PROOF Act

Key Points

• The bill sets new rules for how the IRS audits most groups that do not pay taxes, such as charities and social clubs. The agency would be required to give these groups a clear written notice that explains the specific reasons for the audit and which laws are being checked.
• Nonprofits would gain the right to review the evidence the IRS collects against them. The agency must keep a detailed record of every document they ask for and every decision they make, and they must share this file with the organization if a dispute happens.
• The policy creates several opportunities for a group to defend itself before losing its tax-exempt status. This includes the right to meet with an investigator's boss and a required meeting to discuss the agency's findings before any final action is taken.
• If the IRS decides to take away a group's tax-exempt status, they must provide a 30-day warning. This gives the organization time to file a formal protest or take the case to an independent appeals office or a judge.

Impact Analysis

Govbase has not yet run an impact analysis on this legislation.