TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Wednesday, April 5, 2017

The IRS Scandal, Day 1427:  54 Applications For Tax-Exempt Status Were Rejected In 2016; One Conservative Group Has Been Waiting For An Answer Since 2009

IRS Logo 2Washington Free Beacon, IRS Denied Tax-Exempt Status to 37 Religious, Charitable Groups in 2016: One Group Has Been Waiting For Tax-Exempt Status For More Than Seven Years:

The Internal Revenue Service denied tax-exempt status to 37 religious, charitable, and educational organizations in 2016, according to recent data from the agency.

The IRS rejected a total of 54 applications for tax-exempt status in 2016. Groups applying for 501(c)3 status, which applies to non-profits whose mission is religious or charitable in nature, comprised 69 percent of denials.

Nearly 85,000 groups applied for 501(c)3 status in 2016. Of those applications, 79,545 were approved, 37 were denied, and 5,006 were not adjudicated. According to the IRS, the 5,006 applications that were not adjudicated in 2016 were either withdrawn by the organization, did not include required information, were incomplete, or were IRS correction disposals. ...

As early as 2010, the IRS began targeting applicants for tax-exempt status based on their political ideology, delaying the applications of some Tea Party and conservative groups before the 2012 presidential election. To this day, some groups are still waiting for their tax-exempt status to be approved.

Attorney Jordan Sekulow, executive director of the American Center for Law and Justice, represents 37 conservative and pro-life nonprofit organizations encountered opposition from the IRS in getting their tax-exempt status approved. One of these groups is still waiting for determination after filing for tax-exempt status in December 2009, which means it has been waiting for more than seven years. ...

Sekulow said IRS Commissioner John Koskinen, who has led the agency since 2013, needs to be replaced by someone who Congress and the American people can trust. "We've had a very firm position at the ACLJ, we believe that there needs to be total reform at the IRS, and the institution is incapable of self-correcting," Sekulow said. "That means people like Koskinen and a lot of the bureaucrats like Lois Lerner that run the [exempt organizations division] and the different departments within the IRS need to be changed."

Sekulow said Koskinen missed an opportunity to clean up the IRS and was too protective of the agency and its officials. Koskinen's term ends at the end of November 2017, though he said late last year he would resign at the request of President Donald Trump. Sekulow said added pressure from Congress to impeach the commissioner could encourage Trump to take him up on his offer. ...

"You shouldn't have to be afraid that the IRS will target you because of your political beliefs or your religious beliefs," he said. "So that's why we believe continued pressure from Congress, I think, President Trump would appreciate that because it would give him the momentum to make that decision and it would work in tandem. You would have Congress calling for it and the president taking action on it."

The IRS did not respond to requests for comment.

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