IRS Isn't Best Suited to Regulate Non-Profits

I've always thought it odd that the agency charged with overseeing charities and other non-profits is the Internal Revenue Service (IRS). The IRS was created to collect taxes. Its ethos is to find revenue for the U.S. Treasury, and the reward system among its employees reflects that ethos--you succeed at the IRS when you collect taxes.

Yet, there is a small group within the agency whose job is to tell potential taxpayers in effect, "Never mind. You don't have to pay any taxes because we say you're tax-exempt." These employees do not find revenue for the Treasury. In fact, they spend a good bit of their time and resources on "recognizing" the organizations that will not have to pay taxes. It should be no surprise then that when the agency's budget is allocated, its Exempt Organizations division usually gets the short end of the stick. Granting exemptions from tax is simply not an IRS priority.


Bruce D. Collins

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