IRS TE/GE division announces new compliance initiatives

IRS TE/GE division announces new compliance initiatives

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

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Read the TE/GE release (April 5, 2021)

The TE/GE release indicates that the TE/GE Compliance Program and Priorities webpage has been updated to add eight new initiatives, three of which are notable for tax-exempt organizations:

  • Employee plans—small exempt organizations that sponsor retirement plans: The focus of this strategy is to review retirement plans of small exempt organizations to determine whether the plan investments are properly administered, whether there are any party-in-interest transactions in the plan trust, and whether any participant loans violate section 72(p). Improper transactions between the plan and its participants can result in prohibited transactions under section 4975 (with distributions deemed to be taxable income) or result in section 72(t) early distribution penalties.
  • Exempt organizations—officers treating exempt organizations as Schedule C business: The purpose of this strategy is to determine if officers and insiders of exempt organizations are claiming expenses of exempt organizations as Schedule C business deductions. Issues under focus are potential private benefit and inurement related to the exempt organization and potential adjustments to Forms 1040.
  • Exempt organizations—Form 990-N filers/gross receipts model: The purpose of this strategy is to determine if an exempt organization is eligible to file Form 990-N when related filings indicate the $50,000 gross receipts threshold was not met.  

In addition, two of the new initiatives involve tax-exempt bonds:

  • Tax-exempt bonds—student loan bonds market segment
  • Tax-exempt bonds—Form 8038-G yield restriction

Background

A January 2021 TE/GE transmittal message indicated that the Compliance Program and Priorities webpage would be updated at the beginning of each fiscal year quarter with information about new initiatives—read TaxNewsFlash.
 

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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