Tax Administration

In response to a congressional request, GAO provided information on: (1) statutes which address political and lobbying activities by tax-exempt organizations; (2) statistics on the number and type of tax-exempt organizations which engage in political and lobbying activities; and (3) the Internal Revenue Service's (IRS) program to monitor tax-exempt organizations, lobbying and political activities.

GAO noted that: (1) most tax-exempt organizations are exempt under section 501(c) of the Internal Revenue Code (IRC), which contains 25 categories of tax-exempt organizations; (2) IRS statistics indicate that over 800,000 tax-exempt organizations, not including religious organizations, did not apply for tax-exempt status; (3) other sections of IRC provide exempt status for political organizations, various cooperatives, and other organizations; (4) Congress amended IRC to address the lobbying and political activities of tax-exempt organizations; (5) according to IRS, organizations found most likely to engage in lobbying or political activities are public charities, social welfare organizations, labor unions, business leagues, war veterans' groups, and political organizations; (6) most lobbying and political activities were actually concentrated among social welfare organizations, labor unions, and business leagues; (7) IRS does not have a separate compliance program to monitor the lobbying and political activities of all tax-exempt organizations; and (8) the IRS Office of the Assistant Commissioner issues revenue rulings and provides overall guidance on lobbying and political activities, identifies and reviews these activities as part of routine compliance examinations, and maintains limited statistical data on them.