IRS issues updated compliance initiatives for exempt organizations

The IRS Tax Exempt & Government Entities Division (TE / GE) has update its 2021 program letter to announce eight new compliance initiatives. Click here for our pre-coverage of the TE / GE 2021 program letter. These initiatives address potential areas of non-compliance for small and large exempt organizations.

The eight new TE / GE compliance initiatives are:

  • Small exempt organizations that sponsor pension plans. This strategy examines the pension plans of small exempt organizations to determine if the plan’s investments are being properly administered, if there are any transactions with interested parties in the plan trust, and if member loans violate Section 72. (p).
  • Single member 401 (k) plans. This strategy examines 401 (k) plans to a participant to determine if there are operational or qualification failures, income tax and excise adjustments, or plan document violations.
  • Employee schemes: classification of workers. This strategy focuses on the pension plans of employers who have been found to have wrongly classified employees as independent contractors.
  • Officers treating EOs as Annex C matters. This strategy involves determining whether the executives and insiders of the exempt organizations claim the expenses of the exempt organizations as Schedule C business deductions. Matters of interest are the potential private benefits and liabilities associated with the exempt organization. and potential adjustments to the 1040 forms.
  • Form 990-N Depositors / Gross Receipts Template. This strategy involves determining whether an exempt organization was eligible to file Form 990-N when the related statements indicate that the gross revenue threshold of $ 50,000 has not been met.
  • Tax-exempt bonds: student loan bond market segment. This strategy is to determine whether the requirements of Section 144 (b) are met to be considered a student loan surety.
  • Tax Exempt Bonds: Form 8038-G Yield Restriction. This strategy examines the yield restrictions on bond proceeds after the statutory temporary period to determine whether the proceeds are limited to the yield of the issue.
  • Employee plans: plan liabilities and unrelated business income. This strategy involves determining whether plan sponsors who reported plan liabilities on their 5500 series return are engaging in activities that result in unrelated taxable business income (UBTI) under section 512. Significant, unusual and doubtful liabilities may result from prohibited transactions, UBTI, or failure to properly value assets.
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