TIGTA Report on TEGE Compliance Checks

In August the Treasury Inspector General for Tax Administration (TIGTA) issued a report titled Improvements to the Tax-Exempt Compliance Unit Could Reduce Mistakes and Unproductive Examination Referrals. While I doubt anyone is surprised that TIGTA found room for improvement, what I found most interesting about the report is its window into details of the compliance check program.

According to the report: “A compliance check is a review to determine whether a TE/GE taxpayer is compliant with their Federal tax return filing(s), reporting, and payment requirements. A compliance check is not an examination, and the taxpayer may legally choose not to participate. A compliance check does not directly relate to determining a tax liability for any period. It is instead a tool intended to help educate TE/GE taxpayers, practitioners, plan sponsors, and participants as well as encourage voluntary compliance. In addition, a compliance check is not a discussion, inspection, or a request/review of books and records.”

With respect to exempt organizations, workstreams of particular interest include ones focused on:

• hospital financial assistance policies (as required by section 501(r)(4);
• the section 4960 excise tax on excess executive compensation
• the Form 990-T
• the Form 1023-EZ streamlined application under section 501(c)(3).

Lloyd Mayer