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DOCUMEbT RESUME
00279 - [A0751137]
Action Being Taken to Prevent Refundable Payments of Social
security and Federal Unemployment Taxes by Charitable
Organiations. GGD-76-102; B-137762. February 1, 1977. 28 pp.
Report to Sen. Russell B. Long, Chairman, Joint Comittee on
Internal Revenue Taxation; Rep. Al Ullman, Vice Chairman; by
Elmer B. Staats, Comptroller General.
Issue Area: Tax Administration (2700).
Contact: General Government Div.
.udget Function: General Governqent: Other General Government
(806).
Organization Concerned: Department of the Treasury; Internal
Revenue Service.
congressional Relevance: House Committee on Vals and Means;
Senate Committee on Finance; Joint Committee on I, ternal
Revenue Taxation.
Authority: P.L. 94-563. 26 U.S.C. 501(c)(3). 26 U.S.C.
3306(c) (8).
Many charitable organizations are exempt by law from
paying social security and unemployment taxes. Hcever, the
exemption frcm social security taxes can be waived if a written
request or waiver is filed with the Internal Revenue Service. If
a waiver was not filed and payments were ade, the organization
could withdrav any payments accepted over the Last 3 years.
Transcripts of the emoloyment tax payments of 1,000 randomly
selected charitable organizations were examined and waiver
certificate files were reviewed. Taxpayer case files, pertinent
statutes, and regulations were also examined.
Findings/Conclusions: In 1975 about 12,700 to 20,200
organizations which had not waived their exemption paid social
security taxes ranging from $118 to $369 million. Because of
Internal Revenue Service administrative errcrs, these amounts
were all refundable. Legislation signed in October 1916 designed
to correct the problem stated that if charitable organizations
have made social security payments for three consecutive
calendar quarters, they could not withdraw their money whether
or not they failed to file a waiver. Pursuant to the law, the
Internal Revenue Service is taking actions which will also
correct the lesser problem of improper unemployment tar
collections. Recommendations: The Commissioner cf Internal
Nevenue should make sure that all charitable organizations are
identified properly and that their waiver statuses are recorded
properly. Present procedures should be revised so charitable
organizations are identified at the time they officially receive
tax-exempt status. (Author/SC)](ViewImageLocal?handle=hein.gao/gaobaabuu0001&div=1&collection=&method=preview&ext=.png&size=3)