MLR

IRS questionnaire is voluntary – but advisable

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Board members and directors of self-declared tax-exempt organizations should be aware that the IRS is conducting a compliance check on certain organizations.

These organizations include:

  • Civic leagues and social welfare organizations (Internal Revenue Code Sec. 501(c)(4))
  • Labor, agricultural and horticultural organizations (IRC Sec. 501(c)(5))
  • Business leagues, chambers of commerce, etc. (IRC Sec. 501(c)(6))

About 1,300 organizations have received a letter from the IRS requesting them to complete an online questionnaire.

The IRS has posted information about the online questionnaire that addresses the following issues:

  • Purpose of the questionnaire. The questionnaire is part of the IRS Exempt Organizations’ ongoing efforts to increase voluntary compliance.
  • Affected organizations. Only organizations receiving a letter from the IRS should complete the questionnaire. Completing the questionnaire is optional but encouraged.
  • Print copy of questionnaire. An organization can print out a paper copy of the questionnaire but must complete it online.
  • Deadline for completion. An organization has 60 days from the date of the cover letter to complete the questionnaire. If an organization needs more time, the IRS will grant up to an additional 30 days.
  • Compliance check. This questionnaire is part of a voluntary compliance check, not an examination. The IRS is not reviewing the organization’s books and records, contacting third parties or requesting verification of the information the organization provides. Although an organization may choose not to complete and submit the questionnaire, if it doesn’t, the IRS may refer the organization for an examination.

The questionnaire is fairly detailed. It seeks the following information:

  • The date when the organization was formed
  • The type of structure under which it operates (e.g., corporation, trust, etc.)
  • The year in which it filed its most recent Form 990
  • Information on why the organization did not apply for recognition of exemption
  • The specific type of organization under the particular Tax Code section involved

In addition, the IRS is seeking detailed information on the organization’s activities, revenues and expenses, and the compensation of the top six officers, directors or employees.