IRS commissioner John Koskinen told time magazine that the IRS procedural change for section 501(c)(3) charities has been overhauled. As of July 1, a three page form needs to be completed. Previously, an organization had to complete 26-pages detailing their organization.
As of July 1, any group that pays a $400 fee and declares on a three-page online form that it has annual income of less than $50,000, total assets of less than $250,000 and is in compliance with the tax-code requirements of a charity will automatically be allowed to accept donations that are tax-deductible for the donors.
The IRS scandal over alleged political scrutiny of right-wing 501(c)(4) groups under then-head Lois Lerner has led to this decision because 40,000 to 50,000 less applications will need to be reviewed. The current legal interpretation of tax regulations allows so-called 501(c)(4)s to engage in political activities as long as they don’t spend more than 50% of their money on politics. The IRS division devised a means to scan applications for key words. Proponents point to the Government Accountability Office report that IRS budgets have been cut over the past few years and need to find shortcuts. The IRS software is also outdated.
Will this new IRS process lead to political organizations claiming charity exemptions when they are solely political organizations?