On July 15, 2020, the IRS issued interim guidance (IG) providing instructions to examiners on how to inform churches of the option to authorize the Service to consider church claims for refund or requests for abatement without following the otherwise applicable procedures of Internal Revenue Code (IRC) Section 7611. The IRS generally must follow several procedural steps under Section 7611 before it can commence an inquiry or examination of a church.
Section 7611 and the related regulations permit a church to waive the application of these procedures by submitting a written waiver. Absent a waiver, the IRS follows these procedures even if the church initiated the contact. For example, if the IRS is requesting information to verify and process a church’s claim for refund or request for abatement.
As described in the IG, the IRS developed a voluntary written waiver process to allow more expeditious processing of these claims or requests. The process is applicable only in the case of claims for refund or requests for abatement. Where applicable, the IRS will contact a church in writing to offer the option to execute a written waiver allowing the IRS to consider its claim or request without following the procedures contained in Section 7611. The church is under no obligation to agree to a waiver.
If the organization doesn’t respond by the response due date or indicates they are not authorizing a waiver, the IRS will continue processing the claim by following Section 7611 procedures and issuing a Notice of Church Tax Inquiry.
Notice 2020-56 postpones until December 31, 2020, the due date for any Community Health Needs Assessment (CHNA) that was due to be conducted and for any implementation strategy that was due to be adopted on or after April 1, 2020, and before December 31, 2020.
Hospitals using the relief in the Notice that file Form 990 prior to December 31, 2020, should state in the narrative of Part V, Section C of Schedule H (Form 990) that they are eligible for and are relying on the relief provided in the notice, and should not be treated as failing to meet the requirements of Section 501(r)(3) prior to December 31, 2020. See the Notice and IR 2020-156 for more information.
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IRS News Releases
IRS Operations During COVID-19: Mission-critical functions continue
The IRS has updated its operations page on IRS.gov with several items related to the status of IRS operations, including several items related to compliance activity.