Royalties, ACA Provisions Triggering IRS Audits on Exempts

The Internal Revenue Service is zeroing in on details when it comes to audits of tax-exempt organizations.

Recent audits have dealt with narrow issues, likely a reflection of the agency’s shift toward using a system that flags certain elements on returns from exempt organizations, several practitioners said Sept. 28. Agency officials have previously said the IRS runs about 190 queries against all Forms 990, Return of Organization Exempt From Income Tax, in an effort to make the exam function more automated and to spot potential compliance issues.

Organizations that have high royalty income, periodical income but no unrelated business income ...