In its Fiscal Year 2024 Program Letter, the IRS Tax Exempt & Government Entities division (TE/GE) outlined its priorities for the coming fiscal year. For the first time, TE/GE will be working under a single compliance workplan created by a team pulled from all the IRS's Business Operating Divisions (BODs). The goal is to combine funding, people and technology across the agency to implement its priorities.

The TE/GE priorities align with the IRS's overall compliance and workforce initiatives in the Strategic Operating Plan for FY 2023—2031, which outlined how the agency plans to spend the almost $80 billion allocated by the Inflation Reduction Act (see Tax Alert 2023-0710).

According to the Program Letter, TE/GE will focus on:

• Expanding examinations and other actions in multiple segments (including EO) where audit coverage has declined over the past decade
• Addressing emerging issues and schemes by "unscrupulous promoters"
• Helping taxpayers make complete and accurate payment elections for clean energy credits enacted as part of the IRA
• Tax collection and non-filer initiatives to address a tax gap resulting from underpayment and non-filing

Workforce

The IRS will address the lack of resources by having employees work across different specialty areas. In addition, the IRS is working on increasing knowledge sharing between agents and specialists to strengthen compliance in the "highest-potential" areas of taxation. To aid in achieving these goals, the IRS is establishing a new pass-through entities team to increase coverage in that area.

The IRS will also create opportunities for cross-BOD collaboration in workstreams that impact multiple BODs (e.g., return preparer work, employee retention credit (ERC) and other employment tax issues, and non-filers).

Technology

The IRS will be updating the systems used for accessing taxpayer information and managing cases, as well as expanding its internal network and increasing data security. In addition, the IRS will improve data analysis to help determine which returns to examine and how to support enforcement of EO-related tax laws.

FY2024 priorities

The Program Letter lists the following TE/GE priorities:

• Better taxpayer experience: Focus on improved education and outreach to taxpayers
• Faster issue resolution: Review and process claims more quickly (focusing on clean energy tax credits and ERCs), streamline notices and improve how they are updated and issued to taxpayers
• Smarter enforcement: Improve data analytics to refine how EO cases are selected, determine problematic relationships between entities and increase collaboration for complex issues
• Advanced technology and analytics: Improve efficiency of referrals and examinations
• Empowered employees: Create career and workforce development initiatives

Implications

The IRS Strategic Operating Plan and the TE/GE Program Letter provide insight into what projects and tax issues Treasury and the IRS TE/GE division will prioritize for fiscal year 2024. Among those priorities, the IRS plans to strengthen, expand and develop its workforce to increase its coverage of areas requiring sophisticated and complex review, and to continue utilizing technology and data analytics to improve its case-management capabilities and refine its examination case selection process. Included in the Program Letter are plans to improve the taxpayer experience as well, including outreach and education initiatives and faster resolutions of claims and notices.

While the impact of these focus areas may not materialize until further into the fiscal year, the IRS appears to be making a concerted effort to improve its internal procedures for more efficient and effective taxpayer relations and resolution of claims and inquires.

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RELATED RESOURCES

— For more information about EY's Exempt Organization Tax Services group, visit us here.

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Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor