The transcript of IRS Commissioner Mark W. Everson’s speech to the Greater Washington Society of CPAs can be found here.
Commissioner Everson identified as one of the four key objectives of the IRS the deterrence of abuse within the tax-exempt and governmental entities sector and misuse of such entities by third parties for tax avoidance and other unintended purposes. He listed four factors that account for the emergence of problems in the tax-exempt area:
- A dramatic increase in the size and complexity of the sector and the organizations within it.
- IRS enforcement resources did not keep up, making it more difficult to enforce the law.
- Some of the problems seen in profit-making businesses — such as lax attitudes toward governance — appeared in the nonprofit arena as well.
- A rise in abusive tax avoidance transactions generally, including a number that involve tax exempts.
Everson also listed four examples of the IRS’s renewed enforcement efforts:
- Credit counseling organizations.
- Excessive compensation of some tax-exempt executives.
- Abusive transaction settlement initiative / patents and conservation easements.
- Tax exempts and political activity.
Everson closed by reiterating three points that he made before the Senate Finance Committee in 2005 concerning potential legislative action:
- Intermediate sanctions.
- Sharing of information with other federal and state regulatory agencies.