In its Fiscal Year 2025 Program Letter, the IRS TE/GE outlined its priorities for the coming fiscal year.

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 (IRA) (see Tax Alert 2023-0710).

According to the program letter, the TE/GE will focus on:

• Supporting IRS efforts to review and address Employee Retention Credit (ERC) requirements
• Providing education and training to help "TE/GE customers" make complete and accurate elective payment elections for clean energy tax credits under the IRA
• Training the nearly 800 new TE/GE employees across the nation, which make up more than half of the TE/GE workforce
• Refining its examination case selection by using advanced data analytics and referrals to identify high-risk issues

FY 2025 priorities

The program letter lists the following TE/GE priorities:

Better taxpayer experience. Improve taxpayer-facing communications through the expanded use of the taxpayer-facing employee document upload tool for exam employees. Offer education and outreach to help taxpayers make complete and accurate elective payment elections for clean energy credits under the IRA.

Faster issue resolution. Support IRS efforts to proactively review and address ERC claims during the filing process or immediately after processing returns claiming the credit.

Smarter enforcement. Continue collaborating with Research, Applied Analytics and Statistics to build and refine exempt organizations exam case selection through the use of advanced modeling techniques. Collaborate across the IRS on highly complex and emerging issues, including the examination of: (1) tax-exempt hospitals; (2) name, image, and likeness (NIL) collectives; and (3) elective payment for certain clean energy credits.

Advanced technology and analytics. Continue modernizing the Tax-Exempt Organization Search tool to make more usable data available to stakeholders. Add more forms to the Digital and Mobile Adaptive Forms database, so that taxpayers have electronic options for submitting forms online.

Empowered employees. Expand the TE/GE workforce through direct hiring and recruitment. Expand outreach efforts and engage with external stakeholders to market TE/GE and IRS careers.

Implications

The annual TE/GE Program Letter provides insight into TE/GE priorities for the upcoming fiscal year. While this year's priorities further many of the focus areas TE/GE detailed in the 2024 TE/GE Program Letter, such as increased scrutiny of tax-exempt hospitals, two significant new focus areas are NIL collectives (see Tax Alert 2023-1093) and IRA elective payment outreach and education. The TE/GE's focus on tax-exempt hospitals under IRC Section 501(r) is consistent with both the TE/GE and Treasury Department Priority Guidance Plan for FY25 (see Tax Alert 2024-1895), and its current exam compliance strategy on community benefit standard compliance. Areas from the FY24 Program Letter the TE/GE will build on include building a better taxpayer experience, training its growing workforce, expanding integration of data analytics into its processes, reviewing and addressing Employee Retention Credit (ERC) claims, and providing education and outreach regarding elective payment elections for clean energy credits. The TE/GE's significant expansion of its workforce — 800 new employees, representing over 50% of the TE/GE's total workforce — should ultimately result in increased attention to the aforementioned focus areas and increased examination and educational campaigns in the tax-exempt space.