IRS Issues Memorandum on Political Activities Referral Committee while determined to be “at risk” by GAO

On July 21, the IRS released a memorandum (TEGE-04-0715-0018) that defines the operation and composition of the Political Activities Referral Committee (PARC)  that is charged with reviewing referrals for exempt organization audits.  According to Bloomberg BNA, the memorandum was released in advance of a hearing where the Government Accountability Office has now issued a report finding that “poor oversight” places the IRS at risk that its agents could target exempt organizations for audits based on the organization’s religious, educational or political views.

The memorandum describes the basic composition of a PARC:

Effective immediately, a PARC will consist of three IR-04 managers (OPM General Schedule (GS) grade 14 equivalent) who will be selected at random. All EO Examinations and Rulings & Agreements front-line IR-04 managers are eligible for selection to a PARC. The managers who are selected to serve on a PARC will receive appropriate training, and will serve on that committee as a collateral assignment for a period of two years. The inventory volume of political activities referrals received will determine the number of PARCs established and the time commitment required by the members of a PARC.

A PARC will review and recommend referrals for audit in an impartial and unbiased manner. A PARC must identify and document to the case file that the referral and associated publicly available records establish that an organization and any relevant persons associated with that organization may not be in compliance with Federal tax law. All PARC members will use the Reporting Compliance Case Management System (RCCMS) to document their activities and conclusions for the duration of their assignment to a PARC. In order for a referral considered by the PARC to be forwarded to an EO Examination group for audit consideration, two out of three PARC members must make that forwarding recommendation (majority rule).

(More on GAO Report:  Washington Post, “Watchdog: IRS at risk for unfairly auditing political groups“)

 Nicholas Mirkay