IRS Checking 1,300 ‘Self-Declared’ Tax-Exempt Groups

April 29, 2013

The Internal Revenue Service is currently conducting a compliance check on approximately 1,300 “self-declared” tax-exempt organizations.

In addition, the IRS is seeking detailed information on the organization’s activities, revenues and expenses, and the compensation of the top six officers, directors or employees.

The organizations have received a letter from the IRS requesting them to complete an online questionnaire. The purpose of the online questionnaire is to increase voluntary compliance, according to the IRS. An organization has 60 days from the date of the cover letter to complete the questionnaire. If an organization needs more time, up to an additional 30 days will be granted.

The questionnaire is part of a voluntary compliance check, not an examination. The IRS is not reviewing the organization’s books and records, contacting third parties or requesting verification of the information the organization provides.

Only organizations receiving a letter from the IRS should complete the questionnaire. Completing the questionnaire is optional but encouraged. While an organization may choose not to complete and submit the questionnaire, if it doesn’t, the IRS may refer the organization for an examination.

These organizations include:

• Civic leagues and social welfare organizations (Internal Revenue Code Sec. 501(c)(4))
• Labor, agricultural and horticultural organizations (IRC Sec. 501(c)(5))
• Business leagues, chambers of commerce, etc. (IRC Sec. 501(c)(6))

The questionnaire is fairly detailed and seeks the following information:

• The date when the organization was formed
• The type of structure under which it operates
• The year in which it filed its most recent Form 990
• Information on why the organization did not apply for recognition of exemption
• The specific type of organization under the particular Tax Code section involved