The IRS Tax Exempt & Government Entities division (TE/GE) has published a pared-down 2021 program letter describing TE/GE’s priorities for the October 2020–September 2021 fiscal year (FY 2021). TE/GE has also launched a new Compliance Programs and Priorities webpage to provide details on the division’s goals. The new webpage will feature quarterly updates on TE/GE’s plans and compliance initiatives.
The 2021 program letter provides few specifics on TE/GE’s priorities but explains the division’s goals in broad terms. With respect to employee benefit plans, the letter suggests that TE/GE will pay close attention to retirement plans of closely held businesses, such as employee stock ownership plans (ESOPs), and will develop a tool to help individuals avoid making excess 401(k) plan contributions.
The webpage provides more details on the benefit and compensation issues receiving TE/GE focus in FY 2021:
TE/GE will also continue to pursue its FY 2020 compliance programs, including the focus on 403(b) and 457 plans, which prompted several IRS issue snapshots this year. The FY 2020 program letter also indicated that TE/GE would examine whether terminated cash balance plans violated IRC Section 415 limits or generated asset reversions subject to a reversion tax.
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