What is the role of governmental agencies regarding charities?
Various government agencies take actions that affect the status and operations of charitable organizations. The IRS and the California Franchise Tax Board initially determine whether an organization qualifies for exemption from federal and state income tax. At any time during the operating life of a charity, the IRS or the Franchise Tax Board may audit the organization to determine its liability for taxes, penalties, or revocation of tax-exempt status. The role of the Attorney General in overseeing California charities is different from the IRS and Franchise Tax Board. The Attorney General represents the public beneficiaries of charities, who cannot sue in their own right. The Attorney General investigates and audits charities to detect cases in which directors and trustees have mismanaged, diverted, or defrauded the charity. If such improper actions by directors have resulted in a loss of charitable assets, the Attorney General may sue the directors to recover from them the missing fu
