IRS Released Report Outlining Changes for Non-Profits

IRS Principal Deputy Commissioner, Danny Werfel is attempting to make good on his pledge to restore the IRS’ reputation and image. On Tuesday, an IRS press release announced the release of an 83 page report titled: “Charting a Path Forward at the IRS: Initial Assessment and Plan of Action” outlining new actions and steps to fix problems with the IRS’ review of tax-exempt applications and to improve the processes and operations that already exist at the IRS.

Here are the main points the three-part report covers:

Accountability: This part of the report places accountability for the mismanagement described in last month’s Treasury Inspector General for Tax Administration (TIGTA) report by determining the following:

  • Who was responsible – The report finds that significant management and judgment failures occurred that contributed to the inappropriate treatment of some taxpayers applying for tax- exempt status.
  • Ensure this does not happen in the future – New leadership has been installed across all executive management levels involved in the chain of command connected to these matters. The IRS has also empaneled an Accountability Review Board to provide recommendations within 60 days (and later as needed) on any additional personnel actions that should be taken.

Fixing the Problems with the Review of Applications for Tax-Exempt Status. This part covers several process improvements that are now underway to ensure that taxpayers are treated appropriately and effectively in the review of applications for tax-exempt status. A few of the points covered in this part are:

  • A new voluntary process – to allow fast-track approval for a 501(c)(4) tax-exempt entities if they certify they will operate within specified limits and thresholds of political and social welfare activities. This self-certification process can avoid the 120 day backlog.
  • Additional staff to help - the IRS has added new technical and program staff to assist with reviewing 501(c) (4) applications.
  • No BOLO lists – The “be-on-the-lookout,” or BOLO lists (that caused so much controversy) in the application process for tax-exempt status are suspended.

Review of IRS Operations and Risks – This part of the report identifies a series of actions aimed at reassuring taxpayers that selection criteria are appropriate. It also covers education and outreach programs to let taxpayers know how to seek assistance through the National Taxpayer Advocate if they have concerns about the IRS. Also in the report is an outline of the steps already underway that address the handling of operational risks issues within the IRS. Here are few ways the Agency intends to do this:

  • Establish an Enterprise Risk Management Program – provide a common framework for capturing, reporting and addressing risk areas across the IRS.
  • Initiate a comprehensive, agency-wide review of compliance selection criteria – with the results shared between the Department of the Treasury, the IRS Oversight Board, the Chairpersons of the House Ways and Means Committee and the Senate Finance Committee.

AccountingWEB quotes Werfel as saying, “The IRS is committed to correcting its mistakes, holding people accountable and establishing control elements that will help us mitigate the risks we face.”

The IRS also pledged to post the report on IRS.gov, and regularly update the progress made on the TIGTA report’s recommendations and provide other developments related to this effort. So far, it’s a decent first step.

At Tax Resolution Services we solve tax problems every day. We are IRS problem solvers. For a free, no-risk tax relief consultation, please call our office at (888) 699-7630.

Additional sources:

AccountingWEB article: http://www.accountingweb.com/article/acting-irs-head-daniel-werfel-receives-temporary-title-change/221938

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