On February 8, 2012, the Internal Revenue Service posted its FY 2011 Annual Report and FY 2012 Work Plan on www.irs.gov. The Work Plan highlights four areas of effort: legislative implementation, compliance using Form 990, collaborative efforts and general work. The Exempt Organization’s legislative implementation continues to be driven by the Pension Protection and the Patient Protection and Affordable Care Acts, including:
- Auto-revocation for non-filers
- New 501(c)(3) exemption requirements for hospitals
- Exempt health insurance issues and accountable care organizations
With three years of the redesigned Form 990 on file, the IRS will refine internal risk modeling to drive compliance and oversight. Compliance questionnaires will be issued to Internal Revenue Code Section 501(c)(4), 501(c)(5), and 501(c)(6) organizations that have not sought formal recognition of their tax-exempt status. Historic reporting of unrelated business income on Form 990 but not reported on Form 990-T will be explored, as well as the reporting of significant unrelated business income losses by filing organizations.
Collaborative efforts with multiple government agencies will involve an international project designed to examine exempt organizations that operate overseas and to ensure that their activities are consistent with their charitable purposes, including large private foundations with international activities with assets or total annual revenue in excess of $500 million. Approximately 500 exempt organizations will have their employment tax returns reviewed as part of the National Research Program.
The final focus of the EO IRS 2012 Work Plan will be the issuance of the College and University Compliance Initiative final report, audits of the nation’s largest private foundation, a study of group rulings and a communications plan regarding disaster relief.
As filing organizations continue to implement risk-based compliance programs, the Exempt Organization’s 2012 Work Plan focuses on compliance and oversight initiatives. As federal resources continue to diminish, efficient approaches to oversight are long overdue, but welcomed.
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