Independent Sector Asks for More IRS Funding

Today, Independent Sector sent the following letter to:

• Senator Richard Durbin (D-IL), Chair, Senate Appropriations Subcommittee on Financial Services and General Government;

• Senator Sam Brownback (R-KS), Ranking Member, Senate Appropriations Subcommittee on Financial Services and General Government;

• Representative José Serrano (D-NY), Chair, House Appropriations Subcommittee on Financial Services and General Government; and,

• Representative Ralph Regula (R-OH), Ranking Member, House Appropriations Subcommittee on Financial Services and General Government.

Achieving full compliance with our nation's tax laws, particularly the complex requirements for tax-exempt organizations, will require that the Internal Revenue Service has a greater oversight and education capacity than its current budget permits. I write today to urge you and your committee to give strong consideration to increasing the IRS FY2008 budget and encourage you to rely on the IRS Oversight Board's forthcoming recommendation, which we anticipate will exceed the President's budget request.

Independent Sector's more than 575 member organizations represent a broad cross-section of our nation's nonprofit community, which exists to meet society's needs in diverse areas such as education, human services, community development, health, and more. To achieve these missions, nonprofits rely on Americans' gifts of time and money, which are fueled by the confidence that they are used for the purposes for which they were intended.

Indeed, this public trust is essential to maintaining a viable and vibrant nonprofit community, and preservation of that trust depends upon maximum compliance with the law. In addition to proactive self-regulation by charitable organizations, effective oversight and education by the IRS are critical to achieving compliance and maintaining this trust.

Congress' recent passage of substantive changes to the tax laws governing exempt organizations has made IRS outreach more important than ever. The enacted reforms, which Independent Sector and much of the nonprofit community supported, have the potential to strengthen the work of charitable organizations by deterring potential abuse of nonprofits and creating safeguards to ensure that donated funds are used for charitable purposes. Without sufficient education of charitable organizations about the new laws, however, the provisions will not achieve their intended purpose.

An increased IRS budget would allow the agency to offer and improve upon the resources -- the written guidance, online fact sheets, and telephone and onsite seminars -- that educate nonprofit organizations, many of which rely upon volunteer staff and do not have access to tax or accounting professionals, about new and existing tax laws. Moreover, it would provide the enforcement resources that deter intentional noncompliance, making possible more extensive examinations of organizations' annual returns.

In addition, Congress has spent much time during recent weeks considering the impact that greater IRS resources could have on the Service's ability to collect increased revenue. Research indicates that a larger IRS enforcement budget could help the Service to narrow the nation's tax gap and, ultimately, reduce the federal deficit. This is something that I know is important to you, as well as Independent Sector.

I thank you for consideration of these comments. If you have any questions, please feel to free to contact Patricia Read, Independent Sector's Senior Vice President of Public Policy and Government Affairs, by phone at (202) 467-6100 or by email at patr@independentsector.org.