"is selling its property after losing a court case last spring that began after city officials suddenly removed the group's 50-year-old property tax exemption as a nonprofit organization."
"The city ended the exemption, saying the property was not used exclusively for charitable purposes because its executive director lived in the house. "
As part of the Tax Exempt Compensation Enforcement Project, the Internal Revenue Service (IRS) intends to examine non-profit organizations (NPO), to learn more about the practices nonprofits follow as they fill out Form 990, the main public disclosure documents for charities and foundations, and whether accounting fraud and tax evasion is taking place, and whether the compensation of specific individuals is excessive and, and whether instances of questionable compensation practices may evade IRS, banking and SEC laws.
The IRS will examine NPO insider transactions, such as (1) loans, the (2) sale, (3) exchange or (4) leasing of property to non-profit officers and others. In particular, the IRS will look to see how organizations report (5) "excess benefit transactions" on Form 990, and (6) executive pay.
The IRS has received complaints that 501C's are being used to run just about every kind of off-the-books accounting fraud. In one case, the president of a non-profit organization was embezzling donations and was engaging in accounting fraud by having the NPO pay his entire apartment lease which was fraudulently booked on non-profit documents as a "business office."
When the incident was reported to the IRS, they agreed that documentation to prove the fraud existed, but that the IRS had the staff to investigate non-profit fraud solely in amounts totaling $100,000 or more.
The only way the fraud could have been stopped was to hire private attorneys to take the individual to court for fraud against the non-profit. However, the non-profit board walked away from it because they didn't have the personal resources to stop the fraud.