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Can the IRS really oversee political non-profits?

Campaign-finance watchdog groups are questioning the ability of the Internal Revenue Service to track soft-money fundraising in light of a multi-million-dollar mistake by the Republican Governors Association.

They also say the IRS has little incentive to enforce accurate reporting because the organization is tax-exempt under tax code section 527. At the same time, the issue raises serious issues with how the RGA keeps its books, the congressional newspaper The Hill reported.

The RGA has told the IRS that last year it failed to report more than $3 million it raised in the months preceding the gubernatorial races in Kentucky, Louisiana, Mississippi and the recall of California Gov. Gray Davis. The organization also failed to report nearly $4 million in expenditures. ...

Derek Willis, an analyst with the Center for Public Integrity, said the amendments not only raise questions about the ability of the RGA to keep accurate books, but also the IRS soft-money tracking system. -- IRS Accused of Failing to Aggressively Track Tax-Exempt Organizations (AccountingWEB)