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IRS Needs More Oversight as they Investigate Non-Profits

Yesterday, a group of IRS watchdogs presented findings that suggest that the IRS needs additional oversight when they investigate non-profits.  This is much more than simply targeting political groups, it is about the lack of control over how the IRS targets audit clients.

The chair of the House Ways and Means Oversight sug-committee said “There isn’t proper documentation of allegations or decisions to audit; there are a handful of gatekeepers with sweeping authority and broad discretion; and there is a broken referral committee process.”

Many IRS audits are based upon questionable accounting practices or expeditions based upon bell curve analysis of groups of tax returns.  However, there is little guidance or mandated process to guide auditors within the realms of their audit powers.  We have directly experienced the effect of a rogue IRS auditor (no longer with the IRS) who abused her discretionary audit power with the simple intent of putting a client out of business.  By the time her supervisors gathered enough information and disciplined her it was too late for the some of the businesses she had targeted.

“Absolute power corrupts absolutely.”  There is no question the IRS has abused its sweeping audit powers in the past several years for political purposes.  They have admitted as much.  The question is what we can do as citizens and watchdogs to ensure that the IRS has the power to accomplish their legislated mission, without abusing the powers that accomapny it.