The IRS has issued its work plan for 2018, which outlines the issues they will focus on. Here is a summary of important points:
Compliance Strategies:
- Focus on for-profit entities: they will look closely at organizations that operated as for-profit organizations before converting to a 501(c)(3)
- Private benefit and inurement: they will closely at organizations which show indications of private benefit or inurement. This will be done, in part, by looking at inconsistent answers on the form 990.
- Form w-2/1099 matching: they will examine entities where payments reports on forms 1099 should have been treated as wages subject to withholding. If you filed a form 990 showing little wages and large form 1099 amounts, you are at risk.
- Supporting organizations: they will examine organizations that state they are supporting organizations but file form 990-n
Referrals and claims
- Referrals: They will continue to pursue referrals received from sources either within or outside of the IRS.
- Form 1023-EZ filers: They will audit organizations that filed form 1023-ez for compliance with organizational and operational compliance
- Statistical sampling: they will continue to use statistical samples to determine that there is widespread compliance
Rulings and Agreements:
- The unit that handles Exempt Organizations expects to receive an increased number of applications. They will implement changes to Form 1023-EZ requesting information on assets, gross receipts, and foundation status. This will increase processing time.
Form 1024-A: the IRS did not mention the form 1024-A, which is in draft mode. Comments on the form are due by October 23. The form bears a closer resemblance to the present form 1023 than the current form 1024. We will keep you informed on new developments.
If you have questions about any of these areas, please give us a call.
