On April 17, 2026, the IRS Whistleblower Office issued a rare Whistleblower Alert. The alert is brief and informs the public that the IRS is seeking tips about fraud involving “the misuse, diversion or fraudulent use of federal funds and grants by tax-exempt organizations, individuals, and businesses.” It lists examples of wrongdoing including “misclassification of activities to maintain tax-exempt status” and “any other tax-exempt organization misconduct such as tax fraud, money laundering, or operating for non-exempt purposes.”
The focus on misconduct by tax-exempt organizations, such as nonprofits, foundations, political organizations, religious organizations, is notable. The IRS usually does not devote much enforcement energy to investigating tax-exempt organizations. In the past, whistleblowers submitting tips about these organizations have had little hope of spurring a successful enforcement action.
The IRS has historically been especially reluctant to scrutinize whether nonprofits are following the rules to maintain their tax-exempt status. For instance, there are limits on how much political and lobbying activities charitable organizations organized as 501(c)(3) nonprofits can do. Yet, the IRS has historically let whistleblower tips about nonprofits engaging in prohibited political action languish without enforcement. The right-wing group American Legislative Exchange Council (ALEC) has been the subject of multiple IRS whistleblower tips by the Center for Media and Democracy and Common Cause. Whistleblower Partners attorneys Eric Havian and Max Voldman represented the Center for Media and Democracy on one such complaint in 2021. They never received any updates from the IRS about the tip, and there is no indication that the IRS opened an investigation. ALEC maintains its tax-exempt status.
This whistleblower alert has an ominous ring. It may suggest that the IRS will begin targeting organizations whom the Trump administration considers political enemies, which would be an unfortunate weaponization of IRS enforcement. If the IRS is truly concerned with tax-exempt organizations that are bending the rules, it should investigate such wrongdoing across the political spectrum.
