IRS auditing local libraries

I work in a small town library and apparently the IRS doesnt like the way we operate as we are being audited.

An email out on a list-serv has enlightened me to the fact that we are not alone:

We were just notified that we (and apparently 10 other libraries in our neighborhood) have been scheduled for an IRS compliance check due to the fact that the Town (not our trustee treasurer) issues our payroll checks. It's our understanding that MANY libraries ... handle payroll this way, but apparently the IRS has a beef with this approach.

So the IRS is apparently sticking it to small towns that operate the way they choose? The fed wants to stick it's hands in our affairs?

Where's my Chope?

Any IRS folks or of kind ilk know (or can reasonably speculate) about this?

I guess they have to milk every rock they can to make up for spending us into oblivion. Even the non-profit community rocks.