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