Carolyn Schenck Weighs in on IRS Tax Examinations Targeting Certain Organizations in Tax Notes

Future IRS examinations of the exempt organization sector may focus on nonprofits’ representation or reporting of their exempt purposes, according to a former official familiar with federal investigation procedures.

Nonprofit organizations and their employees “need to come up with a rapid response plan” should they be the subject of a criminal investigation, former National Fraud Counsel Carolyn Schenck told Tax Notes.

In October reports surfaced claiming that the Trump administration is seeking to reshape the IRS Criminal Investigation division to target left-leaning organizations.

“Misrepresentation of an EO stated purpose on a Form 990 alone can form the basis for a false tax return charge,” Schenck, now with Caplin & Drysdale, said during a remote program hosted by the District of Columbia Bar November 13.

To prepare to defend against an accusation of misrepresenting exempt purpose, Schenck recommended that EOs “make sure that their books and records are in order” because a false representation of exempt purpose accusation can be very broad or narrow.

To read the article in full, please visit Tax Notes’ website.