Jody Blazek - Tax Planning and Compliance for Tax-Exempt Organizations

Prepared by AICPA, Not-for-Profit Section.

Additionally, the IRS created the following new educational program.

WASHINGTON—The Internal Revenue Service today announced that 18 new self-study seminars are available through the IRS Nationwide Tax Forums Online.

Tax professionals—CPAs, enrolled agents, Annual Filing Season Program participants, and others—can earn continuing education for $29 per credit.

The new seminars were recorded in July and August at the 2021 IRS Nationwide Tax Forum.

1 Advocating for Taxpayers in Order to Avoid Abusive Tax Schemes

2 Be Tax Ready—Understanding Rules for Due Diligence and the Child Tax Credit and Earned Income Tax Credit Under the American Rescue Plan Act of 2021

3 Charities & Tax-Exempt Organizations Update

4 Closer Look at the IRS Independent Office of Appeals

5 Collection Flexibilities During Difficult Economic Times

6 Common Issues Presented to OPR and Best Practices to Address Them

7 Determining an Individual's Tax Residency Status

8 e-Services and You

9 Gig Economy

10 Helping You and Your Clients Steer Clear of Fraud and Scams

11 Key Enforcement Issues

12 Keynote Address

13 Keys to Mastering Due Diligence Requirements and What to Expect During a Due Diligence Audit

14 Overview of Taxpayer Civil Rights

15 Professional Responsibility Obligations when Practicing before the IRS: OPR and Circular 230

16 Retirement Plans—IRS Compliance Initiatives

17 Tax Law Changes from a Forms Perspective

18 Virtual Currency

These 18 courses are now available in addition to 37 sessions from previous years that are also available for credit.

I want to suggest again to readers to always carefully read the instructions to IRS Forms 990, 990-PF, 990-T and others that are required to be filed.Readers can also find some useful news and information on the IRS News, particularly if you are interested in both exempt and nonexempt entities, which is distributed as an email most days of the week. The July 21, 2021, version encouraged, for example, readers to look for Tax Law Answers and to Use the Interactive Tax Assistant to find answers to your tax law questions. An important news item on September 10, 2021, announced, for example, the deductibility of COVID-19 tests in time for individuals to claim the deduction on the 2020 return.

p. 14. Add at beginning of section:

The IRS's Tax Exempt and Government Entities (TE/GE) Division on an ongoing basis seeks to meet its responsibility to provide the best possible service to taxpayers as it administers its responsibility for enforcing the rules set forth in the federal tax code. Its role ranges from designing forms to writing instructions and memoranda to explain policies and procedures for filing tax returns, monitoring filing deadlines, and managing a trained staff to administer the tax filing system. On August 17, 2021, the Exempt Organizations Rulings & Agreements (EO R&A) office issued an Interim Guidance memorandum, Updated Procedures Relating to Direct Contact (PDF) in the Determination Process, to its employees regarding procedures those employees should use when contacting entities that are applying for tax-exempt status.

The memo notes that the following procedures apply to further ensure taxpayers' effective participation in the exempt organization determinations process, to promote consistency in determinations procedures across TE/GE, and to clarify the Division's processes when the taxpayer authorizes a representative to assist. The memo stipulated the following steps the IRS personnel should follow in assisting tax filers.

If an organization does not submit a Form 2848 (Power of Attorney and Declaration of Representative) with its application for recognition of tax-exempt status or during case processing, contact the primary contact person listed on the application to discuss issues or items in the application, to follow up on Letters 1312 requesting additional information, and to otherwise discuss determinations such as for a potentially adverse case (i.e., for all telephone inquiries) as currently described in Internal Revenue Manual (IRM) 7.20.1.6.

If an organization submits a valid Form 2848 with its application for recognition of tax-exempt status or during case processing, IRS specialists will contact the authorized representative listed on the Form 2848 to discuss issues or items in the application, to follow up on Letters 1312 requesting additional information, and to otherwise discuss determinations such as for a potentially adverse case (i.e., for all telephone inquiries), except as listed below.In the situations below, a specialist should contact the primary contact person listed on the application as currently described in IRM 7.20.1.6.

1 [If] Specialist cannot make contact with the authorized representative listed on Form 2848 within five business days of the initial attempt to contact the authorized representative. The specialist should confirm the authorized representative, the authorized representative's contact information, and preferences for future communications.

2 If the organization's primary contact, board member, officer, or other authorized person contacts the specialist directly, the specialist will discuss the application with that individual and confirm preferences for future communications.

If a Form 2848 or Form 8821 (Tax Information Authorization Form) is invalid and an additional information request is sent, a copy should be returned to the organization, explaining why the form is invalid. If no additional information is needed, a determination letter is prepared and sent to the organization. An additional information letter or determination letter is not sent to the person(s) designated on an invalid Form 2848 or 882.

To accomplish its job of “giving and taking away an organization's tax-exempt status,” the IRS receives and determines qualification for tax exemption for prospective nonprofit organizations that submit Form 1023 or 1024. A vast majority of other nonprofits qualifying 501(c) exempt entities are not required to file for approval. Their ongoing qualification, as well as those initially seeking and receiving approval, is monitored through the annual filing of Forms 990 that report their financial transactions and respond to countless questions about their mission, activities, persons in control, and importantly about program activities they conduct to accomplish their mission.

The IRS disseminates on the Internet and by release to tax and financial publications news about its activities, instructions for form preparation, and instructions for the vast array of rules that apply to a tax-exempt entity. Those who serve nonprofits with their accounting and legal talents and other skills regularly study IRS pronouncements. Beginning in January and throughout the year new rules and guidance and redesigned forms are issued. For example, on January 4, 2021, Internal Revenue Bulletin 2021-1 contained the following information:

ADMINISTRATIVE

Rev. Proc. 2021-1, page 1.

This procedure contains revised procedures for letter rulings and information letters issued by the Associate Chief Counsel (Corporate), Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes), Associate Chief Counsel (Financial Institutions and Products), Associate Chief Counsel (Income Tax and Accounting), Associate Chief Counsel (International), Associate Chief Counsel (Passthroughs and Special Industries), and Associate Chief Counsel (Procedure and Administration). This procedure also contains revised procedures for determination letters issued by the Large Business and International Division, Small Business/Self Employed Division, Wage and Investment Division, and Tax Exempt and Government Entities Division. Rev. Proc. 2020-1 superseded.