Georgetown Law held its 39th Annual Representing and Managing Tax-Exempt Organizations Conference in-person and by livestream on April 28-29, 2022. Here are some of the highlights from the sessions presented by representatives of the IRS, Treasury, and staffers on Capitol Hill:

2022 Message from the IRS Director, Exempt Organizations and Government Entities: Priorities

• FY 2021 Accomplishment Letter
• FY 2022 Program Letter
• AM 2020-006 (Abusive charitable remainder annuity trust structure)
• Examining Processes Abusive Transactions
• Form 13909 Tax-Exempt Organization Complaint (Referral)
• Communicate Securely with the IRS Online | New system will roll out this year
• Significant hiring expected for FY 2022 (recruiting has started)
• Where’s My Application for Tax-Exempt Status? | as of 4/1 for FY 2022:: 54,000 applications received; 68,000 applications closed; average age of inventory: Form 1023 – 106 days; average cycle time: Form 1023 – 160 days | approved applications are posted on TEOS (applicants should check for determination letters here before trying to contact IRS)
• Compliance strategy – checking misuse of Form 990-N by ineligible filers; may impact automatic revocation (misuse will count as missed filing)
• Form 8868 (Application for Automatic Extension of Time To File an Exempt Organization Return) can be filed electronically
• Closing Agreements

Update from the Treasury and IRS: What You Need to Know in 2022

• Private foundation use of donor advised funds (DAFs) to make a qualifying distribution (see Notice 2017-73) – proposal to include distributions to DAFs like distributions to non-operating foundations in IRC Section 4942(g)(1) and (3)
• Notice 2022-21 (Public Recommendations Invited on Items to be Included on the 2022-2023 Priority Guidance Plan)
• Notice 2021-56 (Standards for Section 501(c)(3) Status of Limited Liability Companies) – IRS still reviewing comments and accepting late comments
• Rev Proc 2021-40 – The Service will not issue rulings on whether an act of self-dealing occurs when a private foundation (or other entity subject to § 4941) owns or receives an interest in a limited liability company or other entity that owns a promissory note issued by a disqualified person | IRS re-assessing this Rev Proc
• Basis of Assets of Former Public Charities for Section 4940 Purposes
• IRC 501(c)(6) Organizations Providing Pension and Health Benefits
• PLR 202133104
• PLR 202206013
• PLR 202204003
• PLR 202133014

Capitol Hill Update: What Are Members and Staffers Focusing on in 2022?

• Infrastructure Investment and Jobs Act (IIJA) enacted 11/15/21
• Build Back Better (BBB) passed by House but not yet by Senate – some chance a modified version will pass
• May 4, 2022 hearing on dark money
• Expired charitable deduction provisions – nonitemizer charitable deduction: 2020 – limited to $300; 2021 – limited to $300 ($600 for joint return filers) – panelists discussed whether these should be treated as temporary COVID-related provisions or permanent provisions – some urgency to this issue because easier to extend or expand this provision than to craft it as new legislation after several years
• IRA qualified charitable distributions – see, e.g., ‘SECURE 2.0’ would further expand retirement savings options (Journal of Accountancy)
• Accelerating Charitable Efforts (ACE) Act – nonprofit sector is divided, many legislators have not taken a position
• College Endowment Tax Modification – phaseout of excise tax based on the amount of aid provided to undergraduate students – support for this provision from the Democratic caucus but pulled from current bill – see, e.g., Proposed Change to College Endowment Excise Tax Is Welcome Relief for Private Colleges (Armanino)
• Public University Infrastructure Credit – 40% credit (instead of charitable contribution deduction under IRC 170) – part of BBB Reconciliation Bill – see, e.g., Donate to Universities? What to Know About the Public University Research Infrastructure Credit (Armanino)
• Syndicated Conservation Easements – issues going through courts, taking up substantial IRS resources – was in early version of BBB – generally denies deduction for partner’s allocable share of a deduction for partnership’s qualified conservation contribution that exceeds 2.5x the partner’s basis in the partnership property with respect to which the contribution is made – bipartisan support but strong lobby groups against so hasn’t gotten over the line yet
• College Coaching Contract Investigation – see Pascrell Expands College Coaching Contract Probe