IRS Data Book 2021 EO Information (Including Examination Rate of < 0.2%)

The 2021 IRS Data Book, covering the fiscal year that ended on September 30, 2021, contains its usual treasury trove of information about exempt organizations. Notable facts include:

• There are 1,980,571 tax-exempt organizations, nonexempt charitable trusts, and split-interest trusts (Table 14), of which 1,828,187 are recognized under IRC section 501(c) (1,431,266 under section 501(c)(3)) and 42,697 under IRS section 527 (political organizations).

• The IRS closed 94,466 applications for recognition of exemption (Table 12), approving 81,583 (86.4%), disapproving 84 (0.1%), and resolving 12,793 (13.5%) in other ways (including withdrawal, lacking required information, or incomplete). The vast majority (90,461 or 95.8%) of the applications were under IRC section 501(c)(3), with the next closest categories being approximately a thousand applications each under section 501(c)(4) and section 501(c)(6).

• The IRS also received 3,334 notices of intent to operate under Section 501(c)(4) (Table 13), of which it rejected 465 for a variety of reasons, including that notice was not required because of a previously filed annual information return or application for recognition of exemption, or the organization was exempt under a section other than 501(c)(4).

• The IRS examined (Table 21) only 1,383 Forms 990, 990-EZ, and 990-N, an additional 203 Forms 990-PF, 1041-A, 1120-POL, and 5227, 748 Forms 990-T, and 301 Forms 4720. This compares to 1,360,719 exempt organization returns filed in 2020 and 1,722,803 filed in 2021, which figures include all of the above forms except for Forms 1041-A and 1120-POL This means even taking into account examination lag the examination rate was less than 0.2%.

Lloyd Mayer