IRS Cracks Down on Charity ‘Supporting’ Groups

The Internal Revenue Service is going after so-called supporting organizations set up by philanthropies to aid specific charities out of concern that too many of the groups have been created simply to allow donors to avoid taxes, according to The New York Times.

The IRS has revoked the exemptions of 72 supporting groups in the last five years. Another 30 supporting organizations that were audited agreed to shut down, and 59 were reclassified as charities or foundations, subjecting them to tougher rules on grant making and disclosure.

Lois G. Lerner, director of the agency’s tax-exempt organizations division, said the most common abuse involved donors taking a tax deduction on a gift to the supporting group, then getting the donated money back through offshore investments, interest-free loans, or other transactions.