Meghan Biss Talks to Law360 on Decline in Audits of Tax-Exempt Organizations

A recent audit shows IRS examinations of tax-exempt organizations are dwindling, but as the administration prepares its budget request for the agency, the lack of revenue brought in by the exempt organizations division may mean it gets short shrift.

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"When you find an organization that's engaged in bad behavior, that shouldn't be exempt anymore, and you revoke their status and that halts their operations, that helps with public trust over the charitable system — but that's not going to bring in millions of dollars like the IRS would get out of an audit of a large corporation," Meghan Biss, Of Counsel at Caplin & Drysdale, told Law360. Biss spent almost a decade at the IRS where, for part of her service, she worked in the Tax Exempt and Government Entities Division.

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In its resource-strained position, the EO division has attempted to shift to data-driven approaches in its examinations of nonprofits. There's reason to be optimistic about that development, Biss said, although it may take a considerable period of trial and error before those processes are refined enough to address some of the more sophisticated facts and circumstances with which the agency is presented.

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