01/20/2021

New IRS Initiatives for Tax-exempt and Governmental Entities

Recently, several developments/initiatives relating to tax-exempt organizations were unveiled

On Jan. 5, 2021, the Internal Revenue Service (IRS) Tax Exempt and Governmental Entity (TE/GE) announced several developments/initiatives relating to tax-exempt organizations. The IRS has updated its compliance program and priorities website. Listed below are some IRS initiatives to take note of:

1. Worker Classification. This new strategy aims to review worker classification to ensure tax-exempt organizations are not reducing their employment tax burden by incorrectly treating workers as independent contractors instead of employees. Most IRS audits of tax-exempt organizations include reviewing the organization employees, payroll and independent contractors.
   
   Another strategy to identify the potential misclassification of wages is when a tax-exempt organization issues both a W-2 and a 1099 to the same payee in the same calendar year.

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