Final answer:
The IRS concerns over cost allocation for not-for-profit organizations arose when organizations reported reductions in spending allocated to lower-income tax filing units and increases in deficits allocated to higher-income tax filing units.
Step-by-step explanation:
The IRS concerns over cost allocation for not for profit organizations arose when organizations reported reductions in spending allocated to lower-income tax filing units and increases in deficits allocated to higher-income tax filing units. This occurred in 2013 following an investigation into the IRS by Congress, which revealed that certain groups applying for tax-exempt status were subjected to extra scrutiny. The concerns arose from the possibility that the IRS might purposefully use its power to inconvenience citizens and their groups.