IRS Denied Tax-Exempt Status to 37 Religious, Charitable Groups in 2016

One group has been waiting for tax-exempt status for more than seven years

IRS Commissioner John Koskinen / Getty Images

BY:

The Internal Revenue Service denied tax-exempt status to 37 religious, charitable, and educational organizations in 2016, according to recent data from the agency.

The IRS rejected a total of 54 applications for tax-exempt status in 2016. Groups applying for 501(c)3 status, which applies to non-profits whose mission is religious or charitable in nature, comprised 69 percent of denials.

Nearly 85,000 groups applied for 501(c)3 status in 2016. Of those applications, 79,545 were approved, 37 were denied, and 5,006 were not adjudicated.

According to the IRS, the 5,006 applications that were not adjudicated in 2016 were either withdrawn by the organization, did not include required information, were incomplete, or were IRS correction disposals.

Last year, the IRS denied 57 applications of religious and charitable groups.

As early as 2010, the IRS began targeting applicants for tax-exempt status based on their political ideology, delaying the applications of some Tea Party and conservative groups before the 2012 presidential election. To this day, some groups are still waiting for their tax-exempt status to be approved.

Attorney Jordan Sekulow, executive director of the American Center for Law and Justice, represents 37 conservative and pro-life nonprofit organizations encountered opposition from the IRS in getting their tax-exempt status approved. One of these groups is still waiting for determination after filing for tax-exempt status in December 2009, which means it has been waiting for more than seven years.

Sekulow said he is not surprised the IRS rejected so many groups. He suggested the decline in rejections this year was due to the overall decline in applications for tax-exempt status. Groups interested in issue advocacy or political involvement during the 2016 election likely filed for tax-exempt status the previous year.

"What I would expect is that many of those groups probably should be given tax exempt status," Sekulow said. "There's probably a handful that maybe they applied to be 501(c)3 that should have applied to be 501(c)4."

"They should have been notified by the IRS that, hey, we think you fit better in this category and work with some of these organizations, rather than lengthy delays and review processes," he said. "We're still in federal court over this with the IRS."

Sekulow said IRS Commissioner John Koskinen, who has led the agency since 2013, needs to be replaced by someone who Congress and the American people can trust.

"We've had a very firm position at the ACLJ, we believe that there needs to be total reform at the IRS, and the institution is incapable of self-correcting," Sekulow said. "That means people like Koskinen and a lot of the bureaucrats like Lois Lerner that run the [exempt organizations division] and the different departments within the IRS need to be changed."

Sekulow said Koskinen missed an opportunity to clean up the IRS and was too protective of the agency and its officials.

Koskinen's term ends at the end of November 2017, though he said late last year he would resign at the request of President Donald Trump. Sekulow said added pressure from Congress to impeach the commissioner could encourage Trump to take him up on his offer.

"We need someone there who actually sees your vision, at least for [tax] reform and someone who understands that the IRS needs to be open and transparent about its past wrongdoing, because it needs to regain the trust of the American people," Sekulow said.

"You shouldn't have to be afraid that the IRS will target you because of your political beliefs or your religious beliefs," he said. "So that's why we believe continued pressure from Congress, I think, President Trump would appreciate that because it would give him the momentum to make that decision and it would work in tandem. You would have Congress calling for it and the president taking action on it."

The IRS did not respond to requests for comment.

Ali Meyer

Ali Meyer   Email Ali | Full Bio | RSS
Ali Meyer is a staff writer with the Washington Free Beacon covering economic issues that expose government waste, fraud, and abuse. Prior to the Free Beacon, she was a multimedia reporter with CNSNews.com where her work appeared on outlets such as Drudge Report and Fox News. She also interned with the Heritage Foundation and Pacific Research Institute. Her Twitter handle is @DJAliMeyer, and her email address is meyer@freebeacon.com.