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July 24, 2015

Report: Lax Controls Raise Bias Risk in IRS Nonprofit Audits

The federal government's watchdog agency is calling on the Internal Revenue Service to strengthen oversight of how nonprofit groups are selected for audits to ensure the choices do not reflect IRS staffers' biases, Bloomberg and the Associated Press report.

The Government Accountability Office did not find examples of bias-based audits but said in a report issued Thursday that lax controls on the process raise the risk of groups being targeted for religious or political reasons.

Conservatives have accused the IRS of political prejudice since the agency acknowledged two years ago that its nonprofits unit applied heightened scrutiny to tea-party groups' applications for tax-exempt status.

The GAO report addressed only audit issues, not the application process. The IRS said it generally agreed with the findings and would implement changes in how agents' audit selections are monitored and reviewed. The agency completed audits of 8,000 nonprofits last year, or one-half of 1 percent of the country's 1.6 million tax-exempt groups.