I had a really great time at the IRS last week.
Hmm. Let’s try, “Things I Never Expected to Say This Year” for $800, Alex.
Until a flurry of year-end legislation, Congress’ most significant tax policy achievement in 2019 was arguably the passage of the Taxpayer First Act, legislation that overhauled the workings of the Internal Revenue Service. Implementing this legislation is the IRS’ top priority this year, and it has reinforced that priority by establishing a Taxpayer First Act Office helmed by its chief of staff.
In addition to establishing a webpage where feedback and ideas can be submitted, the IRS has been actively soliciting feedback from key communities with a big stake in its mission. I had the opportunity to attend one such listening session last week, and I came away incredibly impressed. From the thoughtful design of the conversations to the huge time investment by very senior staff and the commissioner himself, the IRS’ commitment to gathering input from the nonprofit sector could not have been clearer.
Independent Sector and its members have a lot of ideas about how the relationship between the IRS and the nonprofit sector could be strengthened. Here are a few themes that IS brought to the table that day:
- Nonprofit organizations that paid unrelated business income tax under the now-repealed tax on transportation benefits urgently need more information about how to obtain refunds. Update: These instructions have since been released. Thank you, IRS!
- Inadequate appropriations from Congress leave the IRS and its Tax Exempt and Government Entities Division less than fully equipped to conduct effective oversight and provide critical assistance to nonprofit organizations.
- Without increased oversight, the 1023-EZ form may open the door to incorrect determinations of exempt status or abuse by bad actors.
- The IRS may wish to consider providing more tax-exempt resources in different languages for Limited English Proficiency nonprofit leaders.
- The IRS’ Advisory Committee on Tax Exempt and Government Entities (ACT) previously served as one of the primary mechanisms for sharing information between IRS staff and tax-exempt organizations. The ACT Committee reports served as an important resource that identified areas for improving the relationship between IRS regulators and our sector. When the ACT Committee ceased operation and was combined into the IRS Advisory Council, it reduced the number and variety of nonprofit experts providing feedback to the IRS. This should be reversed.
- The continued lack of clarity for nonprofits in the area of political activity is alarming and leaves many well-intentioned but cautious organizations on the sidelines. It is unfortunate that there is legislative language currently preventing IRS from regulating in this space.
Like I said, it’s a long list! Did we miss anything? Please submit your ideas to TFAO@irs.gov and let us know in the comments.