An Understandably Modest IRS Agenda for Fiscal Year 2023

This month saw three updates on IRS (and Treasury) tax-exempt organization plans or possible plans for fiscal year 2023, and those plans are (understandably) modest. The highlights from the 2022-2023 Priority Guidance Plan, the TE/GE FY2023 Program Letter, and the annual IRSAC report are:

• Six of the ten Priority Guidance Plan exempt organizations items are repeats from last year (group exemptions, supporting organization final regs, section 512 allocation regs, section 4941 partnership investment guidance, section 6104(c) final regulations, and section 7611 appropriate high-level official final regs). The section 6104(c) item is listed only to say it was completed (T.D. 9964), and the section 7611 issue may be moot as the IRS has identified the Commissioner, TE/GE and the Deputy Commissioner for Services and Enforcement as the appropriate officials in IRM 4.76.39.1.1.

• The other four Priority Guidance Plan EO items are an expansion of the single donor advised fund item from last year. The expanded items identify specifically donor advised fund regulations under sections 4966, 4967, and 4958, as well as guidance regarding the public-support computation with respect to DAF distributions.

• The Priority Guidance Plan drops guidance relating to LLCs and section 501(c)(3), apparently because the IRS has decided not to issue any additional guidance in response to comments on Notice 2021-56, as Paul Streckfus reported today.

• Other exempt organizations related Priority Guidance Plan items include section 170 general guidance and also specific guidance relating to conservation easements, section 414(e) definition of a church plan regulations, section 501(c)(9) voluntary employees' beneficiary associations regulations and other guidance, and section 514(c)(9)(E) fractions rule final regulations.

• The TE/GE Program Letter focuses on high-level, relatively vague goals (Service, Enforcement, People, Transformation) as has been typical in recent years. That said, it does report that TE/GE hired 187 new employees in FY2022 and anticipates hiring a greater number in FY2023.

• The IRS Advisory Council Public Report only contains two recommendations of tax-exempt organization interest, one relating to tax-exempt bonds and the other to the tax-exempt organization data. The former has to do with form revisions, and the latter with ensuring functionality of data sharing in compliance with section 6104.

Lloyd Mayer