Tax-Exempt Organizations Neglect Tax Debts

August 14, 2014 Taxation in USA

WASHINGTON D.C. – More than 64 000 tax-exempt organizations in the USA are skipping out on paying the small amount of taxes they do owe.

On August 14th the independant watchdog Treasury Inspector General for Tax Administration (TIGTA) issued a new report showing that 3.8 percent of all tax-exempt organizations in the USA actually owe back taxes, with some holding debts of more than USD 100 000 each.

Currently some organizations may be granted tax-exempt status in the USA, meaning that they are exempt from paying income taxes, however, these same organization may still have a payroll tax obligation.

The experts of the TIGTA found that as at June 2012 more than 64 200 tax-exempt organizations owed the government nearly USD 875 million in payroll taxes and other federal taxes, and the amount of taxes owed varied between organizations, with at approximately 1 200 organizations owing well over USD 100 000 each.

The TIGTA also noted that the organizations which owed taxes often had debt spanning several financial years, with 9 of them owing taxes for at least 10 years.

It was also noted that tax-exempt organizations are not eligible to lose their status for failing to pay any outstanding tax obligations, and as at May 2013 none of the organizations examined as part of the research for the report had lost their beneficial tax status.

Photo By: Steven Depolo