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http://www.examiner.com/article/irs-commissioner-sarah-ingram-keynotes-gwscpa-conference
IRS Commissioner Sarah Ingram keynotes GWSCPA Conference
Business Examiner (USA) - Monday, December 20, 2010
Author: Elissa Myers
As the keynote speaker at the Annual Meeting of the Greater Washington Society of CPA’s last week, Sarah Hall Ingram , Commissioner of the Tax Exempt and Government Entities Division of the IRS, set a lively and informative pace.

Ingram ’s division is responsible for administering the tax law governing employee retirement plans, tax-exempt organizations, tax-exempt bonds, Indian tribal governments, and federal, state and local governments, was the kick-off speaker.

“Associations are a part of our national psyche” said Ingram . “We in this nation have a long tradition of working together to give back to the community.”

She spoke about changes in IRS reporting requirements for tax-exempt hospital organizations that have emerged as a result of the Patient Protection and Affordable Care Act that was passed this year. One of the most significant changes is that in the past hospital organizations could file a group tax-exemption that covered the overall organization and each of its separate hospital facilities. Under new rules, exemption requirements must be met on a facility by facility basis– each facility or hospital has to meet the rules, and if they don’t then the facility will lose its exemption even if the parent organization does not. Among the provisions or rules contained in Section 9007 that each facility must meet, are these:

* Transparency

* Adoption of a written financial assistance policy

* A written emergency care policy

* Limitations on certain charges,

* New rules on billing and collection procedures

* Conduct of a Community Health Needs Assessment (CHNA) every three years — and on the 990 tax return detailed description of what CHNA needs the facility will not address seen by Congress as a way to make sure that you and the community and your donors are well-informed.”

The Affordable Care Act asks for lots of information – what an organization is doing and what it is not doing must be included on the annual IRS return. That info is seen by Congress as a way to make sure that you and the community and your donors are well-informed.”

Though this requirement for the conduct of a Community Health Needs Assessment and a requirement to disclose to the IRS and the public what you a facility will not do only apply to tax-exempt hospital organizations, it is a significant new direction in IRS non-profit policy that bears serious consideration.

“Anyone who knows me knows that I am passionate about good governance in exempt organizations,” said Ingram . “Principles of Good Governance are important anytime you have an organization with a purpose, and there are assets involved and there are oversight rules that must be complied with. Good governance ensures that the money that goes into the organization is used for the intended purposes it was collected, and that the organization doesn’t go astray through neglect or malfeasance. Good governance, an engaged leadership, a board that’s paying attention and transparency to donors – these basic principles are all about managing risk. IRS is one of the audiences of the transparency, and the easier we can assess how an organization is run the more we can leave the well-run organization in place and can focus on the organizations run amok.”

“There are too many anecdotes in the press about poor governance in associations – enough incidents where donors end up asking ‘what was that all about?’” she said.

“We have institutionalized our study of good governance. We are reviewing returns looking for correlations between things going wrong and governance procedures,” she said, “and when we have enough data we will share what we see.”

“We are reaching out to the non-profit community in another different way,” she said. Through our Academic Institution Initiative we are reaching out to universities who train folks to run exempt organizations – who train people who are passionate about a cause but not focused on procedures. We are offering to run workshops on the fundamentals of good governance and IRS compliance. Currently we are working with universities in Michigan and North Carolina. We were oversubscribed for the program we ran in Chapel Hill, North Carolina,” she said.

“In its consideration of US health policy, Congress has realized that the IRS has a considerable amount of information on tax exempt hospitals, “said Ingram , and we are preparing a whole series of annual reports to congress – to compare tax exempt hospitals to nonexempt hospitals.”

“Another important initiative,” she said, “was the recent redesign of the 990 was a collaborative effort between the IRS and the association community. The 990 discussion was a sea-change in the relationship between the association community and the IRS – and one of the key changes is the ability to include narrative explanations of data. We also now allow you to attach audited financial statement as a PDF instead of reentering all that data on the 990 return. The discussion on the design of the 990 is an ongoing one, she said, and further comments are still welcome.”

“We are mindful that we need to be careful about what we ask you about as the 990 become public information.”

Exempt organizations have always been required to file an annual 990 exempt organizations tax return, and failure to do so could be cause for the revocation of a tax exemption, but this process required a specific outreach to the negligent nonprofit by the IRS. Under new rules, any organization that fails to file a return for three straight years has an automatic revocation, and has to apply again even if it didn’t have an initial requirement to apply.

“Despite the fact that we spent time to get the word out, we had a huge number of organizations failed to file – associations that weren’t paying attention to the requirement or were chronically late. We were concerned about the large number of exemption organizations on our records that would have lost their exemption this year, so for the really small organizations, those eligible to use form 990EZ, we created a relief program that ran through this past October. Between January 1 and October we received over 300,000 remedial returns – over half of them after May, and over 100,000 between July and October . Not all appear to have been eligible for relief.”

“If you are a small exempt organization that missed the deadline, or you have a client that missed the deadline, please go to web site to see what the next steps are to get back on track. These associations are part of the fabric of our society and we need to help them stay viable if they are still in existence,” she said.

Ingram ’s presentation was the perfect kick-off to an outstanding, content packed conference.