New TE/GE compliance initiatives

New TE/GE compliance initiatives

The IRS Tax Exempt and Government Entity (TE/GE) division issued a release about initiatives under the TE/GE compliance program.

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The TE/GE release indicates that it has updated its Compliance Program and Priorities webpage to add a new compliance strategy on worker classification.  The IRS will be conducting examinations to review worker classification due to concerns that organizations may be reducing their employment tax burden by incorrectly treating workers as independent contractors instead of employees.

Other initiatives under the TE/GE compliance program strategies include:

  • Tax-exempt bonds: Arbitrage violationsExaminations of Form 8038, Information Return for Tax-Exempt Private Activity Bond Issues, regarding potential arbitrage violations of section 148 by investment of bond proceeds in higher yielding investments beyond the temporary period allowed by the regulations
  •  TE/GE: Excise tax on excess compensation: Compliance checks and examinations of Form 4720 to review the impact of the new section 4960 excise tax on compensation over $1 million paid to a “covered employee” of a tax-exempt organization

The TE/GE division also indicated that it has added a new compliance contact priority to review supporting organizations that file the Form 990-N, Annual Electronic Filing Requirement for Small Exempt Organizations, to determine if they meet the eligibility standards to file that form.

The TE/GE transmittal message (January 2021) indicates that the Compliance Program and Priorities webpage will be updated at the beginning of each fiscal year quarter with information about new initiatives. The six components  of that webpage are:

  • Compliance strategies
  • Data-driven approaches
  • Referrals, claims and other casework
  • Compliance contacts
  • Determinations
  • Voluntary compliance and other technical programs


For more information, contact a tax professional with KPMG’s Washington National Tax practice:

Ruth Madrigal | +1 202 533 8817 | ruthmadrigal@kpmg.com

Preston Quesenberry | +1 202 533 3985 | pquesenberry@kpmg.com

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