IRS offers not-for-profit governance guidelines

The Internal Revenue Service has posted a guide sheet and companion checklist that will be used by agents to evaluate the governance of not-for-profit hospitals and other tax-exempt organizations during examinations for compliance with tax law regulations.

The IRS has expressed an interest in the governance of tax-exempt organizations and included a section (Part VI) in the revamped Form 990, which the agency describes on its Web site as “the best reflections” of current IRS positions on the topic. Sarah Hall Ingram, tax exempt and government entities commissioner for the IRS since April, said in a July speech that the IRS believes that organizations with good governance are less likely to abuse their tax-exempt status.

The IRS said on its Web site that data collected on the checklist “will be included in a long-term study to gain a better understanding of the intersection between governance practices and tax compliance.”

Michael Peregrine, a partner in the law firm McDermott Will & Emery, said he sees the guide sheet as “extrapolating and putting meat on the bones” of the Form 990 section on governance. “By the questions these guidelines present, we get a better idea what the IRS is expecting the right answer to be.”

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