Internal Revenue Service
Hillary Clinton's family's charities are refiling at least five annual tax returns after a Reuters review found errors in how they reported donations from governments, and said they may audit other Clinton Foundation returns in case of other errors. The charities' errors generally take the form of under-reporting or over-reporting, by millions of dollars, donations from foreign governments, or in other instances omitting to break out government donations entirely when reporting revenue, the charities confirmed to Reuters.
Battered by a scandal over delays in approving groups for tax-exempt status and plagued by a backlog tens of thousands of cases long, the Internal Revenue Service unveiled a strikingly stripped-down online application last year to speed the process. But to critics, the IRS's version of “don’t ask, don’t tell” is fraught with problems. An unlikely coalition of tax lawyers, state enforcement agents and even many nonprofits that favor simpler rules say that the agency is making it too easy to commit fraud.
The IRS approved 94,365 applications from organizations seeking 501(c)(3) designations in fiscal year 2014, more than double the number approved in the previous two years. The one-year jump was due to the introduction of an alternative, three-page electronic version of the 26-page form 1023, the IRS said in its 2014 Data Book, an annual report released Tuesday. The electronic option, 1023-EZ, first became available in July 2014 and provides a streamlined way for organizations with annual gross receipts of less than $50,000 to apply for tax-exempt status.
Nonprofits could see important changes in tax policy from Congress during the current session even though a broad tax overhaul is unlikely to advance this year, according to a leading tax expert in the House. Provisions like the charitable deduction are unlikely to change this year. But other areas of charitable tax policy are up for grabs, said Harold Hancock, tax counsel for the House Ways and Means Committee.
The TurboTax of the nonprofit world has been hacked. The Urban Institute, a prominent think tank in Washington, D.C., alerted charitable organizations around the country Tuesday that its system for filing tax forms was breached. Hackers were able to access usernames, passwords, IP addresses and other account data for nonprofits that use the Urban Institute's National Center for Charitable Statistics (NCCS) to file their taxes.
A Koch brothers advocacy group contends California Attorney General Kamala Harris has no business demanding the names and addresses of its donors, who might face “grotesque threats” if identified. Americans for Prosperity Foundation, co-founded by billionaires Charles and David Koch, promotes limited government and free markets and conservative causes. Compelling disclosure of the nonprofit organization’s contributors may put them at risk of being targeted by the group’s opponents and intimidate would-be donors, the foundation is set to argue in federal court in Los Angeles.
A federal judge handed open-records activist Carl Malamud a victory in his battle to get the Internal Revenue Service to release Form 990 tax returns in a format that can be read by computers, thus making information about nonprofit operations far more accessible. U.S. District Judge William Orrick rejected the IRS's argument that producing the documents requested by Malamud's group, Public.Resource.Org, would create a significant burden on an overstretched agency.
"Dark money" nonprofit groups, including many that enjoy a preferred tax status because they purport to be focused on "social welfare," are barred from engaging in electoral politics as their primary activity. But the Internal Revenue Service (IRS), which is charged with policing the groups, almost never audits them to see if they're spending too much money on politics, according to new information obtained by the Center for Public Integrity.
The open-records activist Carl Malamud has moved a step closer to winning his legal battle to give the public greater access to the wealth of information on Form 990 tax returns that nonprofits file. During a hearing in San Francisco on Wednesday, U.S. District Judge William Orrick said he tentatively planned to rule in favor of Malamud's group, Public.Resource.Org, which filed a lawsuit to force the Internal Revenue Service to release nonprofit tax forms in a format that computers can read.
The Internal Revenue Service says it won't come out with new proposed rules for so-called dark money groups until late spring at the earliest, increasing the likelihood that no changes will take effect before the 2016 elections.
These groups — social welfare nonprofits that can engage in politics, but do not have to disclose their donors — have become a major force in elections, pouring at least $257 million into the 2012 elections. The Wesleyan Media Project estimates that dark money paid for almost half the TV ads aired in the 2014 Senate races.