Exempt Organizations Advisory - IRS Exempt Organizations Division Issues 2008 Implementing Guidelines

Catherine W. Wilkinson (cwilkinson@steptoe.com)
Suzanne Ross McDowell (smcdowell@steptoe.com)
Randal T. Evans (revans@steptoe.com)

On December 13, 2007, the IRS' Exempt Organizations Division ("EO") issued its FY 2008 Implementing Guidelines  which describe  EO's  program plans for the upcoming year.    Areas where EO plans to focus its attention include:

New Compliance Tools

• A research and compliance initiative involving colleges and universities
• Voluntary compliance program for delinquent filers

Enforcement Initiatives

• Reviews and compliance checks of supporting organizations
• Examinations of charitable trusts
• Compliance checks dealing with conservation easements (to be implemented in FY 2009)
• Continued examinations of exempt organizations and government entities that may have received certain interests in real property known as "successor member interests" 
• Examination of exempt organizations that operate franchises or business ventures
• Examination of tax-exempt insurance companies whose gross receipts or premium amounts appear to violate the amended 501(c)(15) provisions
• Continuation and expansion of existing compliance initiatives dealing with political activities, executive compensation, community foundations, gaming, and Section 527 political organizations.

Customer Service Plans

Development and implementation of an electronic determinations case processing and tracking system, the TE/GE Determination System (TEDS)

Development of a web-based tool (the "Cyber Assistant") to assist new organizations in meeting the requirements for obtaining and maintaining tax-exempt status and to assist them in completing their exemption application

Continuation and expansion of education and outreach programs; and the issuance of formal guidance on a variety of subjects. 

Formal Guidance Plans

• Proposed or final regulations pertaining to new requirements added by the Pension Protection Act of 2006 on: 
• supporting organizations;
• new excise taxes on donor-advised funds; and
• the e-Postcard notification requirement for organizations not required to file Form 990 ;

• Regulations to implement Form 990 revisions;
• Regulations governing qualified tuition programs under section 529;
• Final regulations on excise taxes on prohibited tax shelter transactions and related disclosure requirements;
• Final regulations under sections 501(c)(3) and 4958 on revocation standards for organizations that engage in excess benefit transactions; and
• Guidance relating to charitable trusts, including
• the ordering rules for charitable payments made by a charitable lead trust under section 642(c); 
• the division of charitable remainder trusts under section 664; 
• proposed regulations under section 664(c) concerning the effect of unrelated business income on charitable remainder trusts; and
  
• providing sample inter vivos charitable lead unitrusts under section 2522.

The Implementing Guidelines are available on the IRS' website, under the heading FY2008 EO Implementing Guidelines.