Fiscal Year 2023 Accomplishments Letter

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A message from the TE/GE Commissioners

Edward

T. Killen & Entities

Robert S. (TE/GE)

Choi

Tax Exempt and

Government

Commissioner, TE/GE

Deputy Commissioner, TE/GE

Hello,

Thank you for helping us accomplish our strategic goals and mission while promoting voluntary compliance to the

tax-exempt sector. Our fiscal year 2023 Accomplishments Letter provides a detailed overview of our successes.

The IRS after years of underfunding, is now able to make significant modernization and transformation improvements and

enhance operations thanks to Inflation Reduction Act (IRA) funding, which amounts to roughly $60 billion over the next

decade. With this increased funding and a dedicated workforce, Tax Exempt and Government Entities (TE/GE) made

significant operational enhancements in fiscal year 2023.

Below is a snapshot of our achievements:

▪ Working in collaboration with Information Technology, we started using the

Document Upload Tool for Taxpayer Facing Employees (DUT – TPFE) with most of

the Determinations community and we plan to offer this digital tool to additional

taxpayers in fiscal year 2024. DUT – TPFE allows taxpayers to electronically upload

responses to requests for information to a portal on IRS.gov; thus, reducing case

processing time and the need to send paper documents through the mail.

▪ In partnership with Research, Applied Analytics, and Statistics (RAAS), we created

the Exempt Organizations Graph Exploration Tool (EOGET), an interactive graph tool

designed to help EO examiners and classifiers conduct risk analysis and identify

potential insider abuse among tax exempt organizations – a process that was

extremely laborious in the past.

▪ The examination Lean Six Sigma team continued moving forward with its

recommendations to improve exam-related processes and in early 2024, we will

publish the new TE/GE Consolidated Examination Internal Revenue Manual (IRM)

which will replace the existing functional IRMs.

Edward T. Killen

Commissioner, TE/GE

▪ We listened to our stakeholders and initiated the Tax Exempt Organization Search

(TEOS) Modernization project. TE/GE designed, implemented and identified an

initial set of seven improvements including a dataset guide, data dictionary, indices,

annotated tax forms, schemas, FAQs and regular updates, all aimed at enhancing the

user experience of the IRS.gov site.

▪ TE/GE worked with LB&I, IT and TF&P to identify form, programming and processing

changes needed to expand the use of Form 990-T, enabling TE/GE taxpayers to

make elective payment elections and we implemented these changes for the 2024

filing season. Another collaboration with LB&I, SB/SE, W&I and IT resulted in creating

an electronic pre-filing registration portal designed to mitigate the risk of duplicative

or improper payments and fraud related to elective payments.

▪ In fiscal year 2023, we hired 197 employees — including 113 Revenue Agents, 7 Tax

Compliance Officers, 64 Tax Examiners, 5 Analysts, and 8 other positions.

▪ TE/GE worked collaboratively with the other BODs across the IRS to implement

the objectives and initiatives within the Strategic Operating Plan to facilitate

transformation across the IRS. TE/GE participated with our counterparts across

Services and Enforcement to identify compliance issues of enterprise significance,

resulting in the development of an enterprise workplan for fiscal year 2024.

Robert S. Choi

Deputy Commissioner, TE/GE

We encourage you to read the Accomplishments Letter, highlighting your contributions to this past year’s successes – all

focused on providing better service to the tax-exempt sector.

Thank you for reading.

Edward T. Killen

Robert S. Choi

Fiscal Year 2023 Accomplishments Letter

TE/GE Snapshot

The entities that fall within TE/GE’s jurisdiction are diverse in form and

function, ranging from exempt organizations and entities of all types to large

and small business retirement plans to all levels of governmental entities,

including Tribal governments, to multi-billion-dollar bond issuances. The

one thing they share is that they are all generally exempt from or not subject

to federal income tax. Although these organizations are generally exempt

from taxation on their income, they contribute substantially to the economy

because they control trillions of dollars in assets and may be subject to

other federal taxes, such as excise and employment taxes.

TE/GE’s Organization

29%

EMPLOYS

OF THE

AMERICAN WORKFORCE

$53T

CONTROL

NEARLY

IN ASSETS1

To help this diverse set of entities meet their tax obligations and to enforce

the tax laws as part of the overall Internal Revenue Service (IRS) initiatives,

TE/GE continues to invest in its workforce. TE/GE started fiscal year 2023

with 1,513 staff on rolls. During the year TE/GE lost 212 employees resulting

in an average estimated attrition rate of 9% and hired 197 employees ending

the fiscal year with 1,520 permanent staff on rolls. The fiscal year on rolls

total is adjusted by the net gains and losses due to temporary staff

movements which result in a net increase of 22 included in year end on rolls.

The 197 hired include 113 Revenue Agents, 7 Tax Compliance Officers, 64

Tax Examiners, 5 Analysts, and 8 other positions.

ACCOUNT FOR ABOUT

26% OF $1.5T

IN FEDERAL TAX EXPENDITURES2

Figure 1: FY 2023 Year End Staffing

Headquarters

Compliance, Planning and Classification

122

Shared Services

130

207

Government Entities

508

Employee Plans

541

Exempt Organizations

100

200

300

400

500

600

In 2022 dollars. Represents the latest data available for assets for U.S. retirement plans (2021), F990/990EZ data estimates (2018), domestic private

foundation estimates (2018) and outstanding municipal debt (2nd quarter 2022).

Tax expenditures are defined in the Budget Act as “revenue losses attributable to provisions of the [federal] tax laws which allow a special exclusion,

exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability.’’ [Congressional

Budget & Impoundment Control Act of 1974, Pub. L. No. 93-344, § 3(3), 88 Stat. 297]

Fiscal Year 2023 Accomplishments Letter

62 EXAMINATIONS

APPROVED

COMPLIANCE

STRATEGIES3

32 COMPLIANCE

CONTACTS

OTHER

In fiscal year 2023, TE/GE continued to identify compliance work through

our compliance strategy and data driven processes. Both processes require

review and approval from the TE/GE Compliance Governance Board (TE/

GE CGB) and allow us to address significant compliance and resource

challenges through the strategic use of resources, training, and tools. This

helps us focus on high risk and emerging issues using different treatment

streams – from examinations and compliance contacts to educational letters

and technical guidance. We develop compliance strategies and data driven

approaches around areas of noncompliance using information collected

through employee experience and input merged with data analytics. Using

a web-based portal, TE/GE (and other IRS) employees submit issues to the

TE/GE CGB for consideration. Once approved for a compliance treatment,

these issues are considered priority work.

Since the inception of the compliance strategy portal in 2017, we received 622 submissions from employees and

approved 89 compliance strategies and 16 data driven compliance workstreams, 71% of which are currently underway as

examinations or compliance checks with taxpayers.

The web-based portal is transitioning to a newer version using PowerApps, Power Automate, and SharePoint to

document the process of submitting issues from beginning to end. The updated portal will document all actions

performed from issue submission to proposal development to completion of the submitted issue. The new portal will be

effective the first quarter of fiscal year 2024.

To accomplish our mission, we deliver a platform of six programs that together promote tax law compliance by tax

exempt and government entities.

▪ Compliance Strategies: Issues approved by the TE/GE CGB to identify, prioritize, and allocate resources within the

TE/GE filing population.

▪ Data-Driven Approaches: Data and queries based on quantitative criteria, used to identify high risk areas of

noncompliance, and focus on issues with the greatest impact.

▪ Referrals, Claims and Other Casework: Referrals of alleged noncompliance from internal and external sources,

and claims for refunds, credits, or adjustments.

▪ Compliance Contacts: Correspondence contacts, known as compliance checks, addressing potential

noncompliance, and educational letters to limit costs and taxpayer burden.

▪ Determinations: Letters issued to exempt organizations on exempt status, private foundation classification and

other determinations related to exempt organizations, and qualified retirement plans that meet legal and regulatory

requirements.

▪ Voluntary Compliance and Other Technical Programs: The Voluntary Correction Program (VCP) enables a plan

sponsor (at any time before examination) to pay a fee and receive IRS approval for correction of plan failures. Other

technical programs, including Knowledge Management (KM), work to ensure the quality and consistency of technical

positions, provide timely assistance to employees and preserve and share TE/GE’s knowledge base.

Improving Processes

In fiscal year 2023, TE/GE continued its Lean Six Sigma (LSS) efforts in three significant areas. The examination LSS

team continued to work through the recommendations to improve exam-related processes and should be concluding

these efforts in early fiscal year 2024 with the publishing of the new TE/GE Consolidated Examination Internal Revenue

Manual (IRM) which will replace the existing functional IRMs. The compliance check LSS team continued its work to

develop a consistent TE/GE compliance check process, implementing efficiency opportunities, mitigating, or eliminating burdensome steps in the process, and implemented a process to provide meaningful real-time feedback on results.

The team is developing procedural content related to the compliance check process for a new IRM which is scheduled

to be published by the end of March 2024. Additionally, the team is developing a quality measurement system for the

compliance check workstream and expects to implement during the third quarter of fiscal year 2024. The EO Rulings

Compliance Strategies may have more than one treatment. For example, one compliance strategy may have an examination and compliance check

components. The “Other” category includes educational letters, newsletters, issue snapshots, data-driven queries, and revenue protection procedures.

Fiscal Year 2023 Accomplishments Letter

and Agreements Correspondence Unit LSS team focused on process improvements relating to the intake submissions

of Form 4506-B, Request for a Copy of Exempt Organization IRS Application or Letter. The process improvements are

intended to improve efficiencies, reduce duplicative steps, and minimize bottlenecks. The team will continue carrying out

implementation steps of the remaining recommendations in fiscal year 2024.

Collaborative Partnerships

TE/GE collaborated with a diverse group of stakeholders to strengthen its programs in fiscal year 2023. We partnered with

Information Technology to drive key components of the IRS modernization plan. We initiated use of the Document Upload

Tool for Taxpayer Facing Employees (DUT - TPFE) for most of the TE/GE Determinations community. We will extend this

tool to additional TE/GE taxpayers in fiscal year 2024. DUT - TPFE provides an avenue for taxpayers to upload responses

to requests for information to a portal on IRS.gov. This digital solution decreases case processing time while supporting

our goal to provide taxpayers ways to submit information electronically and reduces the need to send paper documents

through the mail. In addition, we modified Form 13909, Tax-Exempt Organization Complaint (Referral), for intake on

IRS.gov through the Digital and Mobile Adaptive Forms DUT and will be implementing it in fiscal year 2024. This digital

solution will provide an electronic way for the public to submit referrals to TE/GE.

In fiscal year 2023, we initiated the TEOS Modernization project. The team focused on designing and implementing an

initial set of seven identified improvements derived from valuable stakeholder feedback. These enhancements involve

providing essential descriptive information such as a dataset guide, data dictionary, indices, annotated tax forms,

schemas, FAQs and regular updates, all aimed at enhancing public usability. These identified improvements demonstrate

to stakeholders the value of their feedback, highlighting its positive impact. Our goal is to publish these improvement

documents on TEOS Improvements by Fall 2023 and early 2024 in two waves, ensuring a seamless experience for

tax-exempt organizations search and analysis. Looking ahead, the project team will refine long-term plans and create a

roadshow presentation to raise awareness about transformation of the public disclosure program, emphasizing its significance to secure IRA priority funding.

In pertinent part, the Inflation Reduction Act expanded and enhanced general business credits allowable with respect

to a range of clean energy investments and production activities. At the same time, the Inflation Reduction Act enacted

provisions that enable various taxpayers (including exempt organizations, Indian Tribal Governments, and state and local

governments) to monetize certain allowable credits by electing to treat the credits as a payment of tax (referred to as

“elective payment”). Elective payment makes the benefit of specific clean energy credits available to entities/organizations even if they are not subject to income tax. TE/GE continued to coordinate with LB&I, IT, and TF&P to identify form,

programming, and processing (including correspondence) changes necessary to expand the use of Form 990-T to enable

TE/GE’s taxpayers to make an elective payment election and took steps to ensure these changes are implemented for

the 2024 filing season. Elective payment elections can result in a net payment of Treasury funds to a qualifying taxpayer.

To mitigate the risk of duplicative or improper payments and fraudulent claims, the Inflation Reduction Act authorizes

Treasury and IRS to implement a pre-filing registration process (implemented under the recently issued temporary regulations). TE/GE continues to work intensively with LB&I, SB/SE, W&I, and IT to create an electronic portal for submission

and review of pre-filing registrations and to develop procedures addressing issues and needs related to TE/GE taxpayers.

Currently, the pre-filing registration portal is expected to launch in November. TE/GE continued collaborating with LB&I,

SB/SE, W&I, and IT on development of processes for appropriate prepayment compliance review and post-payment

compliance activities to mitigate the risk of duplicative or improper payments and fraud related to elective payments.

We continued our collaborative efforts in fiscal year 2023 with multiple releases of additional functionality of Enterprise

Case Management (ECM) to our end users in Exempt Organization’s Correspondence Unit (EOCU). We participated in the

service-wide effort to design the future examination process in ECM and partnered with other business operating divisions

to standardize examination processes. We will continue these efforts in fiscal year 2024.

We also spent the year working with stakeholders across the agency to enhance our efforts in the areas of fraud, promoter

investigations and abusive transactions. Our EO agents continue to work with Small Business/Self-Employed (SB/SE),

Large Business and International (LB&I) and Criminal Investigation (CI) on syndicated conservation easement cases. TE/

GE continues to assist CI with fraud investigations as cooperating agents. TE/GE managers joined their SB/SE and CI

counterparts for virtual compliance councils across the country, discussing compliance issues. We continued collaborating with CI and Research, Applied Analytics and Statistics (RAAS) to develop methods to identify potential noncompliance

in the exempt organization community.

In fiscal year 2023, TE/GE continued to partner with LB&I and RAAS around high income/high wealth taxpayers and the

identification of linkages involving TE/GE organizations. Collaboration in this area continued with finalizing the development and implementation of a joint exam desk guide and launched joint exams between IRS divisions. We expect the joint

examinations to continue in fiscal year 2024.

Fiscal Year 2023 Accomplishments Letter

In fiscal year 2023, we partnered with Research, Applied Analytics, and Statistics (RAAS) to create the Exempt

Organizations Graph Exploration Tool (EOGET). EOGET is an interactive graph tool designed to help Exempt Organization

(EO) examiners and classifiers visualize the networks of relationships between EOs, their officers, and other individuals

and organizations. It will assist examiners and classifiers with conducting risk analysis and identifying potential insider

abuse of EOs in ways that would have been extremely laborious if not impossible in the past. RAAS also assisted in

improving CDW Knowledge Graph Environment (CKGE) to implement Tax Exempt and Government Entities (TE/GE) data

from the Compliance Data Warehouse (CDW) to assist in identifying related entities/individuals and form filings. CKGE will

mainly be used by field examiners in looking at related data for the entity under examination. We also worked with RAAS

to launch a graphical analysis tool for Employee Plan examiners to use and this has proven useful immediately. Finally,

we’ve collaborated with RAAS to launch a demonstration project leveraging advance artificial intelligence processes to

screen and prioritize referrals submitted by the public. We look forward to testing and launching this in fiscal year 2024.

Employee Plans (EP) has shared jurisdiction over ERISA with the Department of Labor’s Employee Benefit Security

Administration (EBSA) and the Pension Benefit Guarantee Corporation (PBGC). Throughout fiscal year 2023 EP worked

closely with these agencies, resulting in enhanced customer service and improved compliance for retirement plans.

EP and EBSA held joint internal workshops where technical topics that impact both agencies were discussed. The two

agencies held a face-to-face summit where collaboration increased in a variety of arenas such as digital currency, cybersecurity, and law changes made by the SECURE 2.0 Act of 2022. Collaboration at the local level continued throughout the

year with meetings between EP and EBSA field offices to discuss issues, trends, and joint examinations. EP and PBGC

held discussions regarding the multi-employer plan funding status certifications.

The Office of TE/GE Equity, Diversity & Inclusion (EDI), in support of the Agencywide Equity, Diversity, Inclusion, and

Accessibility (EDIA) Strategy and Roadmap, focused its efforts to engage the TE/GE and IRS Workforce and enhance

cultural awareness and demonstrate our office’s commitment to the four key EDIA Pillars - People, Culture, Leadership,

and Community. The Large Business and International (LB&I), Small Business/Self Employed (SB/SE), and TE/GE Diversity

and Equal Employment Opportunity Advisory Committees (DEEO ACs) established a Community of Practice (COP)

in fiscal year 2023 to share best practices and discuss common concerns. TE/GE implemented a Field Visit Plan and

conducted two Field Visits at TE/GE Community Cities Posts of Duty engaging with 13% of the TE/GE workforce. TE/GE

EDI continued its education and outreach efforts to external organizations in support of the IRS Strategy and Roadmap’s

outreach objectives. Overall, during fiscal year 2023, TE/GE EDI hosted 132 EDIA workshops for 14,102 IRS and external

attendees. These sessions break out as follows:

▪ Internal to TE/GE: Hosted 39 Lunch and Learns, New Hire EDI Orientations, and other EDIA virtual training

workshops for a total of 4,119 attendees.

▪ Other IRS Business Units: Hosted 37 EDIA professional development virtual workshops for a total of 3,738

attendees.

▪ External to the IRS: Hosted 56 EDIA virtual and in-person workshops in support of outreach to external Federal

Agency Partners and National Equal Employment Opportunity (EEO) and IRS Employee Organizations and Employee

Resource Groups for a total of 6,245 attendees.

Fiscal Year 2023 Accomplishments Letter

Exempt Organizations

Examinations

Started

Closed

Change %

Pick-up %

232

221

84.2%

57.0%

Compliance Strategies

Data-Driven Approaches

790

746

61.7%

44.3%

Referrals, Claims and Other Casework

1,507

1,497

81.3%

34.7%

Totals

2,529

2,464

75.7%

39.6%

EO completed examinations of 2,464 filings in fiscal year 2023, including the Form 990 series (990, 990-EZ, 990-PF,

990-N, 990-T) and their associated employment and excise tax returns. Overall, 76% of closed examinations resulted in a

tax change (change percentage) and 40% of the examinations were “picked-up” from a related examination (pick-up

percentage). We proposed revocations for 141 tax-exempt entities because of these examinations.

Figure 2: FY 2023 Revocations by Issue*

124

Operational Requirements

Filing Requirements

Organizational Requirements

Unrelated Business Income

Chapter 42 Taxes

100

120

140

Examinations can have more than one issue code. As a result, the number of issues reported in the chart above doesn’t match the number of revocations.

Compliance Strategies

EO continued several compliance strategy examinations to address noncompliance in this sector, including:

▪ Private benefit and inurement: Focused on organizations that show indicators of potential private benefit or inurement

to individuals or private entities through private foundation loans to disqualified persons.

▪ IRC Section 501(c)(7) entities: Focused on nonmember income generated by exempt recreational and social clubs.

▪ Form 990-N filing eligibility: Focused on determining if an organization was eligible to file Form 990-N where related

filings indicate the organization’s gross receipts aren’t normally $50,000 or less.

The most prominent issues found in compliance strategy examinations relate to filing requirements, for-profit conversions,

and self-dealing.

Fiscal Year 2023 Accomplishments Letter

Data-Driven Examinations

Additionally, EO initiated and continued several data-driven compliance examinations, including:

▪ Organizations selected through compliance query sets based on information reported on Form 990, Return of

Organization Exempt from Income Tax, or Form 990-EZ, Short Form Return of Organization Exempt from Income Tax.

▪ Organizations identified in collaboration with CI and RAAS to research indicators of private benefit/inurement.

The most prominent issues found in data-driven examinations relate to employment taxes, unrelated business income,

and unreported compensation.

Referrals, Claims and Other Casework

EO also completed other casework vital to protecting the public interest, including:

▪ Organizations claiming the Employee Retention Credit.

▪ Organizations referred by both external and IRS sources.

▪ Organizations engaged in potentially abusive promoter schemes or transactions.

The most prominent issues found in such examinations involve Employee Retention Credit eligibility, employment taxes,

filing requirements, and operational requirements related to operating for an exempt purpose.

Determinations

EO closed 119,491 determination applications in fiscal year 2023, including 103,073 approvals, 98,417 of which were

approvals for 501(c)(3) status. Figure 3 shows receipts of applications for tax-exempt status, private foundation classification and other EO-related determinations. The figure reflects receipts by Form 1023-EZ, Form 1023 and other forms

including Forms 1024, 1024-A, 1028 and 8940.

Figure 3: EO Determination Receipts

TE/GE pursues continuous improvement in the determinations process for exempt organizations. Use of Form

1023-EZ has grown since its introduction in 2014, and TE/

GE continues its efforts to collect, monitor and evaluate

data to understand the impact and opportunities from this

important change to its determination process.

140000

120000

100000

Figure 4 provides the taxonomy (as categorized by the

National Taxonomy of Exempt Entities (NTEE) codes) of

501(c)(3) organizations approved in fiscal year 2023 by

application type. The visual provides the categories with

the highest proportion of organizations. Form 1023-EZ

approvals in fiscal year 2023 were mostly organizations

categorized as human services; education; arts, culture &

humanities; and recreation & sports. Those organizations

that were approved after filing a Form 1023 were largely

organizations categorized as religion-related; human

services; education; and philanthropy, voluntarism &

grant-making foundations.

80000

60000

40000

20000

2021

Form 1023-EZ

2022

Form 1023

2023

Other

Fiscal Year 2023 Accomplishments Letter

Figure 4: Taxonomy of 501(c)(3) Organizations Approved in FY 2023

3,443

Community Improvement & Capacity Building

4,251

Youth Development

4,835

Religion-Related

6,923

Arts, Culture & Humanities

8,512

Recreation & Sports

9,597

Education

10,565

Human Services

919

Community Improvement & Capacity Building

Recreation & Sports

1,543

Arts, Culture & Humanities

1,694

2,811

Philanthropy, Voluntarism & Grantmaking Foundations

Human Services

3,179

Education

3,327

5,630

Religion-Related

2,000

4,000

6,000

Form 1023-EZ

8,000

Form 1023

10,000

12,000

Fiscal Year 2023 Accomplishments Letter

Employee Plans

Examinations

Started

Closed

Change %

Pick-up %

Compliance Strategies

443

581

76.9%

61.3%

Data-Driven Approaches

1,320

1,311

73.9%

53.9%

Referrals, Claims and Other Casework

1,983

2,100

73.6%

54.9%

Totals

3,746

3,992

74.2%

55.5%

EP closed 3,992 examinations in fiscal year 2023. We proposed revocations or disqualifications for eight (8) plans in these

examinations for issues involving participation/eligibility/coverage and proper employer contributions relating to SIMPLE

and SARSEP IRAs. A SIMPLE IRA plan (Savings Incentive Match Plan for Employees) allows employees and employers

to contribute to traditional IRAs set up for employees and a SARSEP is a simplified employee pension (SEP) plan set up

before 1997 that includes a salary reduction arrangement.

Compliance Strategies

EP continued examinations on the following compliance strategies:

▪ Required Minimum Distributions in Large Defined Benefit Plans: Ensured that retirement plan sponsors distributed

benefits according to IRC Section 401(a)(9).

▪ One-Participant 401(k) Plans: Reviewed one-participant 401(k) plans to determine if there were operational or

qualification failures, income and excise tax adjustments, or plan document violations.

▪ Worker Classification: Examining worker classifications.

▪ Required Minimum Distributions in Single Participant Plans: Reviewing single participant plans to verify that the

required minimum distribution rules have been followed.

▪ Multi-Employer Plans: Reviewing a plan identified as a multi-employer plan after 4/2001.

Prominent issues found in closed compliance strategy examinations include excess contributions and failing to meet the

IRC 401(k) deferral test.

Data-Driven Examinations

EP continues to identify indicators of noncompliance with the tax laws for profit-sharing, money purchase, 401(k) and

defined benefit plans, including:

▪ Participant Loans: verified whether participant loans of retirement plans that hold a high percentage of participant

loans to total assets were being repaid timely if the loan balance didn’t change or increased for more than one year.

▪ IRC 401(k) plan issues

Prominent issues found in data-driven approaches relate to contributions, earning allocations, participation and coverage,

plan document amendment failures, and vesting issues.

Referrals, Claims and Other Casework

EP also verified that non-bank trustees (NBT) satisfied the NBT regulations. This examination portfolio also included

referrals from internal and external sources, claims initiated by taxpayers requesting a refund and fraud related work. This

fiscal year, EP also continued to focus on open promoter investigations. As is common with promoter schemes, the plan

is used as a conduit in a potentially abusive transaction. In addition, EP continued its work in supporting SB/SE-led investigations and assisting CI with fraud investigations as cooperating agents.

Prominent issues found in EP’s Referrals, Claims and Other Casework include delinquent amendment plan documents,

inappropriate treatment of plan assets (timing of distributions, proper valuations, timely deposits, and reversions), 401(k)/

(m) noncompliance, and ineligibility to sponsor SIMPLE IRA plans.

Fiscal Year 2023 Accomplishments Letter

Determinations

Figure 5: EP Application Receipts (FY 2020 – FY 2023)

3,000

2,500

2,000

1,500

1,000

500

2020

Form 5300

(initial)

Form 5300

(amendments)

2021

2022

Form 5307

Form 5310

2023

Form 5316

Pre-Approved

EP Determinations split focus between determination and pre-approved plan applications programs, examinations and

voluntary compliance during fiscal year 2023. EP Determinations closed 1,367 determination applications, 226 examinations, 30 determination/examination assistance cases and 53 voluntary compliance cases. The figure above shows the EP

determination letter and pre-approved plan applications received over the last four fiscal years. The determination letter

program was expanded to include 403(b) individually designed plans. The program opened June 1, 2023 and was the first

time these filers were allowed to submit for a determination letter.

As of June 1, 2023, all determination letter applications now file electronically through Pay.gov.

During fiscal year 2023, EP reviewed and finalized the third cycle defined benefit pre-approved plans, issuing 582 letters

on February 28, 2023. The window for the second cycle 403(b) pre-approved plans closed May 1, 2023 with total receipts

of 550. Training was held in early June and review of the 53 lead cases began later that month.

Figure 6: EP Application Closures (FY 2020 – FY 2023)

4000

3500

3000

2500

2000

1500

1000

500

Form 5300

(initial)

2020

Form 5300

(amendments)

2021

2022

Form 5307

Form 5310

2023

Form 5316

Pre-Approved

Fiscal Year 2023 Accomplishments Letter

Voluntary Correction and Other Technical Programs

The VCP enables retirement plan sponsors (at any time before examination) to pay a fee and receive IRS approval for correction of plan qualification failures. In fiscal year 2023, EP received 1,185 voluntary correction applications and closed 1,142.

For the year, Voluntary Compliance returned its focus to regular voluntary compliance work, successfully reducing its

Exam inventory from 114 cases to just 6 cases (representing 2 lead plans). This allowed the program to achieve voluntary

compliance closures at 200% of the annual goal, effectively stabilizing its inventory.

Figure 7 lists the top 10 types of failures corrected through the VCP in fiscal year 2023.

Figure 7: Top 10 Failures Corrected Through EP VCP

2.24%

Failure to timely adopt initial plan document

IRC 4974 - Required Minimum Distribution-Tax Waiver Granted

2.61%

Participation agreements not executed (Multiple/Multi employer)

2.73%

3.17%

Exclusion of Eligible Employees

Failure to make matching contributions per plan terms

3.66%