What are the IRS’s Priorities for Tax Exempt Entities for Fiscal Year 2025?

November 25, 2024

The IRS Tax Exempt & Government Entities (TE/GE) division has outlined its priorities for fiscal year 2025. These priorities include the following: Better Taxpayer Experience, Faster Issue Resolution, Smarter Enforcement, Advanced Technology & Analytics, and Empowered Employees.

Better Taxpayer Experience

Creating a better taxpayer experience involves proactively connecting with internal and external stakeholders to better serve small and underserved taxpayers, such as smaller entities and organizations. The division plans to expand the use of the Taxpayer Facing Employee-Document Upload Tool (TPFE-DUT) to examination employees, which will streamline communications and make it easier for taxpayers to submit necessary documents.

Additionally, TE/GE will focus on providing education and outreach to help taxpayers stay well-informed and able to comply with tax laws more effectively.

Faster Issue Resolution

TE/GE is committed to resolving issues more quickly and efficiently. This includes supporting effective processing and compliance at pre-filing and filing stages for elective payment elections of clean energy credits. The division will also support IRS efforts to proactively review and address Employee Retention Credit claims during the filing process or immediately after return processing.

To further streamline issue resolution, TE/GE will collaborate across the IRS to improve how notices are updated and issued to taxpayers, encouraging secure two-way electronic communication regarding notices.

Smarter Enforcement

Smarter enforcement is another key priority for TE/GE in FY 2025. The division will continue to collaborate with the Research, Applied Analytics, and Statistics (RAAS) team to build and refine exempt organizations exam case selection using advanced modeling techniques. This approach will help identify high-risk areas of noncompliance and focus enforcement efforts where they are most needed.

TE/GE will also incorporate new network analysis tools that allow graphical exploration of connections between entities, helping to identify potentially problematic relationships. These tools will be used in partnership with other IRS business units and Criminal Investigation to enhance enforcement capabilities.

Advanced Technology & Analytics

Leveraging advanced technology and analytics is crucial for TE/GE's transformation efforts. The division will use data-driven approaches to identify high-risk areas of noncompliance and focus on issues with the greatest impact. This includes continuing initiatives from the FY 2024 program letter and using quantitative criteria to support compliance strategies.

TE/GE will also modernize systems and technology, utilizing funding from the Inflation Reduction Act to train approximately 800 new employees hired in FY 2024. This training will equip employees with the skills needed to effectively use new technologies and improve overall efficiency.

Empowered Employees

Building a strong and empowered workforce is essential for TE/GE's success. In FY 2025, the division will focus on training and developing its employees, particularly the newly hired staff who now make up more than half of the TE/GE workforce. Training strategies and tools will be implemented to help employees develop their careers and better serve taxpayers.

TE/GE will also expand outreach efforts and stakeholder partnerships to support tax compliance in high-priority segments, such as high-income, high-wealth individuals who fail to meet their tax obligations. By collaborating with partners IRS-wide, TE/GE aims to enhance compliance and protect the integrity of the tax system.

Conclusion

The IRS Tax Exempt & Government Entities division's priorities for fiscal year 2025 reflect a comprehensive approach to improving taxpayer experience, resolving issues more efficiently, enforcing compliance smarter, leveraging advanced technology, and empowering employees. These efforts are designed to ensure that tax-exempt and government entities can comply with tax laws effectively while maintaining the integrity of the tax system. By focusing on these key areas, TE/GE aims to enhance its service to taxpayers and support the broader goals of the IRS.

(For more details, you can view the IRS TE/GE program letter using this link: Publication 5313 (Rev. 9-2024).)