COMMENTARY: The IRS commissioner has reported the IRS Tax Exempt & Government Entities Priorities document for the 2016 fiscal year. It can be viewed here.
I hope all of our leaders in the government entities in New Mexico will take a few moments to read this for two reasons:
- To be proactive and prepare for potential IRS audits.
- As a good example of how to lead with an open and transparent communication of management and planning within your entities.
Note on page 9, Government Entities & Shared Services: Federal, State and Local Governments (FSLG), where it states:
“Examinations. FSLG projects address significant issues of non-compliance and identify government entities with compliance issues. In addition, these projects allow us to learn more about emerging or significant compliance issues, which we then use to prepare outreach and guidance to help taxpayers understand and comply with their tax responsibilities.”
“We will also conduct specific compliance initiative projects to determine high risks of non-compliance with a specific issue, test a hypothesis about a possible non-compliance pattern or theory of non-compliance that will lead to a better case selection method.”
And on page 11, Government Entities & Shared Services: Indian Tribal Governments (ITG), where it states:
“In FY 2016 we will also introduce a new work type, a Technical Assistance Visit, which will focus on compliance in conjunction with education. This will be more complex than routine post-filing assistance and will provide one-on-one assistance to address compliance issues and allow the specialist to determine appropriate education and outreach to prevent reoccurrence. Note that we are calling this a work type for tracking and monitoring purposes, but these will not be counted as part of our examination closures.”
Also on page 12, Government Entities & Shared Services: Tax-Exempt Bonds (TEB), where it states:
“We are critically reviewing our most important TEB programs to determine how they can be improved and made more efficient. As a result, we have improved our voluntary compliance, employee training, and examination programs. We are also working to optimize resource allocation, including taking steps to determine and focus resources to areas of greatest non-compliance through revisions to the market segment program. With a projected attrition rate approaching 18% for FY 2016, we are implementing programs to improve knowledge sharing, such as virtual case studies and collaborative market segment meetings, to further knowledge management and allow us to have a well-trained, flexible and collaborative workforce.
“Examinations. Our balanced FY 2016 workplan will allocate half of TEB’s resources to examination casework.
“Referrals/Claims. Exam priority will be given to referrals, including whistleblower referrals, that have been determined to warrant examination resources and to claims; these should account for approximately 20% of our examination work.
“Market Segment Program. Remaining examination resources will be spent on the market segment program. A market segment generally refers to a type of bond such as a private activity bond. The past market segment program provided examination coverage in each market segment at least every three years, but did not produce the information needed for TEB to focus our future resources on issues having a higher risk of non-compliance. In FY 2014 we began refining the program to: (1) focus resources on areas expected to have a greater potential compliance risk, and (2) increase the informative value of these exams.
“Under this new program, we will retain an examination presence in each TEB market segment while working to identify specific fact patterns or issues in each segment (“focused subsegments”) that have a greater risk of non-compliance. For example, the advance refunding market segment now has several subsegments directed at fact patterns or issues for which TEB believes there will be a higher risk of non-compliance. We identify these subsegments and classify the cases using return and public information.”
Also see page 14, Government Entities & Shared Services: Government Entities Compliance Services (GECS), where it states:
“In FY 2016 we will also introduce a new work type, a Technical Assistance Visit, which will focus on compliance in conjunction with education. This will be more complex than routine post-filing assistance and will provide one-on-one assistance to address compliance issues and allow the specialist to determine appropriate education and outreach to prevent reoccurrence. Note that we are calling this a work type for tracking and monitoring purposes, but these will not be counted as part of our examination closures.”
A question for officials in Albuquerque
There is a $6.5-million bond question on the ballot in Albuquerque on Tuesday. It doesn’t indicate where the money is specifically going. Consider the frequently-asked-question document about the proposed bond on the city’s website:
“7. When City voters approve one purpose, can the money be used for another purpose?
“NO! Occasionally, however, money for projects identified within one purpose may be reallocated to another project within the same purpose, provided that the City Council holds a public hearing and then gives their formal approval to the reallocation. Stated another way, funding approved for the Streets purpose may not be reallocated to the Parks purpose, or funding approved for the Zoo and BioPark purpose may not be reallocated to the Storm Drainage purpose.”
Would anyone in Albuquerque’s government like to explain which is correct? Is repurposing of this $6.5 million bond money permissible?
With proactive leadership and both parties uniting to work together, we can prevent New Mexico government entities from being on the IRS “hotlist.”
Goodman is a citizen advocating to make New Mexico better by continuously improving our government and providing a better future for our children and the future of New Mexico. She can be reached at govethics@protonmail.com.