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Business and Policy Areas
Business and Policy Areas

IRS to Focus on UBIT, Employment Taxes, Retirement and Deferred Comp Plans in FY16

October 19, 2015

The recently released FY16 work plan of the Tax Exempt and Governmental Entities (TE/GE) division of the Internal Revenue Service (IRS) outlines the areas in which the Service will focus enforcement activities in the coming year.

According to the document, the Employee Plans division of TE/GE will continue large case audits of 403(b) retirement plans and 457(b) deferred compensation plans. The report attributes increased scrutiny of these plans to a "historical pattern of noncompliance."

In the Exempt Organizations division (EO), the focus is on "significant compliance issues," some of which will require a multi-year approach. The work plan states that in addressing these issues, EO will utilize "the most appropriate, cost-effective and least intrusive compliance treatment. This will include educational efforts, compliance reviews, compliance checks, and correspondence and field examinations."

Included among the list of compliance areas EO will be examining:

  • Private inurement, self-dealing, excess benefits transactions, and loans to insiders
  • Employment taxes
  • Unrelated business income tax
  • Foreign banking and financial accounts (FBAR) requirements

The Federal, State, and Local Governments division (FSLG), which oversees public colleges and universities, announced that it will be conducting compliance projects to address employment tax issues that arise out of early retirement incentive plans, as well as worker classification.

All divisions of TE/GE will continue customer outreach initiatives, including web-based programming, to provide education and updates to stakeholders in the exempt community.


Mary Bachinger
Director, Tax Policy