Tax Administration

IRS Can Improve Its Process for Recognizing Tax-Exempt Organizations Gao ID: GGD-90-55 June 8, 1990

GAO assessed several administrative steps the Internal Revenue Service (IRS) could take to better use its resources and improve its efficiency in recognizing tax-exempt status.

GAO found that: (1) IRS initiated the expedited determination process to make the tax-exempt determination process more efficient; (2) IRS may not be realizing the maximum benefit from the process, since districts varied in their process usage, and IRS had not evaluated districts' process usage; (3) during fiscal year 1989, all district offices used the expedited process to some extent, ranging from 17 percent of determination requests in one district to 2 percent in another; (4) IRS did not provide guidance to districts using the process; (5) IRS did not effectively use its determination resources when doing advance ruling followups and could not assess the effectiveness of the followups, since it did not review expenditure data; and (6) IRS procedures to close cases due to a lack of information created inefficiencies because districts had to reopen cases after applicant organizations subsequently provided IRS the requested information.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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