Veterans Groups Resist IRS Audits

The IRS does a fairly good job taking care of American military families, but what about our veterans?

Some think the IRS is picking on the American Legion and other non-profit veteran organizations.  The American Legion is a veterans organization that was incorporated by Congress in 1919.  They are “the nation’s largest wartime veterans service organization, committed to mentoring youth and sponsorship of wholesome programs in our communities, advocating patriotism and honor, promoting strong national security, and continued devotion to our fellow servicemembers and veterans.”  They are also highly enthusiastic about baseball and that’s good enough for me.

Jerry Moran, a Senator from Kansas, is unhappy about audits that the IRS has undertaken of certain American Legion posts.  Apparently the IRS requires that they maintain dates of service and character of service records for all its members or face $1,000 per day penalties.  American Legion officials are claiming that they have never heard of this requirement.

Really this requirement is not unreasonable, given the fact that it is the IRS’ job to make sure all tax-exempt organizations are meeting the requirements for tax-exempt status.  But veteran groups are claiming that they have never been informed of the record-keeping obligations.  Moran wants to know when this requirement came about, under whose watch, and by what authority.  These are valid questions since the audits are being conducted pursuant to mere IRS “guidelines” found in the Internal Revenue Manual.  Moran is asking the IRS to point to the actual legal authority that grants them the right to conduct these audits and levy tax penalties for non-compliance.

Accounting Today asked about these audits.  The IRS’ response:

  • There is no special enforcement effort underway; just routine compliance activity
  • Authority for these audits is granted by Internal Revenue Code Section 501(c)(19)
  • The IRS HAS made efforts to inform veteran organizations of their obligations by way of outreach programs and special publications, so if they didn’t know, they should have known

Happy Veterans Day

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Technically Sunday was Veterans Day, but most of us have today off, including the IRS. I paid my first visit to the Department of Veterans Affairs website today and here are some of the things I found:

  • VA has guanteed 20 million home loans for veterans since 1944, including 540,000 in 2012 alone
  • VA recognizes award-winning and influential veterans around the country on its website
  • VA supports health care and health education for our nation’s military heroes through some top-rated medical facilities
  • There are 152 VA hospitals and 817 outpatient clinics located throughout the country
  • Every possible type of VA application or form is available with the click of a mouse
  • The “projected veteran population” is over 22 million, most having served in Vietnam
  • The IRS offers free basic tax help for veterans

I like the way we take care of our country’s veterans. Although I have not had ocassion to test the theory, I would venture to guess that the IRS would give some due consideration to veteran status in their collection / tax relief cases as well.

Veterans Tax Credit Expanded

Today the IRS released new guidance on the tax relief available to employers who hire veterans.

The Work Opportunity Tax Credit was made available under the VOW to Hire Heroes Act of 2011. For-profit employers may qualify for a credit of up to $9,600 per veteran hired. The actual amount of the credit depends on how long the veteran was unemployed before being hired and a whole host of other factors. A veteran who is hired after being unemployed for 2 years is worth more than one who took a 6-week vacation between jobs.

So what’s new with the credit?

  1. Now certain tax-exempt organizations may qualify for the tax credit ($6,240 max).
  2. Form 8850 — the form used to collect pertinent details about the veteran job applicant — previously had to be filed within 28 days after the veteran hire date, but now the rule is the form must be filed by June 19, 2012 for veterans hired before May 22, 2012.
  3. Employers can submit Form 8850 electronically or by fax.

Business use Form 5884 to claim the credit and tax-exempt organizations use Form 5884-C. For more information, see the IRS website.