New Year, New IRS Priorities for Exempt Organizations

This time of year, many of us are making resolutions for the new year—what do we hope to accomplish and how will we get there? It’s a process that often involves looking back at what has already been done, and prioritizing what still needs to happen.

If you work in the nonprofit sector, you already know that much of you can accomplish in the new year can be affected (for better, for worse) by the resolutions of the IRS! So we thought it might be helpful to remind you of what the IRS has on the horizon for nonprofits and foundations.

Current Project List. Here are the 2012/13 guidance projects the IRS is working on, listed in order of priority. We have noted any change in priorities from the previous year, as well as progress made in the previous year.

  1. Grantor/donor reliance on IRS determination letter as to “publicly supported” status of grantee – updated revenue procedures (up from No. 2)
  2. Reliance on EO Select Check (on the IRS website) for deductibility and public charity status – updated revenue procedure (new)
  3. Community needs assessment requirement for charitable hospitals – new regulations (up from No. 5)
  4. Financial assistance policy and reporting requirements for charitable hospitals – final regulations (no change; proposed regulations issued June 26, 2012)
  5. Type III supporting organizations – final regulations (up from No. 6; final regulations issued December 28, 2012) (see previous blog post on this topic)
  6. Supporting organizations – additional guidance (up from No. 7)
  7.  501(c)(3) equivalency determinations for foreign grantees – new regulations (up from No. 8; notice of proposed rule making issued September 24, 2012) (see previous blog post on this topic)
  8. Program-related investments – final regulations (up from No. 10; proposed regulations issued April 19, 2012) (see previous blog post on this topic)
  9. Donor advised funds – new regulations (up from No. 11; Congressional mandated study completed December 5, 2011)
  10. Group returns – new regulations (up from No. 12)
  11. Consolidation/update of non-regulatory exceptions from filing – new revenue procedure (new)
  12. Disclosure to state officials related to exempt organizations – final regulations (new; proposed regulations issued March 15, 2011)
  13. Church tax inquiries and examinations – final regulations (no change; proposed regulations issued August 5, 2009)

Progress from Last Year. Because it often feels like the IRS moves at a snail’s pace, it’s important to give credit where credit is due, and recognize those areas where the IRS has made great progress on important guidance projects:

  •  Final regulations on Form 990 revisions and modification of public support test
  • Guidance under §501(c)(29) relating to tax exemption for qualified nonprofit health insurance issuers
  • Proposed regulations on financial assistance policy and reporting requirements for charitable hospitals (see current list item 4)
  • Proposed regulations for program-related investments (current list item 8) (see previous blog post on this topic)

And, since releasing its current list of resolutions, the IRS has checked one more project off the list. Treasury issued final regulations for Type III supporting organizations (current list item 5), though regulations dealing with the payout requirement for certain supporting organizations are still temporary. See our previous blog post for discussion of these regulations.

A complete copy of the Priority Guidance document is available here.


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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