Each year the IRS announces its exempt organization work plan. Evaluation of the plan reveals exempt organization audit triggers. For 2013 the IRS will be scrutinizing entities with the following characteristics:
1. Organizations with high foreign expenditures.
2. Medium to large organizations that report substantial fundraising income but proportionally small fundraising expenses.
3. Entities that report high annual gross receipts but low compensation of directors, trustees, officers and key employees.
4. Organizations reporting considerable unrelated business income for three or more consecutive tax years with little or no related taxable income.
5. Exempt organizations that have potential impermissible campaign spending.
6. 501(c)(4), (c)(5) and (c)(6) filers including social welfare organizations; labor, agricultural and horticultural groups; and trade associations that have self-declared themselves tax-exempt without an IRS determination.
Because the IRS continues to use analytical evaluators of Form 990 responses to select organizations for audit and review: filers should take care to review and follow Form 990 instructions.
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