Many Organizations Are Not Notifying the Internal Revenue Service of Their Intent to Operate Under Internal Revenue Code Section 501(c)(4) As Required by Law.

The Director, EO function, should determine the feasibility of working with State Governments to identify newly established I.R.C. Section 501(c)(4) organizations. This process could include identifying electronic repositories of organizing documents kept by State Governments or developing information sharing agreements to identify Form 8976 notification noncompliance and take actions, such as issuing a notice, to bring the organizations into compliance.

The Director, EO function, should use internal sources of information, e.g., applications for tax-exempt status filed after July 8, 2016, to assist with detecting I.R.C. Section 501(c)(4) organizations that have not filed Forms 8976 and update EO function Determinations Unit procedures to include verifying that I.R.C. Section 501(c)(4) organizations have met their Form 8976 notification requirement when processing applications for tax exempt status. In addition, develop a process for notifying identified Form 8976 nonfiler organizations about this requirement to bring them into compliance.

The Director, EO function, should follow up with those organizations that were required to file notifications but had their initial Forms 8976 rejected and never refiled.

The Director, EO function, should revise the Computer Paragraph 120 Notice to include information about the Form 8976 notification requirement and the Form 1024-A application for I.R.C. Section 501(c)(4) organizations.

The Director, EO function, should conduct appropriate research for the 9,774 nonfiler I.R.C. Section 501(c)(4) organizations TIGTA identified as of September 30, 2018, to determine if any actions are necessary, including informing the taxpayer of the notification requirement or assessing delinquency penalties if warranted.