IRS Exempt Head Raises Big Issues

Steve Miller is a name that can invoke a variety of responses. Most people of a certain age think of the “pompetous of love,” or perhaps, if you’re a little bit younger, of “Abracadabra, I want to reach out and grab you.” Personally, I think of one of the more embarrassing dating choices I made in high school.

But as someone who cares about nonprofits, I think of a new Steve Miller these days, the IRS Commissioner on Tax Exempt/Government Entities. (My apologies, Mr. Miller. I couldn’t resist.) Given his responsibilities for oversight and enforcement of the tax laws governing the nonprofit sector, I think it is worth knowing what’s on his mind.

Last week, Mr. Miller gave a speech at an annual Georgetown conference on Representing and Managing Tax-Exempt Organizations. I found his worries and ideas a pretty reasonable representation of where the field is, overall, on questions of governance, commercialization, and regulation. It is worth taking a look at a few of his key points. Since it looks like the speech will be hard to get online without a subscription service, I’ll quote him liberally here.

Miller’s thesis question was, “Has the time come for the IRS to significantly change or modify our approach?” He went on to cite four forces that gave him pause. They were the rise of the Internet; “the continued concentration of wealth, and the forthcoming transfer of that wealth to the next generation;” the rise of the “large nonprofit organization” (he said their vast wealth affords them the ability to carry out social programs, to conduct research, and to influence policy in ways that were once thought to be the exclusive province of countries); and finally, the “increasingly blurred line between the tax-exempt and the commercial sectors.”

After spelling out these four forces, Miller suggests that the IRS should add two new “pillars” to its three-pillared compliance program. (The three current pillars are customer education and outreach, determinations and examinations.) The two new pillars would include gathering “significant and reliable information about the sector, and to make it broadly available to the public, in a timely user-friendly fashion,” and to “promote standards of good governance, management and accountability.”

Mr. Miller’s speech was not earth-shattering, but it was direct. In the last several days, I have heard experts who read the speech disagree as to whether his comments represent an aggressive regulatory blueprint for the future, or simply are consistent with a variety of things he has said in the past. I can’t divine which is correct. Either way, however, if the key nonprofit person at the IRS is worried about governance, nonprofit size and the blurring of the lines between nonprofit and for-profit organizations, those who give to the sector should be thinking about those things, too.

Tiziana Dearing

Posted at 7:36 AM, May 09, 2007 in Tax Issues | Permalink | Comment