Thursday, November 12, 2020

IRS Announces Tax Exempt and Government Entities Compliance Programs and Priorities

Following up on the announcement of its compliance programs in the Tax Exempt and Government Entities (TE/GE) FY2020 Program Letter the IRS has announced its intention to continue its compliance programs in FY2021 and to share information about new compliance priorities at the end of each quarter during the fiscal year. According to the IRS's announcement, the TE/GE Program protects the public interest by applying the tax law with integrity and fairness to all. To accomplish its mission, the IRS plans to deliver a compliance platform of six programs that together promote tax law compliance by tax-exempt and government entities. These programs are: 

  • Compliance Strategies - issues approved by the TE/GE Compliance Governance Board to identify, prioritize and allocate resources within the TE/GE filing population.
  • Data-Driven Approaches - data and queries based on quantitative criteria, used to identify the highest risk areas of noncompliance and focus on issues with the greatest impact.
  • Referrals, Claims and Other Casework - alleged noncompliance referrals from internal and external sources, and claims for refunds, credits or adjustments.
  • Compliance Contacts - address potential noncompliance through correspondence contacts known as “compliance checks” and “soft letters” to limit costs and taxpayer burden.
  • Determinations - letters issued to exempt organizations on exempt status, private foundation classification and other determinations related to exempt organizations and qualified retirement plans that meet legal and regulatory requirements.
  • Voluntary Compliance and Other Technical Programs – voluntary correction program to enable a plan sponsor (at any time before exam) to pay a fee and receive IRS approval for correction of plan failures. Other technical programs, including Knowledge Management, work to ensure the quality and consistency of technical positions, provide timely assistance to employees and preserve and share TE/GE’s knowledge base.

 The Service's 2021 priorities for scrutiny include Employee Plans: Participant Loans; Exempt Organizations: Excise Tax on Excess Compensation; Exempt Organizations, Federal, State and Local Government, and Indian Tribal Governments: Form W-2 and 1099-Misc to the Same Payee; and Tax-Exempt Bonds: Arbitrage Violations.

Sounds like we have an interesting year ahead.

Prof. Vaughn E. James, Texas Tech University School of Law

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