In 2008, the IRS also will continue its work in the following areas:
In connection with implementation of the PPA, improving the accountability of supporting organizations has become a priority. In 2008, the IRS will scrutinize organizations in their first five years of operation to assess whether they actually qualify as supporting organizations.
Throughout the 2008 election year, the IRS’ Political Activity Compliance Initiative (“PACI”) will closely monitor 501(c)(3) organizations and allegations of political activity, including campaign involvement and contributions. In 2008, PACI will expand its efforts, investigating public charities and private foundations that made contributions to political action committees.
As reported in our August 2007 newsletter, in June of 2007 the IRS issued Revenue Ruling 2007-41 to provide further guidance concerning the prohibition on political campaign involvement. The ruling provides hypothetical fact-patterns that illustrate permissible and impermissible political campaign intervention by 501(c)(3) organizations. The full text of Revenue Ruling 2007-41 may be obtained from the IRS Web Site at: www.irs.gov/pub/irs-drop/rr-07-41.pdf.
The IRS has said that executive compensation will remain a significant part of its compliance initiatives. In 2008, the IRS will continue projects focusing on the “compensation practices of small and mid-size 501(c)(3) organizations,” and organizations that make loans to officers, directors, and trustees. The IRS also will review institutions of higher education through compensation compliance surveys issued to colleges and universities