With the Colleges and Universities Compliance Project well under way, the IRS announced a multi-year National Research Program study of employment tax returns. As part of this three-year initiative, the Exempt Organizations Office will examine 1,500 employment tax returns. Audits will focus on issues such as worker classification, fringe benefits, officer compensation and employee expense reimbursements.
The Exempt Organizations Office has also embarked on a charitable spending initiative, which in its first phase will involve audits of organizations with high levels of fundraising expenses and officer compensation, and high levels of unrelated trade or business income relative to program spending.
IRS officials have also commented that they are developing a sharper focus on the international activities of exempt organizations, based on concerns that charitable assets may be diverted internationally for non-charitable purposes.