The Internal Revenue Code says charities are allowed to use tax-exempt funds for “charitable purposes” such as “charities for the prevention of disease and the relief of suffering.”
But the agency is still looking into whether they can use that language to avoid paying taxes.
Read moreThe IRS said on Friday it was investigating whether a tax-free foundation, which it describes as a religious organization, could claim tax exemptions if it received funds from the American Red Cross.
It said it has also been looking into the potential use of the term “charismatic.”
The IRS has been scrutinizing religious charities for years and the agency has stepped up scrutiny of charities that receive money from organizations that aren’t formally registered with the federal government, according to people familiar with the matter.