On the TE/GE Scene

On the TEGE Scene

Baltimore, Maryland |  On Friday February 28, 2014, I traversed the United States from the Best Coast to the frigid East Coast (specifically the Charm City) to personally attend one of the first public speaking appearances of the new IRS TE/GE Commissioner, Sunita Lough (pronounced “Low”). The occasion (get ready for the mouthful) was the Annual Joint Meeting of the Great Lakes Area TE/GE Council, Gulf Coast Area TE/GE Council, Mid-Atlantic Pension Liaison Group, Northeast Pension Liaison Group and Pacific Coast Area TE/GE Council.

Ms. Lough commenced her speech with some personal/professional background (she started in the EO division at the IRS in the mid-1990’s, has worked in many different places within the Internal Revenue Service since then and has currently been the TE/GE Commissioner for less than two months) and an introduction of her key staff within TE/GE (please see the most recent YH Exempt Org Advisor for a summary of these new TE/GE executives).

To  no one’s surprise, Ms. Lough referenced that this is a very challenging time at TE/GE. That being said, she said that she is primed to do whatever it takes to best get through the choppy waters immediately ahead, Regarding the existing personnel within TE/GE, Ms. Lough stated that she is very proud on the immense amount of diversity within the group. Before moving on to addressing specific upcoming initiatives for TE/GE, Ms. Lough set forth that transparency is of over-arching importance to her and she will continually strive for TE/GE to be as transparent as possible.

Also to no one’s surprise, Ms. Lough stated that the immediate top priority of TE/GE is to address the severe backlog of Tax Exemption Applications that has built up in Cincinnati. In past years, the Internal Revenue Service would receive about 60,000 Tax Exemption Applications per year. In 2013 (primarily because of small exempt organizations seeking reinstatement of their automatically revoked exemptions), the Internal Revenue Service received about 80,000 Tax Exemption Applications. In 2009, the Internal Revenue Service employed about 200 workers in Determinations, currently, the Internal Revenue Service is only employing about 155 workers in Determinations. In order to address the ever-increasing backlog, Ms. Lough stated that she is closely scrutinizing all the different Determinations processes in Cincinnati in order to best streamline them. Additionally, the recent issuance of Rev. Proc. 2014-11 should be of significant benefit to reducing the backlog since such sets forth streamlined procedures for exempt organizations to have their exemptions retroactively reinstated whether reasonable cause exists or not.

On a related front, Ms. Lough stated that she is actively working on a Lean Sigma Six (“LSS”) project with Determinations in Cincinnati in order to make all the processes and procedures being undertaken in Cincinnati more efficient and effective. An LSS approach is essentially a corporate-wide process that examines “assembly line” processes to ascertain how such can be improved.

Ms. Lough also mentioned that the new interactive Form 1023 (Tax Exemption Application) appears to be a “success” notwithstanding the fact that it has yet to be utilized enough to render meaningful statistical analysis and conclusions. Additionally, the “Where’s My Application” portion of the Internal Revenue Service’s has been recently improved according to Ms. Lough.

Ms. Lough then addressed the §501(c)(4) Tax Exemption Application process and reported that the Internal Revenue Service had made substantial progress here, for example, the Service has already adequately responded to all nine TIGTA recommendations (please see the Internal Revenue Service web site related to this) in her opinion. Additionally, the Internal Revenue Service is currently developing processes to document why certain Tax Exemption Applications are identified for further review.

Finally, Ms. Lough closed with an assertion of absolutely no shock value in that she stated that TE/GE will not be releasing a 2013 Annual Report / 2014 Work Plan since we are already in March and the Internal Revenue Service’s year-end is September. That being said, I cannot find fault with Ms. Lough here since her plate is currently overflowing with other important initiatives.