In this paper, a former director of the Internal Revenue Services Exempt Organization Division argues that the IRS is structurally ill suited for the task of providing vigorous oversight of the nations growing number of nonprofit organizations. The author proposes a new, national institution, modeled loosely on the corporate sectors National Association of Securities Dealers that would, among other features, derive sufficient funding for vigorous oversight through contributions from nonprofit organizations. The author envisions an amendment to the Internal Revenue Code that would enable the nonprofit organizations to take a credit against excise taxes, particularly the excise tax on the net investment income of private foundations, they would otherwise pay to the federal government.
This publication is Hauser Center Working Paper No. 33.4. Hauser Working Paper Series Nos. 33.1-33.9 were prepared as background papers for the Nonprofit Governance and Accountability Symposium October 3-4, 2006.
The author, Marcus S. Owens is with Caplin & Drysdale; Chartered.