IRS Modernization Act Becomes Law

• Published date: 01 September 2019
• Date: 01 September 2019
• DOI: http://doi.org/10.1002/npc.30632

Bruce R. Hopkins’ NONPROFIT COUNSEL

2 September 2019 THE LAW OF TAX-EXEMP T ORGANIZATIONS MONTHLY

Bruce R. Hopkins’ Nonpr ofit Counsel DOI:10.10 02/n pc

For purposes of the related party rules, the definition

of control is proposed to be essentially the same as in the

controlled subsidiary context (IRC § 512(b)(13)(D)). The

proposed regulations provide that, where an organiza-

tion is a related organization with respect to more than

one educational institution, the assets and net income of

the related organization are to be allocated between the

institutions in a reasonable manner. The same standard is

to be applied in connection with assets and income avail-

able and not available for the benefit of an institution.

These proposed regulations may be relied on for tax

years beginning before publication of final regulations.

[11.9(b)] ◆

IRS MODERNIZATION ACT

BECOMES LAW

With his signature on July 1, President Trump caused

the Taxpayer First Act, legislation to modernize and oth-

erwise improve the IRS, to become law (Pub. Law No.

116-25).

Exempt Organizations Provisions

The act contains two provisions concerning changes

in the law of tax-exempt organizations.

Mandatory Electronic Filing

In general, any tax-exempt organization required to

file an annual return, including an unrelated business

income tax return (Form 990-T), will soon be required

to file the return electronically. These returns are to be

made available to the public “as soon as practicable” in

a machine-readable format. This law change will apply

with respect to tax years beginning after July 1, 2019.

Transitional relief, for up to two years, is provided for

small organizations or other entities the IRS determines

will otherwise suffer “undue burden.” For this purpose,

a small organization is an organization the gross receipts

of which for a tax year are less than $200,000 and the

aggregate gross assets of which at the end of the tax

year are less than $500,000. Similar transitional relief is

provided as to electronic filing of Forms 990-T. [28.8(d)

(in the 2019 supp.)]

Pre-Revocation Notice

If an exempt organization fails to file an annual infor-

mation return or submit a notice for two consecutive

years, the IRS will be required to notify the organization

of that fact and of the revocation that will occur under

the three-year auto-revocation rule. This notice must

include information about compliance with the filing or

submission requirements.

This law change will take effect for the two-consec-

utive-year periods beginning after December 31, 2019.

[28.5, 28.5A (in the 2019 supp.)]

Modernization of IRS Structure

By September 30, 2020, Treasury must submit to

Congress a comprehensive written plan to redesign

the organization of the IRS. This plan must (1) ensure

BRUCE R HOPKIN S’ NONPROFIT COUN SEL

(Print ISSN: 1542-8 419; Online ISSN: 1542-8427) is p ublished month ly by Wiley Subsc ription Serv ices, Inc., a Wil ey Company, 111 River St., Hoboken ,

NJ 07030-5774 USA.

Postmaster: Send all address c hanges to

BRUCE R HOPKIN S’ NONPROFIT COUNSEL

, John Wiley & Son s Inc., c/o The Sherid an Press, PO Box 465, H anover, PA 17331 USA.

Copyright a nd Copying (in any f ormat): Copyright © 2019 Wi ley Periodicals, Inc . All rights reser ved. No part of this pub lication may be repro duced, stored or tran smitted in any form

or by any means wit hout the prior permis sion in writing from the c opyright holder. Auth orization to copy item s for internal and perso nal use is granted by the co pyright holder for lib raries

and other user s registered with th eir local Reproduc tion Rights Organi sation (RRO), e.g. Copyr ight Clearance Cente r (CCC), 222 Rosewood Drive, D anvers, MA 01923, USA (www.copyright.

com), provided the ap propriate fee is pa id directly to the R RO. This consent doe s not extend to oth er kinds of copying s uch as copying for g eneral distribu tion, for adver tising and promoti onal

purposes, fo r republicatio n, for creating ne w collective wo rks or for resal e. Permissions fo r such reuse can be ob tained using the R ightsLink “Requ est Permission s” link on Wiley Online L ibrary.

Special requests should be addressed to: permissions@wiley.com.

Delivery Terms and Legal Title: Where the subscription pri ce includes print iss ues and delivery is to t he recipient’s addre ss, delivery term s are Delivered at Pl ace (DAP); the recipi ent

is responsible f or paying any impor t duty or taxes. T itle to all issues tran sfers FOB our shipp ing point, freigh t prepaid. We will ende avour to fulfil claim s for missing or damage d copies within

six months of pub lication, within o ur reasonable disc retion and subjec t to availability.

Information for subscribers:

Bruce R Hopkins’ Non profit Counsel

is published in 12 issu es per year. Subscrip tion prices for 2019 are: Institutional: Online Only: $1064 (Th e Americas),

£545 (UK), €691 (Eur ope), $1064 (rest of the world). Institutional: Print + Online: $1330 (The Americ as), £682 (UK), €863 (Euro pe), $1330 (rest of the world). Institutional: Print

Only: $1064 (The Americ as), £545 (UK), €691 (Europe), $1064 (res t of the world). Personal: Online Only: $579 (The Americ as), £297 (UK), €374 (Europe), $579 (rest o f the world).

Personal: Print + Online: $668 (The Americas) , £515 (UK), €613 (Europe), $668 (rest of t he world). Personal: Print Only: $579 (The Ameri cas), £297 (UK), €374 (Euro pe), $579 (rest of

the world). Pri ces are exclusive of t ax. Asia-Paci fic GST, Canadian GST/HS T and European VAT will be ap plied at the approp riate rates. For mor e information on cur rent tax rates, ple ase go to

https://onlinelibrary.wiley.com/library-info/products/price-lists/payment. T he price includes on line access to the cur rent and all online back files to January 1, 2015, wh ere available. For othe r

pricing options, including access information and terms and conditions, please visit https://onlinelibrary.wiley.com/library-info/products/price-lists. Terms of us e can be found here: htt ps://

onlinelibrary.wiley.com/terms-and-conditions.

Back issues: Single issues fr om current and recen t volumes are availabl e at the current singl e issue price from cs -journals@wile y.com.

Disclaimer: The Publisher and Ed itors cannot b e held responsi ble for errors or a ny consequenc es arising from t he use of informa tion containe d in this journal; th e views and opin ions express ed

do not necessa rily reflec t those of the Publi sher and Editors , neither does th e publication o f advertisem ents constitu te any endorsem ent by the Publish er and Editors of th e products ad vertised.

Wiley’s Corpor ate Citizenship init iative seeks to ad dress the environ mental, social, ec onomic, and ethic al challenges face d in our business and w hich are importa nt to our diverse st akeholder

groups. Since la unching the initia tive, we have focuse d on sharing our conte nt with those in nee d, enhancing comm unity philanthro py, reducing our car bon impact, cr eating global guid elines

and best prac tices for paper u se, establishin g a vendor code of e thics, and enga ging our colleag ues and other sta keholders in our e fforts. F ollow our progre ss at www.wiley.com/go/citizenship.

Wiley is a foundi ng member of the UN-b acked HINARI, AGO RA, and OARE init iatives. They are no w collectively k nown as Research4 Life, making online sc ientific content a vailable free or at

nominal cost to re searchers in devel oping countries . Please visit Wiley ’s Content Access – Corp orate Citizenship si te: http://ww w.wiley.com/Wile yCDA/Sect ion/id-39008 2.html

Journal Customer Services: For ordering information, claims and any enquiry concerning your journal subscription please go to https://hub.wiley.com/community/support/onlinelibrary or

contact your nearest office. Americas: Email: cs-j ournals@wiley.c om; Tel: +1 781 388 8598 or +1 800 835 6770 (toll free i n the USA & Canada). Euro pe, Middle East a nd Africa: Email:

cs-journals @wiley.com; Tel: +44 (0) 1865 778315. Asia Pacific: Em ail: cs-journals@wi ley.com; Tel: +65 6511 8000. Japan: For Japanese s peaking support, E mail: cs-japan@wile y.com.

Visit our Online Customer Help available in 7 languages at https://hub.wiley.com/community/support/onlinelibrary.

Editor: Bruce R. Hopkin s. Production Editor: Mary Jean Jones . Address for Editorial Correspondence: Bruce R. Hopki ns. email:

brucerhopkins@brucerhopkinslaw.com. For submission instructions, subscription and all other information visit: wileyonlinelibrar y.com/journal/npc

View this journ al online at wileyonlinelibrary.com/ journal/npc Printed in the US A by The Allied Group.