The IRS is sharing the Audit Technique Guides (ATGs) reviewers use when looking at 501(c)(3) public charities and other NPOs.
There are almost 30 guides available on everything from charter schools to benefit trusts, except that the guide specific to 501(c)(3) private foundations is “coming soon”. The guides are available for download in PDF format. (Go to www.irs. gov/charities-non-profits/, select “Educational Resources and Guidance for Exempt Organizations” and then Audit Technique Guides.
The guide is 44 pages long and examines in great detail how to calculate whether a 501(c)(3) is a public charity or a private foundation based on how its revenues are received and classified.
The guide addresses the conflicts of interest, excessive compensation and private inurement cases (transactions where someone other than the charity gets significant benefit to the point where the charity’s exempt purpose can be questioned) covered by Section 4958, also known as “intermediate sanctions”.
While the audit technique guides are meant to advise IRS staff, they also help NPOs know what the IRS considers during audits of tax-exempt organizations. The guides provide great clues about where nonprofits should focus their compliance efforts.
Source: Nonprofit Quarterly
The guide complements the topics covered in the CNM class on Accounting for Nonprofits November 18.