Federal/State Audit Support

In recent years, we have definitely noticed that the Internal Revenue Service and the California Attorney General have dramatically increased their oversight and supervision over exempt organizations, particularly charitable organizations. This oversight is evidenced in the form of more frequent audits, notices, compliance checks and other types of “attention” being exercised by the governmental regulatory bodies.

Even for the most compliant or “squeaky clean” exempt organizations, the immense burden, cost and time to defend against an inquiry from a governmental authority can be crippling. As such, one of the key areas where we provide significant value to our exempt organization clients is by helping our clients respond to a governmental authority when such authority is scrutinizing them. For example, in this regard, we provide the following services for our clients:

  • Managing of the entire audit process, from the initial contact with the auditor, to the coordinating of the Information Document Request responses, to the negotiating with the governmental authority, to the decision whether to agree to any proposed adjustments or decide to proceed to Appeals.
  • Managing the entire Appeals process, if applicable.
  • Preparing responses to all different types of Notices received from governmental authorities, including responding to Form 990 late filing Notices from the Internal Revenue Service and requesting abatement of all late filing penalties.
  • Preparing other types of penalty abatement letters, including those arising from excess benefit transactions and self-dealing transactions.
  • Helping our exempt organization clients respond to Internal Revenue Service questionnaires and compliance checks

Please find following some examples of federal and state audits which we have previously helped our exempt organization clients with:

  • An Internal Revenue Service audit of perceived political campaign activities being undertaken by one of our clients.
  • An Internal Revenue Service audit of a significant refund obtained by one of our exempt organization clients as a result of overstated unrelated business income.
  • An Internal Revenue Service audit of an exempt organization client who was the victim of a misappropriation by an insider of the organization.
  • An Internal Revenue Service audit of an exempt organization client related to the significant special event and gaming revenue which they were generating.
  • A state Attorney General audit of an exempt organization client related to their allocation of indirect expenses to program services.
  • A state Attorney General audit related to an exempt organization client’s relationship with a professional fundraiser.
  • A state Attorney General audit related to a commercial co-venture undertaken by a charitable organization client.
  • A state Department of Education audit related to the accurately of certain cost allocations.
  • A state Attorney General audit related to perceived self-dealing transactions alleged to have been undertaken by a private foundation client.
  • A state audit related to sales tax issues for an exempt organization client.