United States

IRS TE/GE 2020 Program Letter released

INSIGHT ARTICLE  | 

On Oct. 17, 2019, the IRS Tax Exempt and Government Entities (“TE/GE”) division released its Fiscal Year 2020 (“FY20”) Program Letter, outlining its compliance strategy and priorities for Exempt Organizations; Employee Plans; Federal, State, and Local Governments/Employment Tax; Indian Tribal Governments; and Tax Exempt Bonds for the year ending June 30, 2020.

The Commissioner’s opening message introduces new TE/GE Commissioner Tammy Ripperda and new Deputy Commissioner Edward Killen, highlights TE/GE’s Fiscal Year 2019 efforts to implement and provide additional guidance on TE/GE related provisions of the 2017 Tax Cuts and Jobs Act (TJCA), and conveys TE/GE’s intent to continue to look for ways to help taxpayers navigate changes made by the TJCA and assess the impact of the 2019 Taxpayer First Act.

As in prior years, TE/GE divides its compliance program strategies and priorities across six portfolio programs:

  • Compliance Strategies
  • Data-Driven Approaches
  • Referrals, Claims, and Other Casework
  • Compliance Contacts
  • Determinations
  • Voluntary Compliance and Other Technical Programs

Many of the initiatives, including the focus on investment and nonmember income by section 501(c)(7) entities,  organizations converting from for-profit entities, private benefit and inurement, section 403(b)/457 plans, and employment tax items, are recurring priorities from prior years. Newly added priorities identified in the FY20 Program Letter include the following:

  • Hospital organizations with unrelated business income (UBI), specifically where expenses materially exceed gross income.
  • Small employer employment tax, specifically to determine if fringe benefits are properly taxed for FICA and income tax withholding.
  • TE/GE continues to expect a large volume of determination applications and will continue to look at process efficiencies and expects to hire more revenue agents to address the work and offset anticipated attrition losses.

Announced in conjunction with the Program Letter (but not specifically referenced therein), TE/GE plans to release an electronic version of the Form 1023, Application for Recognition of Exemption under section 501(c)(3), in January 2020.

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