IRS Operations and Tax-Exempt Oversight

Nonprofit Operations

The Issue

Independent Sector supports increased funding for the Internal Revenue Service (IRS) in order for it to fully and properly fulfill its oversight duty of the charitable sector.

The IRS oversees eligibility for tax- exempt status and compliance with laws governing tax exempt organizations through its Office of Exempt Organizations. To be tax-exempt under Section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes. To secure and maintain this exempt status, organizations must complete numerous initial application forms and meet ongoing reporting requirements.

While the IRS develops and pursues its own priorities, the agency’s actions are also affected by Congressional actions in the form of decisions related to funding levels and direct inquiries from tax-writing committee members.  In recent years, the agency has experienced significant budget cuts leading to the elimination of a large number of staff while also facing a greater workload. The IRS has also received a great deal of criticism over the targeting controversy which came to light in 2013.


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