Feb. 23, 2021

Today, the Treasury Inspector General for Tax Administration (TIGTA), which oversees the Internal Revenue Service (IRS), released a report on the obstacles that exist in detecting noncompliance of tax-exempt organizations. The report was written in response to a request last year by Congressman Brad Schneider related to his investigation into potential abuse of exempt organizations’ tax preference status by the National Rifle Association (NRA). The report highlights that large and complex organizations, like the NRA, can relatively easily avoid effective oversight and abuse the tax code to the illicit benefit of donors or executives. The report notes issues of the complexity of the tax code, a shortage of examination resources, and insufficient information on non-profit tax returns. The government is consequently overly reliant on external referrals to inform and prompt IRS attention on abuse by tax-exempt organizations.

The full report can be found here. Schneider’s request for the report can be found here.

“The reported abuses by the NRA of its tax-exempt status, not only is a disservice to American taxpayers, but puts at risk the protections rightly due law-abusing non-profit organizations. It also reflects the utter disregard NRA leadership has for their dues-paying members. As more information is released on the NRA’s leadership stealing from its members, its self-dealing and deceptive practices, and its long abuse of its privileged tax status, I look forward to working with my colleagues on the Oversight Committee to ensure that the IRS has the resources and Congressional partners necessary to ensure compliance and root out bad actors,” said Congressman Brad Schneider (IL-10).

The report detailed issues the IRS had in identifying bad actors: “Moreover, tax abuse continues to occur within the tax-exempt sector because unscrupulous orgs may use elaborate or fraudulent schemes to conceal their illegal activities, making such abuse difficult to identify.”

The report continued regarding areas Congress can work to strengthen enforcement: “The complexity of the tax law, limited examination resources, and lack of filing requirements for some types of entities make identifying tax abuse by tax-exempt organizations challenging.”

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This press release was produced by the office of Rep. Brad Schneider (IL-10). The views expressed here are the author’s own.