Exempt Organizations Priority List Highlights Implementation of Form 1023-EZ

The IRS recently released its 2014-2015 Priority Guidance Plan, which contains 317 projects the IRS intends to work on during the plan year (July 2014 to June 2015). This was released in the same month as last year’s plan, and we hope that indicates a similar year of progress on the following priorities identified by the IRS relative to Exempt Organizations.

2014-2015 project list for Exempt Organizations:

  1. Revenue Procedures updating grantor/donor reliance on IRS determination letter as to “publicly supported” status of grantee (the third year this is priority no. 1).
  2. Revenue Procedure to update reliance on EO Select Check (on the IRS website) for deductibility and public charity status (the third year that this is priority no. 2).
  3. Regulations under I.R.C. §§501(a), 501(c)(3), and 508 to allow the Commissioner to adopt a streamlined application process that eligible organizations may use to apply for recognition of tax-exempt status under §501(c)(3)  (regulations were published July 2, 2014 in the Federal Register as TD 9674 (final and temporary) and REG-110948-14 (Notice of Proposed Rulemaking); this is new on the priority list).
  4. Revenue procedure setting forth procedures for issuing determination letters on exempt status under I.R.C. §501(c)(3) to eligible organizations that submit Form 1023-EZ (this was published July 21, 2014, in IRB 2014-30 as Rev. Proc.  2014-40 (first released on July 1, 2014); this is also new on the list).
  5. Guidance under §501(c)(4) relating to measurement of an organization’s primary activity and whether it is operated primarily for the promotion of social welfare, including guidance relating to political campaign intervention  (down from no. 3 last year).
  6. Final regulations on application for recognition of tax exemption as a qualified nonprofit health insurer under §501(c)(29) as added by §1322 of the ACA. Temporary and proposed regulations were published on February 7, 2012 (this is back on the list – it was previously listed as priority no. 3 on the 2011-2012 Priority Guidance Plan).
  7. Final regulations regarding financial assistance policy and reporting requirements for charitable hospitals; proposed regulations were published on June 26, 2012 (down from no. 4 last year).
  8. Additional guidance on Type III supporting organizations and final regulations (down from no. 5).
  9. Guidance under §512 regarding methods of allocating expenses relating to dual use facilities (new).
  10. Guidance under §4941 regarding a private foundation’s investment in a partnership in which disqualified persons are also partners (down from no. 6).
  11. Final regulations under §§4942 and 4945 on reliance standards for making good faith determinations about a foreign organization’s status. Proposed regulations were published on September 24, 2012 (this is back on the list from the 2012-2013 Priority Guidance Plan).
  12. Final regulations on program-related investments; proposed regulations were published on April 19, 2012 (down from no. 7).
  13. Guidance regarding the new excise taxes on donor advised funds and fund management (down from no. 8).
  14. Regulations regarding filing requirements for excise taxes on charitable hospitals that fail to implement community health needs assessment requirement (down from no. 10).
  15. Guidance on group returns regulations (down from no. 11).
  16. Final regulations for consolidation/update of non-regulatory exceptions from filing; proposed regulations were published on March 15, 2011 (down from no. 12).

New and noteworthy in this year’s Priority Plan:

  • Priority nos. 3 and 4: This outlines an effort to streamline applications from small organizations anticipating less than $50,000 in revenue who meet the eligibility requirements to submit a Form 1023EZ Application rather than the full blown Form 1023. See our previous blog post on this topic here.
  • Priority no. 9: This addresses allocation of expenses by dual use facilities is new, pointing to IRS interest in potentially misclassified unrelated business income tax reporting and allocating of shared expenses.

While it appears that many of the priorities have decreased in priority for the IRS, most effectively remain unchanged from last year’s Priority Guidance list and have simply been bumped down a few notches by priorities 3 and 4. It is interesting that two “new” priorities (nos. 6 and 11) are making their way back on the list from prior years.

At Schauble Law Group, we continue to monitor developments in each of these areas, and will advise readers of those developments in future blog postings.

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