Make us your home page
Instagram

Federal report says IRS could do more to regulate charities

Isolated hundred dollar cancer ribbon on a white background.

Isolated hundred dollar cancer ribbon on a white background.

The IRS doesn't have the manpower to go after charities that flout the law, and it could do more to help state regulators target crooked operators, according to a federal watchdog report made public today.

The U.S. Government Accountability Office also flagged the revenue service for failing to track how well its charity regulators are doing their jobs.

"Clearly the IRS is failing to ensure charitable groups fully comply with the law, or even meet the minimum standards for receiving such preferential tax status," Sen. Tom Coburn, R-Okla., wrote last year in a letter requesting the review.

Coburn made the request in response to an investigation by the Tampa Bay Times and the Center for Investigative Reporting that showed lax regulation has allowed the same charities to spend virtually nothing on the needy for years.

The 66-page report focused on the tax-exempt organizations division of the IRS, where staffing has shrunk in the face of repeated budget cuts — and where regulators are bracing for still more cuts written into a federal budget bill that passed Congress last week.

"I think that the IRS in the tax-exempt area has some talented people, but they're clearly spread way too thin," said Jack Siegel, a Chicago attorney who runs a charity consulting firm. "You can't keep cutting an organizations's funding and expect it to do a job that you want it to do."

The GAO report found that the number of charities audited by the IRS is falling alongside staffing levels. The report notes that only 0.7 percent of the charities who file tax returns are reviewed, compared to 1 percent of individual taxpayers and 1.4 percent of corporations.

The report also says the IRS could be more clear with state regulators, who can be hampered by federal privacy laws, about what data they can glean from IRS files to help build cases against bad actors.

The report also recommended that Congress act to require more charities to file electronic tax returns — which would cut down on labor and make the IRS' job easier.

The Times and CIR spent a year investigating nonprofits across the country and identified the worst charities based on the money paid to for-profit fundraising companies over a decade.

Reporters also collected data from regulators in more than 40 states to piece together the first national list of regulatory actions against charities. Previously, regulators in one state had no systematic way to check if a charity had been in trouble somewhere else.

Reporters found that government regulation was so lax that charities and fundraisers banned in one state could simply move and re-open in another.

Federal report says IRS could do more to regulate charities 12/17/14 [Last modified: Wednesday, December 17, 2014 12:25pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Tampa man pleads guilty to forging check for fake investment

    Personal Finance

    A Tampa resident was convicted Thursday for forging a check for a fake investment. The Florida Office of Financial Regulation said that Eric Franz Peer pleaded guilty. He served 11 months in jail and will have to pay $18,000.

  2. Minority business accelerator launch by Tampa chamber to aid black, Hispanic businesses

    Business

    A "minority business accelerator" program was launched Thursday by the Greater Tampa Chamber of Commerce geared toward helping black and Hispanic business owners identify and overcome barriers to grow their companies. The accelerator, known as MBA, will provide participants with business tools to cultivate opportunities …

    Bemetra Simmons is a senior private banker at Wells Fargo, The Private Bank. She is also chair of the new minority business accelerator program for the Greater Tampa Chamber of Commerce. [Photo, LinkedIn]
  3. Terrier Tri brings unique triathlon training to South Tampa

    Business

    Over a decade ago, Robert Pennino traded late nights in the music studio for early mornings in the Terrier Tri cycle studio.

    Terrier Tri, a cycling studio in South Tampa celebrates a grand opening on June 27. Photo courtesy of Tess Hipp.
  4. New bistro hopes to serve as 'adult Chuck E. Cheese'

    Business

    YBOR CITY — Inside Cheezy's Bistro and Speakeasy, a new restaurant opening in Ybor City, customers will find a mix of family recipes, games and secrecy.

    Cheezy's Bistro and Speakeasy readies to open in Ybor City. Photo courtesy of Cheezy's Bistro and Speakeasy.
  5. Ramadan having an economic impact on local charities, businesses

    Economic Development

    TAMPA — Dodging the rain, a few families and customers gathered inside Petra Restaurant on Busch Boulevard. Around 8:30 p.m., the adham (or call to prayer) music begins, signaling Iftar, the end of the daily fast. Customers grabbed a plate to dig into the feast.

    Baha Abdullah, 35, the owner of the Sultan Market makes kataif, a common dessert that is eaten during the month long celebration of Ramadan in Tampa. [OCTAVIO JONES   |   Times]