IRS EO Stats for FY 2017

The IRS Tax-Exempt/Government Entities (TE/GE) Division released its compilation of Fiscal Year 2017 Accomplishments shortly before the IRS released the broader 2017 Data Book. Together these two documents provided a number of significant statistics regarding tax-exempt organizations related IRS activity for October 1, 2016 to September 30, 2017, including:

• There are 1.65 million tax-exempt organizations under Code section 501(c), including 1.29 million 501(c)(3)s. See Data Book Table 25.

• The IRS completed 6,101 examinations, a plurality of which (2,332) related to filing, organizational, and operational issues but which also involved employment tax issues (1,905), unrelated business income (602), and inurement/private benefit (109).
  • Providing a different breakdown, the Data Book (Table 13) reports 2,375 Forms 990, 990-EZ, and 990-N examined, 608 Form 990-Ts examined, and 302 Forms 990-PF, 1041-A (relating to trust accumulation of charitable amounts), 1120-POL, and 5227 (relating to split-interest trusts) examined.
  • While not completely clear from the Accomplishments document, it appears that 1,400 of these examinations were a statistical sampling of organizations that had had their applications for recognition of exemption approved through a streamlined process (with 43% resulting in changes, and 14 organizations revoked or terminated).
  • It also appears another 565 of these examinations were part of a statistically valid random sample of Form 1023-EZ filers (with 51% resulting in organizing documents amendments or written advisories and five organizations revoked or terminated).

• The IRS revoked the tax-exempt status of 63 organizations, the majority (36) for not operating for an exempt purpose.

• The IRS received 95,177 applications for recognition of exemption, approving 86,669 applications, denying 68 applications, and closing 6,238 applications for other reasons such as withdrawal by the applicant or missing required information; most (85,553) of the closed applications were under Code section 501(c)(3), as were most (42) of the denials and other resolutions (5,812). See Data Book Table 24a. The IRS also received 2,182 Notices of Intent to Operate Under Section 501(c)(4), acknowledged 1,908 such notices and rejected 474 such notices (according to the Accomplishments report, most commonly for “failure to pay the user fee and unnecessary notification (e.g. the organizations were already exempt)”). See Data Book Table 24b.

• The IRS received 1.5 million tax-exempt organization returns, including primarily Form 990 series information returns (so not including the Form 990-T unrelated business income tax return) but also including Form 4720 (excise tax return), Form 5227 (split-interest trust information return), and Form 8872 (political organization report). See Data Book Table 2.

• The IRS collected $882 million in tax-exempt organization unrelated business income tax. See Data Book Table 1.

• The IRS reported 114 technical activities, all relating to Congressional correspondence. See Data Book Table 22.

Lloyd Mayer