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TE/GE Announces New Information Document Request Management Process

November 22, 2016

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The Tax Exempt and Government Entities Division of the Internal Revenue Service has issued new internal guidance for its agents on issuing information document requests (IDRs). The IRS issues IDRs to gather information during an examination. The new process will go into effect on April 1, 2017. Prior to its implementation, TE/GE will provide training to its agents on the new process.

Under the new process:

  • Taxpayers will be involved in the IDR process.
  • Examiners will discuss the issue being examined and the information needed with the taxpayer prior to issuing an IDR.
  • Examiners will ensure that the IDR clearly states the issue and the relevant information they are requesting.
  • If the taxpayer does not timely provide the information requested in the IDR by the agreed upon date, including extensions, the examiner will issue a delinquency notice.
  • If the taxpayer fails to respond to the delinquency notice or provides an
  • Advisory Committee on Tax Exempt and Government Entities (ACT) Presents its Report of Recommendations on June 8, 2016

    June 16, 2016

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    On June 8, 2016, the 21 members of the ACT presented its 15th report of recommendations to the IRS in a public meeting in Washington, DC.

    The ACT report addressed five issues:

    • Employee Plans: Analysis and Recommendations Regarding Changes to the Determination Letter Program
    • Exempt Organizations: Stewards of the Public Trust: Long-Range Planning for the Future of the IRS and the Exempt Community
    • Federal, State and Local Governments: Revised FSLG Trainings and Communicating with Small Local Governments
    • Indian Tribal Governments: Survey of Tribes Regarding IRS Effectiveness with Current Topics of Concerns and Recommendations
    • Tax Exempt Bonds: Recommendations for Continuous Improvement and Enhancing Resources in the Tax Exempt Bond Market

    ACT members provide observations about current or proposed IRS policies, programs and procedures, and suggest improvements. The members are selected by the Commissioner of the IRS and then appointed by the Department of the Treasury. The IRS

    How Would You React?

    How Would You React?

    May 1, 2012

    Authored by: Keith Kehrer

    How would your board of directors react if it discovered potential wrong doing?  The answer to this question is critical.  Recently, Robert Carlson, the Missouri Assistant Attorney General who oversees charity enforcement in Missouri, indicated that a board’s quick action to address an issue, such as a potential breach of fiduciary duty or misuse of charity assets, may keep the board of directors and/or charity from being sued by the Attorney General’s office.  Such a reaction includes a proper investigation of warning signs.  The IRS has similarly provided that a board’s reaction will be a key factor in determining whether the IRS will seek revocation of exempt status in instances involving private inurement, including whether the board has corrected the current situation (which may include firing and suing the offending party) and put safeguards in place to prevent future problems before the IRS gets involved.   See Treas. Reg. 1.501(c)(3)-1(f).  While it is not possible to prevent all acts of

    Governance and Compliance

    April 25, 2012

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    Governance and Compliance

    April 25, 2012

    Authored by: Keith Kehrer

    In 2008, the Form 990 was re-designed to include, among other things, significant governance disclosures.  The IRS justified the disclosures in part on the belief that organizations with good governance are more likely to comply with the law.  Since 2008, the IRS has been studying the connection between governance and compliance.  Among other things, the IRS developed a governance checklist that was used in exams to probe governance practices.   In a recent speech, Lois Lerner, the IRS Director of Exempt Organizations, provided that the initial results of the IRS study confirm that good governance and compliance go hand and hand.  Ms. Lerner stated that exempt organizations with a written mission statement, those that follow the procedures of the rebuttable presumption to establish compensation, and those whose Form 990s were reviewed by the entire board of directors, are more likely to be tax compliant than those that do not follow those practices.   Ms. Lerner’s full comments

    IRS Announces New Off-Shore Voluntary Disclosure Program with August 31, 2011 Deadline

    February 9, 2011

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    On February 8, 2011 the Internal Revenue Service (“IRS”) announced a special voluntary disclosure initiative (“VDP”) designed to bring offshore money back into the U.S. tax system and to help people with undisclosed income from hidden offshore accounts become current with their taxes. The VDP will be available through Aug. 31, 2011 and taxpayers participating in the VDP must file all original and amended tax returns and include payment for taxes, interest and accuracy-related penalties by the Aug. 31 deadline. 

    Read more here.

    Document! Document! Document!

    January 30, 2011

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    Document! Document! Document!

    January 30, 2011

    Authored by: Keith Kehrer

    It is critical for charities and their boards to maintain documentation regarding their exempt activities.  This includes board minutes, financial records, receipts, and other documents related to its activities.  In PLR 201102065, the IRS revoked the tax-exempt status of a charity that failed to provide any documentation that proved it conducted charitable activities for the audit period.  Although this is an extreme case, it is a reminder for all boards to document through minutes their meetings and decisions, and organizations to maintain documents related to their exempt activities, including documents necessary to prepare Form 990.  You never know when the IRS or state Attorney General may require a charity and its board to account for its activities.

    Senator Turns Focus to Churches

    January 9, 2011

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    Senator Turns Focus to Churches

    January 9, 2011

    Authored by: Keith Kehrer

    Senator Charles Grassley (R-IA) has been a driving force behind recent efforts to improve transparency in the charitable sector, including the revisions to the Form 990, Annual Information Return and focus on governance policies.  Senator Grassley recently turned his focus to churches and other religious organizations.  At his request, the Evangelical Council for Financial Accountability (” ECFA”), a national accreditation organization for churches and other religious organizations, will lead an independent, national effort to review and provide input on major accountability and policy issues affecting churches .   According to ECFA’s website, the newly formed “Commission on Accountability and Policy for Religious Organizations” will address some of the most challenging tax and policy issues involving religious organizations, including whether churches should file the same highly-detailed annual information return that other nonprofits must file (Form 990); whether legislation is needed to curb abuses of the clergy housing allowance exclusion; whether the current prohibition

    Executive Compensation Remains IRS Focus

    November 27, 2010

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    The IRS Director of Exempt Organizations, Lois Lerner, recently conveyed that the IRS will be looking into the results of its May compensation survey for executives of colleges and universities.  More than one-half of the colleges and universities surveyed reported that they followed the procedures set forth in Treasury Regulation 53.4958-6 to establish a rebuttable presumption that executive compensation is reasonable (such procedures are discussed in a prior blog entry).  The IRS will now be digging further to determine whether the colleges and universities precisely satisfied these procedures, with a particular focus on whether peer compensation is truly comparable and the decision was properly documented.   It is my belief the IRS will continue to focus on executive compensation and will not limit its inquiries to colleges and universities.  Therefore, it is strongly recommended that your charity precisely follow the procedures set forth in the Regulations now to protect the compensation from scrutiny.

    Board Liability Primer

    October 25, 2010

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    Board Liability Primer

    October 25, 2010

    Authored by: Keith Kehrer

    Volunteer board members often ask whether they are personally liable for the actions of the nonprofit corporation.  The short answer is generally “no” – unless of course, the board member engages in some willful misconduct that caused harm (e.g., criminal misconduct, gross negligence, reckless misconduct, or flagrant indifference to safety).  The Federal Volunteer Protection Act, along with the State law equivalents, generally protect volunteer directors of nonprofit corporations from personally liability. 

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