TEGE Exempt Organizations Council Submits Comments on Form 3520 Filings for Exempt Organizations

We are pleased to announce that the TEGE EO Council has submitted a comment letter in response to REG-124850-08, addressing the Form 3520 filing requirements for tax-exempt organizations involved with foreign trusts. The submission, made on July 8, 2024, aims not to overlook exempt organizations with a filing obligation.

Our comments highlight the need to align the Form 3520 filing deadline with the standard due date for tax-exempt organizations' annual returns, including any granted extensions. Implementing this change would reduce administrative burdens and improve compliance consistency, which supports the Treasury's objective to streamline tax administration and minimize taxpayer burdens.

The TEGE EO Council continues to advocate for sensible regulatory reforms and maintain a productive dialogue between the IRS and the tax practitioner community.

Click here for the full report.

TIC TAQ Questions. We are currently seeking questions and comments for our June 7 program, “Exempt Organizations Updates and Q&A with the Director of EO and Senior Technical Advisor to the Director of EO.” Please submit questions or comments (including those related to forms/form instructions/processes) by end of business on April 30, 2024 via the website (click here) or to Jennifer Becker Harris (jharris@clarknuber.com) and Preston Quesenberry (pquesenberry@kpmg.com).

Based on comments from our March 7^th program, we are specifically soliciting feedback on the following items.

1.      Questions related to IRS Exams and Determinations;

2.      Questions related to IRS processing and responding to taxpayer notices;

3.      990 Series Forms & Instructions - Please provide feedback on the 2023 Forms 990, 990-EZ, 990-T, & 990-PF and the Instructions;

4.      Forms 1023/1024-A/1024/8940 & Instructions - Please provide feedback on the exempt organization forms and instructions transmitted through pay.gov. Please include suggestions for the pay.gov platform itself; and

5.      Please consider general information letter requests on topics of general interest.

Please note that these comments are paraphrased by Council leadership, and do not necessarily represent official requests from IRS, Treasury, or Associate Chief Counsel.

Chief Counsel/EEE/Treasury Questions. As a reminder, although many of the questions posed to our government panelists are focused on tax administration issues (e.g., e-filing, forms, etc.), we also submit questions related to guidance and other legal and tax issues. Please submit questions or comments by end of business on April 30, 2024 via the website (click here) or directly to our EEE/Treasury Forum Co-Chairs, Elinor Ramey (eramey@lowenstein.com) and Dick Locastro (rlocastro@grfcpa.com).

Last September, in IR-2023-171 (Sept. 15, 2023), the IRS sought “comments and feedback on opportunities to expand and enhance tax certainty and issue resolution  . . . whether it’s by enhancing existing programs and tools or developing new ones.” The TEGE EO Council’s response, submitted Friday March 29, states the case for priority action in a 24-page report documenting an increasing number of software issues and pleading for application of the IRS’s Inflation Reduction Act funding toward solutions to efficiently serve the tax-exempt sector’s needs. The sought end—remediating both the unique disadvantages the tax-exempt sector is experiencing and alleviating the burden on IRS resources—is necessary to preserve and protect the reputation and vitality of the more than 1.8 million exempt organizations who serve our nation’s communities and citizens. 

The TEGE EO Council has a longstanding history of collaborative and productive dialogue with the IRS EO Division, including thrice-yearly EO Update sessions with EO Division Director Rob Malone and with his predecessors, Margaret Von Lienen and Tammy Ripperda. Across the past two years, that dialogue has included Councilmembers’ comments and queries relating to issues in the EO/BMF that interfere with organizations’ ability to, among other things, e-file and verify their status to/with third parties such as donors, banks, and state, local and federal agencies. Over this time period and as the result of multiple discussions, Council working groups concluded that the limitations of the IRS’s IT systems, exacerbated by underfunding of the IRS and understaffing of EO functions, have led to a unique impasse between the exempt organization sector and its regulatory overseer.

During these discussions, EO Director Malone and his colleagues have not only attentively fielded the Council’s concerns, but provided procedural recommendations and information connecting affected taxpayers with the frontline offices. The Council is exceptionally grateful for those ongoing efforts, which benefit the tax-exempt sector and the IRS.

The Council’s submission in response to IR-2023-171 is available here: 

• TEGE EO Council 3-29-24 Report on EO BMF Issues w-o Appendices.pdf
  
• Appendices to TEGE EO Council 3-29-24 Report on EO BMF Issues.pdf

TEGE EO Council Comments on Proposed Regulations under Section 4966.pdf 

Link to Submitted Comments - click here.

We are pleased to announce that on June 23, 2020, the TEGE Exempt Organizations Council submitted comments to the IRS and Treasury in response to proposed regulations under Section 512(a)(6), commonly known as the UBIT Silo regulations. The comments were 101 pages, with exhibits, and represent a herculean effort on the part of the group below to spot issues, identify potential solutions, propose examples, and collaborate, coordinate, draft, and edit—all within the short window of time to submit comments for official consideration. Thanks to the committee for the generous gift of time, thought, and leadership. Thanks also to Alexander L. Reid (Regulatory Affairs Chair) and Chelsea Rubin for their leadership.

• Dayo Adesuyi
• Farah Ansari
• Ted R. Batso, Jr.
• Lori Boyce
• Amy Ciminello
• Stephen M. Clarke
• Nathan M. Doane
• Mallory Fairless
• Polly Federico
• Sara Elizabeth J. Hyre
• Ed Jennings
• David Lowenthal
• Elizabeth Mills
• Christopher N. Moran
• Sarah-Jane Morin
• Megan M. Okun
• Jennifer Richter
• Emmett H. Robertson
• Mary Torretta

As always, we have added access to the comments on the Council’s website under Announcements/Comments. Per Council policy, the comments include a note that comments do not represent the views of the TEGE Exempt Organizations Council or any particular Council member.

Section 4960 Project. The Comments Committee is seeking volunteers to participate in a comments project related to the Section 4960 Executive Compensation Excise Tax. Please email Alex Reid (alexander.reid@morganlewis.com) if you are interested.

Forms & Instructions Project. The Comments Committee is interested in maintaining engagement with the IRS on the forms and Instructions applicable to tax-exempt organizations, particularly the Form 990 series and Form 4720. Ideally, the Committee would like to collect comments over the course of the filing season on the prior year’s forms and make an annual submission of comments to the IRS. We have added a submission form on the Council website at https://www.eocouncil.org/question-submission.html. Alternatively, you may email Eve Borenstein (eve@taxexemptlaw.org) and Lori Boyce (lboyce@deloitteretired.com).

Registration is now open for the TEGE Exempt Organizations Council’s EO Update on Monday, November 18, 2019, presented in cooperation with D.C. Bar Continuing Legal Education and the Greater Washington Society of CPAs. This two-hour program will occur live in Washington DC and Cincinnati, and also be broadcast by webinar. The agenda and registration form are available at eocouncil.org/events.

The program will include an extensive Q&A session with Margaret Von Lienen, Director, Exempt Organizations, during which the speaker will respond to pre-submitted questions. Stephen A. Martin, Director, Rulings & Agreements, Exemption Organizations, is also invited for this Q&A session. Janine Cook, Associate Chief Counsel (EEE), IRS, and Elinor Ramey, Office of Tax Policy, Dept. of Treasury, will then present on IRS and Treasury Regulatory updates and respond to certain pre-submitted questions.

As always, the Council will provide questions in advance to our government speakers and their teams. Please send areas of inquiry, questions, and/or comments (including comments on IRS forms and instructions) to Eve Borenstein (eve@taxexemptlaw.org) and Lori Boyce (lboyce@deloitte.com) no later than October 7. We have also added a new feature to the Council website whereby submissions may be entered at any time at Question-Submission.

At the Council’s last program in June, our government speakers requested practitioner feedback on a number of items. Following are related items we would like specific input on:

1. The IRS has put forth a multi-year plan with their Integrated Modernization Business Plan. Are there any items that you feel are missing? Anything that you feel is not workable?
2. Form 990-T e-filing is around the corner. Practitioners have commented that there is no commercial software available that handles all of the items facing tax exempt organizations—in particular, tax-exempt trusts. Other than the following, are there additional examples where the commercial 990-T software does not handle the necessary items to allow for e-filing?
   1. Foreign tax credits
   2. Passive Activity Loss Limitations
   3. NAICS code fields being limited to only those in the 990-T instructions
   4. Other examples?
3. Proposed rules regarding IRC section 4968 excise tax for certain colleges and universities with respect to their net investment income.
4. The IRS has tried to fix the processing of FUTA payments by 501(c)(3) organizations that are being remitted for compensation of employees related to ineligible organizations. Is the rejection of the payments still occurring?
5. Please comment on ASU 2016-14-related instructional changes that may be needed. [This accounting standard changed the way in which non-profits report expenses in their financial statements. The Form 990 instructions state that the organization should “Use the organization’s normal accounting method to complete Part IX Statement of Functional Expenses.”]​

The Council has submitted comments to the 2018 Forms 990-T, 990, 990-PF, 4720, and 1065 (K-1).

Please click here to view. Contact Alexander L. Reid with questions

The TEGE Exempt Organizations Council, in partnership with D.C. Car Continuing Legal Education, is excited to announce that all seven sessions from the Council’s June 28, 2019 EO Update are now available for purchase, viewing, and CLE credit (attorneys only) at www.dcbar.org. To view and purchase the courses, click under “CLE”, then “On Demand Courses”, and then proceed to page 11. D.C. Bar CLE on demand courses are accredited for CLE in all jurisdictions that allow for CLE remote learning. The sessions include:

1. “Form 990: Top Issues” – Eve Borenstein (Harmon Curran Spielberg & Eisenberg), Kathy Pitts (EY)
2. “4960: A Practical Discussion on Employee Benefits and Deferred Compensation” – Andrea Gehman (Johns Hopkins University Applied Physics Laboratory), William McNally (IRS Associate Chief Counsel (EEE)), Seth Safra (Proskauer & Rose), Syma Siddiqui (Johns Hopkins University), Chelsea Rubin (Morgan, Lewis & Bockius) (formerly IRS Associate Chief Counsel (EEE))
3. “IRS, Exempt Organizations Update and Discussion” – Margaret Von Lienen (Director, Exempt Organizations, IRS), Stephen A. Martin (Director, Rulings & Agreements, Exempt Organizations, IRS), Lori Boyce (Deloitte Tax)
4. “IRS and Treasury Regulatory Update” – Janine Cook (IRS Associate Chief Counsel (EEE)) and Elinor Ramey (Office of Tax Policy, Dept. of Treasury)
5. “Capitol Hill Update” – Caroline Waldner (Morgan Lewis & Bockius), Gordon Clay (Legislation Counsel, Joint Committee on Taxation), John L. Schoenecker (Senior Investigative Counsel, Senate Finance Committee)
6. “Social Philanthropy and Program Related Investments” – Rabecca Cross (Michael & Susan Dell Foundation), Jonathan Blum (Polsinelli)
7. “EO Examination Issues” – Ray Bunyard (Baylor Scott & White), M. Michelle McCarthy (IRS TEGE Division Counsel), Alicia Janisch (Deloitte Tax)

CPE credit is not available for the on-demand sessions. We will explore this going forward.

Remember to save the date for our upcoming program on November 18, 2019 from 8-10 PDT / 9-11 MDT / 10-12 CDT / 11-1 EDT (note: the time has changed from our last email), which will take place live in DC and/or Cincinnati and be available by webinar for individual dial-in. Registration will open mid-September.

Please also save the date for our Annual Exempt Organizations Meeting on February 20-21, 2020 in DC. Agenda coming soon, with registration anticipated to open in October.

The Council has submitted comments requested by the IRS and Treasury related to Notice 2018-67 regarding how to identify separate unrelated trades or businesses for purposes of Section 512(a)(6) of the Internal Revenue Code. Following is a link to the comments submitted earlier this week: TEGE EO Council 512(a)(6) Comments.

This has been a significant effort on the part of many. Special thanks to Stephen M. Clarke and Mary Rauschenberg for leading the effort and to Alex Reid (Regulatory Affairs Chair) and the Regulatory Affairs Committee (Lori Boyce and Eve Borenstein) for their assistance.

4960 Comments. On December 31, 2018, the IRS issued Notice 2019-09, which provides interim guidance on the new 4960 excise tax applicable to certain compensation paid by tax-exempt organizations enacted as part of the Tax Cuts and Jobs Acts of 2017. Council leadership is seeking interest in participating in or leading an effort to submit comments on the interim guidance, no later than the first week of March 2019. Please email Alex Reid (alexander.reid@morganlewis.com) if you are interested in participating.