The IRS released its work plan in mid-December indicating that it intends to expand its focus on non-profits organizations to look at issues including political activity, inurement and the extent of compliance with the requirements for tax exemption by organizations that self-identify.

IRS Director of Exempt Organizations Lois Lerner said in a press conference last month that, whereas the agency’s examination program has in recent years concentrated on section 501(c)(3) charities and foundations, the focus over the next several years will expand to look at a range of issues involving the (c)(4), (c)(5) and (c)(6) community. Political activity is one area the IRS intends to study, particularly since 501(c)(4) organizations are not required to disclose their donors publicly and reportedly engaged in record spending during the recent midterm elections.

The work plan indicates the EO office continues to evaluate executive compensation in tax-exempt organizations, citing a compensation project released in 2007 that raised concerns about substantial loans to officers, directors, trustees and key employees and potential excess benefit issues within some organizations.

Other ongoing EO projects include a charitable spending study to learn more about sources and uses of funds in the charitable sector and their relationship to the accomplishment of charitable purposes; ongoing examinations of colleges and universities focusing on unrelated business income, endowments and executive compensation practices; ongoing use of the Form 990 as a compliance tool to gain a more comprehensive picture of each filing organization; and ongoing scrutiny of governance practices and the related controls of various filing organizations.