WASHINGTON -- The Internal Revenue Service (IRS) does not always control or timely process referrals alleging that tax-exempt organizations are potentially violating Federal tax law, according to a new audit report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

The Exempt Organizations (EO) function within the Tax Exempt and Government Entities Division is responsible for assessing referrals from the general public, members of Congress, and Federal and States agencies, as well as other parts of the IRS. These referrals allege that tax-exempt organizations are potentially violating Federal tax law.

TIGTA conducted this audit to determine whether the EO function accurately accounted for referrals, acknowledged receipt to submitters, and tracked and monitored the time periods for working referrals.

TIGTA found that the EO function is facing challenges in managing referrals because it cannot locate all referrals received, ensure that all referrals received are controlled, or ensure referrals are being processed timely.

TIGTA recommended that the EO function ensure that: (1) all referrals are properly controlled; (2) guidance is developed and updated; (3) performance goals are developed; and (4) timeliness measures are developed and updated.

"The EO function must ensure that referrals are controlled and processed appropriately and timely," said J. Russell George, the Treasury Inspector General for Tax Administration. "If referrals are not properly accounted for or worked timely, the EO function may not be able to identify tax-exempt organizations that are potentially in violation of Federal tax law."

In response, IRS officials agreed with TIGTA's recommendations and plan to take appropriate corrective actions.