The IRS Introduces New Leadership and Initiatives to Practitioners in Baltimore
On February 28, 2014, the IRS held its Annual Joint Meeting of the Tax Exempt and Government Entities (TE/GE) Councils in Baltimore, Maryland. The meeting was attended by BDO’s Jeff Schragg, Tax Partner in the Greater Washington, DC office and Rebekuh Eley, Central Region Director for Exempt Organization Tax Services. These meetings are part of the IRS’s attempt to coordinate with the public and be more transparent in their operations. Schragg and Eley had the opportunity to listen to remarks and interact with the new IRS TE/GE Commissioner Sunita Lough.
There have been a number of changes and appointments within the TE/GE Division over the past year. In addition to Lough, the new leadership consists of a team of strong technical practitioners from a variety of backgrounds and sectors within the IRS. One of the priorities of this new leadership team has been to address the backlog of inventory for determinations and rulings
, as well as to improve the overall process of submitting applications. Some of the key improvements Lough discussed include:
- In 2013, the IRS received nearly 80,000 applications, 30 percent of which were requests for reinstatement due to automatic revocation. The TE/GE division has looked into how they can improve the process and turn applications around more quickly and efficiently. To help alleviate the backlog and clarify the process, the IRS has issued Rev. Proc. 2014-11, which aims to streamline the process for applications requesting reinstatement. Lough anticipates that this new guidance will allow the IRS to close three-quarters of applications for reinstatement between June and September this year.
- The IRS has implemented an interactive Form 1023, featuring pop-up information boxes to guide users throughout the process, to further facilitate an effective application process. Lough indicates that users of the new interactive form appear to submit more complete applications for exemption.
- The IRS has improved the webpage for “Where’s My Exempt Application?” as well. Previously, the website only provided the average number of days the process requires. Now, the website provides information about where the application is in the process based on the date of submission. Lough believes that this will allow an organization to more easily track their application’s status.
- According to Lough, it has been essential to enact processes within the IRS to improve efficiency without adding risk. In this regard, TE/GE has looked to an approach used by other divisions of the IRS called the Lean Six Sigma process. This protocol has reduced the number of touches throughout the application process, especially for smaller low-risk organizations, leading to improved efficiency.
- The IRS has also sought to address the application process for 501(c)(4) entities. It has completed and documented a process for selection, additional training and workshops intended to properly identify political campaign interventions, as well as a system for following Information Document Request Guidelines. The IRS has published this revised guidance consisting of nine resolutions to its website. Lough stated that, as a result, the 501(c)(4) application process is now more disciplined, transparent and efficient.
Lough commented that the IRS will not be issuing a formal compliance plan as it has in prior years. Instead, TE/GE Division resources were, and will continue to be, focused on inventory and transparency of processes. The TE/GE leadership team expects to issue a plan next year in a timely manner with a new format more akin to other IRS divisions.
Lough’s view is that the biggest challenge facing the division in the year ahead is resources. This year, its pool of agents was reduced to 155 from 199 in 2009. As a result, Lough believes the division will need to evaluate efficiencies, assess risk and ultimately make cuts to some tasks and procedures. However, Lough expects that this will help to further improve another challenge: customer satisfaction.
Overall, Commissioner Lough is excited about the new leadership team and looking forward to the future and new changes within the TE/GE Division. These changes indicate that nonprofit organizations are poised to benefit from a more streamlined, efficient TE/GE Division.