributor or recipient information."
  • "[T]he IRS is not reviewing these filings [Forms 8872] to determine if they are complete or if penalties should be assessed."
  • "[T]he IRS is not always issuing notices at the appropriate time that include all information needed by political organizations to become compliant."
  • "[T]he IRS is not following up on information it has requested form political organizations to verify compliance."

To be fair to the IRS, it had to design a system to process these highly time-sensitive filings from the ground up, and its Exempt Organizations Division is hindered by its broad mandate - of which reviewing such filings is only a small part - and limited resources (shameless self-promotion: a point I made in a 2007 article).  Nevertheless, these failings are troubling as even more and more oversight of political activity appears to be moving to the IRS (see previous blog posting on this point).

LHM

http://lawprofessors.typepad.com/nonprofit/2010/08/tigta-recommends-further-improvements-to-address-527-reporting-issues.html

Federal – Executive, Studies and Reports | Permalink

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