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House Panel Seeks Details on IRS Investigations of Nonprofits

October 06, 2011

Oct. 6 (Bloomberg) -- Representative Charles Boustany, the Republican chairman of the House Ways and Means oversight subcommittee, is pressing the Internal Revenue Service to provide details on its investigations of the nonprofit sector.

In a letter to IRS Commissioner Douglas Shulman, Boustany asks the agency to explain how much of its budget is dedicated to auditing the eligibility of organizations to be structured as tax-exempt nonprofits. The Louisiana Republican also asks how many audits the IRS has opened since 2008 and seeks data on the revenue and assets reported by nonprofits in that period.

The request builds on a broader effort among House Republicans to determine whether some nonprofits are improperly classified as tax exempt. Most of lawmakers’ attention has been focused on the American Association of Retired Persons, whose tax-exempt status was the subject of a Ways and Means subcommittee hearing in April.

“AARP is not the only tax-exempt organization that more closely resembles a for-profit enterprise,” Boustany wrote in his letter, obtained by Bloomberg News and dated today. Lawmakers “have expressed concern that other tax-exempt organizations may not be complying with the letter or spirit of the tax-exempt regime, yet continue to enjoy the benefits of tax exemption.”

AARP has defended itself against charges that it doesn’t deserve its tax exemption. Barry Rand, the organization’s chief executive officer, testified in April that AARP is “strictly nonpartisan” and said the revenue it collects helps keep membership dues low.

Hospitals and Universities

Boustany’s letter extends the sumcommittee’s inquiry to the tax-exempt status of hospitals and universities. He asks how the IRS is complying with a statutory requirement that it review the community benefits provided by hospitals every three years and what the agency has learned about executive compensation and unrelated business income at universities.

Boustany is also asking the IRS to explain how it reviews whether a tax-exempt organization is engaged in “excessive political campaign activity.” The agency created a stir in May when it confirmed an investigation into whether five taxpayers should pay gift taxes on contributions they made to political advocacy groups that were organized as 501(c)(4) entities.

After criticism of the move by lawmakers, including all of the Republicans on the Senate Finance Committee, the IRS said in July that it was dropping the inquiry.

Boustany asked the IRS to respond to his letter by Oct. 20.

--Editors: Bob Drummond, Justin Blum

To contact the reporter on this story: Steven Sloan in Washington at

To contact the editor responsible for this story: Mark Silva at

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