Action Being Taken to Prevent Refundable Payments of Social Security and Federal Unemployment Taxes by Charitable Organizations

Many charitable organizations are exempt by law from paying social security and unemployment taxes. However, the exemption from social security taxes can be waived if a written request or waiver is filed with the Internal Revenue Service. If a waiver was not filed and payments were made, the organization could withdraw any payments accepted over the last 3 years. Transcripts of the employment tax payments of 1,000 randomly selected charitable organizations were examined and waiver certificate files were reviewed. Taxpayer case files, pertinent statutes, and regulations were also examined.