This table represents the October 24, 2013 status of recommended actions from the Treasury Inspector General for Tax Administration’s (TIGTA) report on IRS’s tax-exempt area. Exempt Organizations Recommended Actions Ending October 24, 2013 No. Recommendation Lead ECD Status* Actions Taken 1 Ensure that the memorandum requiring the Director, Rulings and Agreements, to approve all original entries and changes to criteria included on the BOLO listing prior to implementation be formalized in the appropriate Internal Revenue Manual. Director, Exempt Organizations 06/28/2013 09/30/2013 Completed Because the use of the BOLO lists was suspended (reported in June), the memorandum is no longer operational therefore we are closing this recommendation. However, separately, we are revising the IRM that provides guidance on processing exempt application and have incorporated into the draft comments received from the Taxpayer Advocate and providing training to staff on how to apply approriate screening criteria. 2 Develop procedures to better document the reason(s) applications are chosen for review by the team of specialists (e.g., evidence of specific political campaign intervention in the application file or specific reasons the EO function may have for choosing to review the application further based on past experience). Director, Exempt Organizations 09/30/2013 Completed Procedures were issued to all specialists on September 30, 2013, providing written instruction on classifying applications when issuing an approval based on the original submission is not an option. This recommendation is closed. The following procedures will be incorporated into the Internal Revenue Manual: Interim guidance issued on September 30, 2013 on procedures for EO Determinations Unit regarding initial classification of applications. Interim guidance issued on September 30, 2013 on new Emerging Issue Committee as the central point of contact for all emerging issues. 3 Develop training or workshops to be held before each election cycle including, but not limited to, the proper ways to identify applications that require review of political campaign intervention activities. Director, Exempt Organizations 01/31/2014 Green Team continues to develop training materials and methods of delivery. 4 Develop a process for the Determinations Unit to formally request assistance from the Technical Unit and the Guidance Unit. The process should include actions to initiate, track, and monitor requests for assistance to ensure that requests are responded to timely. Director, Exempt Organizations 06/28/2013 01/31/2014 Completed Updated OCTOBER 2013 The long-term plan as noted in the June report was to engage Business Systems Planning to research subsequent electronic solutions to be completed by January 31, 2014. The new process is documented in written procedures, which enables the use of a spreadsheet-based tracking tool. We are closing this recommendation as the required actions have been completed. However, IRS will expand its efforts through development of a long-term plan. 5 Develop guidance for specialists on how to process requests for tax-exempt status involving potentially significant political campaign intervention. This guidance should also be posted to the Internet to provide transparency to organizations on the application process. Director, Exempt Organizations 06/27/2013 01/31/2014 Green Memo expanding optional expedited process to certain applications under section 501(c)(4) submitted after January 31, 2013, dated September 30, 2013, was issued to staff on October 17, 2013 (delay due to government shutdown). Letters 5228 to be sent to additional applicants soon. The memo is currently on hold pending further review and consultation with stakeholders. 6 Develop training or workshops to be held before each election cycle including, but not limited to: a) what constitutes political campaign intervention versus general advocacy (including case examples) and b) the ability to refer for follow-up those organizations that may conduct activities in a future year which may cause them to lose their tax-exempt status. Director, Exempt Organizations 01/31/2014 Green Team continues to develop training materials and methods of delivery. 7 Provide oversight to ensure that potential political cases, some of which have been in process for three years, are approved or denied expeditiously. Director, Exempt Organizations 01/31/2014 Green As of October 18, 2013, 99 cases in original backlog (75%) have been closed. This includes 77 cases that received favorable determination letters including 38 applicants participating in the optional expedited process. Memo expanding optional expedited process to certain applications under section 501(c)(4) submitted after January 31, 2013, dated September 30, 2013, was issued to staff on October 17, 2013 (delay due to government shutdown). Letters 5228 to be sent to additional applicants soon. 8 Recommend to IRS Chief Counsel and the Department of the Treasury that guidance on how to measure the “primary activity” of I.R.C. § 501(c)(4) social welfare organizations be included for consideration in the Department of the Treasury Priority Guidance Plan. Commissioner, Tax Exempt and Government Entities 05/03/2013 Completed Updated August 2013 Department of the Treasury released the 2013-2014 Priority Guidance Plan on August 9, 2013 and includes guidance under §501(c)(4) relating to measurement of an organization's primary activity and whether it is operated primarily for the promotion of social welfare, and guidance relating to political campaign intervention. June 2013 Recommendation closed last month. On May 7, 2013, EO representatives discussed (c)(4) recommendation with TE/GE Counsel and Treasury Office of Tax Policy. Treasury agreed to include these items in the next Priority Guidance Plan. 9 The Director, EO, should develop training or workshops to be held before each election cycle including, but not limited to, how to word questions in additional information request letters and what additional information should be requested. Director, Exempt Organizations 01/31/2014 Green Team continues to develop training materials and methods of delivery. * Green = On schedule, Yellow = Behind schedule, Red = Significant issues
