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The IRS Advisory Committee on Tax Exempt and Government Entities (ACT) is established to provide an organized public forum for discussion of issues relevant to the responsibilities of the TE/GE division and to enable the IRS to receive regular input with respect to the development and implementation of tax administration issues affecting the communities served by the TE/GE division. One of the ACT’s main activities has been a series of year-long projects on specific topics that culminate in the final recommendations and report presented at the June meeting each year.
The ACT today presented a 416-page “report of recommendations” to the IRS, containing reports and recommendations with respect to the following issues:
- Tax-exempt bonds: The role of conduit issuers in tax compliance
- Federal, state and local governments: Review of the Government Accountability Office (GAO) report to congressional requesters, entitled
Social Security Administration ––Management Oversight Needed to Ensure Accurate Treatment of State and Local Government Employees, and evaluation of, and recommendations for improvement to, the federal, state and local governments (FSLG) Web site
- Indian tribal governments: Supplemental report on the implementation of tribal economic development bonds under the
American Recovery and Reinvestment Act of 2009, and survey of issues requiring administrative guidance in the wake of enactment of section 906 of the
Pension Protection Act of 2006
- Exempt organizations: Group exemptions––creating a higher degree of transparency, accountability, and responsibility
- Employee plans: Recommendations regarding pension outreach to the small business community
The ACT report is available electronically on the IRS Web site:
http://www.irs.gov/pub/irs-tege/tege_act_rpt10.pdf
KPMG Observation
One of the more interesting topics addressed by the ACT was group exemptions and group returns. Group exemptions and returns are utilized by “chapter” organizations, religious organizations and other related groups of tax-exempt entities.
Specific recommendations with respect to group exemptions include the following:
- Amend Reg. section 1.6033-2(d) to remove the authority of central organizations to file group returns
- Update Rev. Proc. 80-27 to provide more guidance on how central organizations are expected to exercise on-going general supervision or control over their subordinate organizations, giving special consideration to the varied organizational structures and unique legal status of churches
- Require each group exemption holder that has a Form 990 filing requirement to file Form 990, even if it would otherwise be eligible to file Form 990-EZ or 990-N, and to disclose, on Schedule O, information about the composition of the group and how the central organization exercises general supervision or control
- Develop workable options for including subordinate organizations in Publication 78 or otherwise providing donors with information regarding the deductibility of contributions to subordinate organizations
- Prohibit “Type III” supporting organizations from being included in a group exemption ruling
- Provide a significant transition period for existing groups to come into compliance with any changes to the group ruling procedures, with special consideration given to existing church group exemptions
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For more information, contact Rick Speizman, National Partner-In-Charge, KPMG’s Exempt Organizations Tax Practice (ExoTax), at (202) 533-3084 or
rspeizma@kpmg.com
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ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY KPMG TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.
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