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Update: IRS receives ACT Report; recommendations affect exempt organizations

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Editor’s Note: This article was updated on Sept. 13 to reflect changes in the IRS website.

Before and after (below): On Thursday, link to nonprofit resourcese was tucked into the small "Information For" link at the top right corner of the IRS main landing page. By Friday, prominent access was restored.

Before and after (below): On Thursday, link to nonprofit resourcese was tucked into the small “Information For” link at the top right corner of the IRS main landing page. By Friday, prominent access was restored.

Jill Warren Lucas

The Exempt Organization (EO) group’s recommendations from the Advisory Committee of Tax Exempt and Government Entities (ACT) Report were presented to IRS Principal Deputy Commissioner Danny Werfel at a public meeting Thursday in Washington, D.C. Actions resulting from the report could affect 1.5 million nonprofits nationwide.

The presentation was made by EO group co-chairs Marty Martin, a Raleigh attorney whose practice focuses on providing legal and training services related to nonprofit and tax-exempt organizations, and Eric B. Carriker, an assistant attorney general in the Nonprofit Organizations/Public Charity Division of the Massachusetts office of the Attorney General.

The EO recommendations reflect both the current budget environment with mandatory cuts due to ongoing sequestration and ACT’s suggestion that the IRS “leverage its resources in regulating EOs” with the goal of minimizing burdens on small agencies.

While some recommendations carry cost implications, the report states that “benefits to the IRS, state charity regulators, the public, and the nonprofit sector outweigh the fiscal burdens which these recommendations may prompt.”

The report recommends improved control of internal IRS resources as well as oversight of external resources that have a role in oversight and tax
administration. Specifically, it urges steps to: (1) enhance the Form 990-EZ to collect more data, with two members recommending that the filing threshold be lowered; (2) improve IRS customer education and outreach, including website improvements to make EO resources more accessible; and (3) step up collaboration with state charity regulators on reporting and enforcement.

Martin says the EO group’s recommendations were well received, adding that Werfel urged prompt action to restore once-prominent links to EO resources to the main IRS landing page (IRS.gov). Currently, the only shortcut for users is not visible unless they know to click on the small “Information For” link found in the top right corner of the screen.

“The commissioner indicated this morning that they would be making an update to that page in light of our report,” says Martin, who is serving his third and final year as a member of ACT.

Last week the IRS posted the beta version of the Interactive Form 1023, a resource that was recommended in the June 2012 ACT Report. The form is used by organizations seeking official nonprofit (or exempt) status from the federal agency. Public feedback on the test site will be accepted through Sept. 20.

The complete ACT Report is available online at http://www.irs.gov/pub/irs-tege/tege_act_rpt12.pdf/tege_act_rpt12.pdf. The 51-page EO section begins on page 75.

Editor’s Note: See related articles here and here.

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