Knowledge and Insights

The IRS Tax Exempt and Government Entities (TE/GE) Office recently issued its fiscal year 2018 work plan. The plan outlines the issues the IRS will focus on as well as the efforts and initiatives they intend to follow in the coming year. The following summarizes highlights of the work plan and its parts.

Exempt Organizations

The exempt organizations division (EOD) expects to receive an increased number of determination applications in 2018. The changes to Form 1023-EZ exemption application in the areas of activity descriptions, gross receipts, asset thresholds and foundation classifications and the enhancement of Form 8976 (Notice of Intent to Operate under Section 501 (c)(4)) are expected to increase the average processing time.

EOD will continue to use compliance checks to determine whether an entity is adhering to recordkeeping and information reporting requirements. The IRS will focus on payroll, unrelated business income tax and financial assistance policies. In particular:

• Discrepancies between Form W-2 and Form 941/944.
• Failure to file Form 940.

Compliance Strategies

• Supporting organizations: examine entities that state they are supporting organizations and filed the Form 990-N.
• Previous for-profit entities, which are now classified as tax-exempt organizations.
• Organizations that show indicators of potential private benefit or inurement to individuals or private entities.

Data-Driven Approaches

• Continue to examine private foundations based on potential anomalies found on Forms 990-PF filings. There are a host of penalties that can be imposed in the private foundation environment for lack of adherence to tax rules and regulations.

Referrals, Claims, and Other Casework

• Continue to pursue referrals received from sources within and outside the IRS that allege non-compliance by an exempt organization.
• ­­Examine entities that filed and received exemption using the Form 1023-EZ.
• Examine entities that were granted exemption through the streamlined review of their Form 1023.
• Examine a statistical sampling of returns filed by exempt organizations to ensure compliance.

The 2018 government fiscal year runs from October 1, 2017 through September 30, 2018. This work plan allows the IRS to help exempt organizations avoid potential problems that would likely draw IRS attention. Our Nonprofit and Human Services team can help answer any questions you may have, contact us today by calling 609-689-9700 or emailing me at [email protected].