Daily Tax Report ®

IRS to Offer Feedback to Auditors Raising Tax-Exempt Exam Issues

Feb. 22, 2021, 5:12 PM

The IRS has agreed to create a process for providing feedback to employees who raise issues or ideas for improving audits of tax-exempt organizations, after its watchdog recommended the change.

The Treasury Inspector General for Tax Administration in a report released Monday identified problems with the IRS’s procedures for auditing exempt groups, including that the agency relies heavily on referrals to help detect abusive tax schemes, which don’t always lead to productive cases.

  • The IRS didn’t examine about 20% of the tax-exempt returns selected for audit in fiscal year 2019, “resulting in an inefficient use of resources,” the...

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