Publication 557 (Rev

7/25/2019 Publication 557 (Rev

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Contents

What's New . . . . . . . . . . . . . . . . . . 2

Reminders . . . . . . . . . . . . . . . . . . . 2

Introduction . . . . . . . . . . . . . . . . . . 2

Chapter 1. Application, Approval,

and Appeal Procedures . . . . . . . . 3Application Procedures . . . . . . . . . 3

Forms Required . . . . . . . . . . 3Required Inclusions . . . . . . . . 4Miscellaneous Procedures . . . . 4

Rulings and DeterminationLetters . . . . . . . . . . . . . . . . . 5

Effective Date ofExemption . . . . . . . . . . . . 6

Revocation or Modificationof Exemption . . . . . . . . . . 6

Appeal Procedures . . . . . . . . . . . . 6Appeals Office

Consideration . . . . . . . . . . 6Administrative Remedies . . . . . 7Appeal to Courts . . . . . . . . . . 7

Group Exemption Letter . . . . . . . . . 7Central OrganizationApplication Procedure . . . . . 7

Keeping the GroupExemption Letter inForce . . . . . . . . . . . . . . 8

Events Causing Loss ofGroup Exemption . . . . . . . . 9

Chapter 2. Filing Requirements

and Required Disclosures . . . . . . 9Annual Information Returns . . . . . . 10Unrelated Business Income Tax

Return . . . . . . . . . . . . . . . . 12Employment Tax Returns . . . . . . . 12Political Organization Income

Tax Return . . . . . . . . . . . . . 13Reporting Requirements for a

Political Organization . . . . . . . 13Donee Information Return . . . . . . . 15Information Provided to Donors . . . . 15Report of Cash Received . . . . . . . 17Public Inspection of Exemption

Applications, AnnualReturns, and PoliticalOrganization ReportingForms . . . . . . . . . . . . . . . . 17

Required Disclosures . . . . . . . . . 19Solicitation of

NondeductibleContributions . . . . . . . . . 19

Sales of Information orServices Available FreeFrom Government . . . . . . 20

Dues Used for Lobbying orPolitical Activities . . . . . . . 20

Miscellaneous Rules . . . . . . . . . . 20

Chapter 3. Section 501(c)(3)

Organizations . . . . . . . . . . . . . 21Contributions to 501(c)(3)

Organizations . . . . . . . . . . . . 21Application for Recognition of

Exemption . . . . . . . . . . . . . . 22Articles of Organization . . . . . . . . 24Educational Organizations and

Private Schools . . . . . . . . . . . 25

Departmentof theTreasury

InternalRevenueService

Publication 557(Rev. February 2016)

Cat. No. 46573C

Tax-ExemptStatus for YourOrganization

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Organizations ProvidingInsurance . . . . . . . . . . . . . . 27

Other Section 501(c)(3)Organizations . . . . . . . . . . . . 27

Private Foundations and PublicCharities . . . . . . . . . . . . . . . 29

Lobbying Expenditures . . . . . . . . 45

Chapter 4. Other Section 501(c)

Organizations . . . . . . . . . . . . . 47501(c)(4) - Civic Leagues and

Social WelfareOrganizations . . . . . . . . . . . . 47501(c)(5) - Labor, Agricultural

and HorticulturalOrganizations . . . . . . . . . . . . 48

501(c)(6) - Business Leagues,etc. . . . . . . . . . . . . . . . . . . 49

501(c)(7) - Social andRecreation Clubs . . . . . . . . . . 50

501(c)(8) and 501(c)(10) -Fraternal BeneficiarySocieties and DomesticFraternal Societies . . . . . . . . . 51

501(c)(4), 501(c)(9), and 501(c)(17) - Employees'Associations . . . . . . . . . . . . 51

501(c)(12) - Local BenevolentLife Insurance Associations,Mutual Irrigation andTelephone Companies, andLike Organizations . . . . . . . . . 53

501(c)(13) - CemeteryCompanies . . . . . . . . . . . . . 54

501(c)(14) - Credit Unions andOther Mutual FinancialOrganizations . . . . . . . . . . . . 55

501(c)(19) - Veterans'Organizations . . . . . . . . . . . . 56

501(c)(20) - Group LegalServices Plan Organizations . . . 57

501(c)(21) - Black Lung BenefitTrusts . . . . . . . . . . . . . . . . 57

501(c)(2) - Title-Holding

Corporations for SingleParent Corporations . . . . . . . . 57

501(c)(25) - Title-HoldingCorporations or Trusts forMultiple Parent Corporations . . . 58

501(c)(26) - State-SponsoredHigh-Risk Health CoverageOrganizations . . . . . . . . . . . . 58

501(c)(27) - QualifiedState-Sponsored Workers'CompensationOrganizations . . . . . . . . . . . . 58

501(c)(29) - CO-OP HealthInsurance Issuers . . . . . . . . . 59

Chapter 5. Excise Taxes . . . . . . . . . 59

Prohibited Tax ShelterTransactions . . . . . . . . . . . . 59Excess Benefit Transactions . . . . . 60Excess Business Holdings . . . . . . 63Taxable Distributions of

Sponsoring Organizations . . . . . 64Taxes on Prohibited Benefits

Resulting From DonorAdvised Fund Distributions . . . . 64

Excise Taxes on PrivateFoundations . . . . . . . . . . . . . 64

Excise Taxes on Black LungBenefit Trusts . . . . . . . . . . . . 65

Excise Tax on Failure to Meetthe Community HealthNeeds AssessmentRequirements . . . . . . . . . . . 65

Chapter 6. How To Get Tax Help . . . . 65

Organization Reference Chart . . . . . . 67

Appendix. Sample Articles of

Organization . . . . . . . . . . . . . . 70

Appendix. Sample Articles ofOrganization, continued . . . . . . 71

Index . . . . . . . . . . . . . . . . . . . . . 74

What's NewFuture developments. The IRS has created apage on IRS.gov for information about Publica-tion 557, at www.irs.gov/pub557. Informationabout any future developments affecting Publi-cation 557 (such as legislation enacted after werelease it) will be posted on that page.

RemindersThe Patient Protection and Affordable CareAct (ACA). The ACA added several new laws.This includes a new excise tax on indoor tan-ning services, a small business health care taxcredit, additional requirements for tax-exempthospitals, and the section 501(c)(29) CO-OPprogram. For more information, go to IRS.govand select Affordable Care Act Tax Provisions.

Electronic filing requirement for large or-ganizations. For tax years ending on or afterDecember 31, 2006, only organizations that file250 returns during the calendar year and that

have total assets of $10 million or more are re-quired to file Form 990 electronically. For moreinformation, go to e-file for Charities and Non-Profits.

Section 501(c)(15) gross receipts. The defi-nition of gross receipts for purposes of deter-mining whether small insurance companiesqualify as tax-exempt under section 501(c)(15)can be found in Notice 2006-42, 2006-19 I.R.B.878.

Prohibited tax shelter transactions. Excisetaxes are imposed under section 4965 on cer-tain tax-exempt organizations entering into pro-hibited tax shelter transactions. See the Regu-lations in T.D. 9492, Excise Taxes on ProhibitedTax Shelter Transactions and Related Disclo-

sure Requirements, 2010-33 I.R.B. 242. SeeIRS Issues Final Regulations Regarding ExciseTaxes on Prohibited Tax Shelter Transactionsand Related Disclosure Requirement.

Pension Protection Act of 2006 taxchanges. The Pension Protection Act of 2006made numerous changes to the tax law provi-sions affecting tax-exempt organizations. Un-less otherwise noted, most of the changes be-came effective on August 17, 2006. For keyprovisions, go to The Pension Protection Act of2006.

Section 501(c)(3) organizations must maketheir Form 990-T, Exempt Organization

Business Tax Return (and proxy tax undersection 6033(e)), open for public inspection fora period of 3 years from the date the Form990-T is required to be filed (determined withregard to any extension of time for filing) or isactually filed, whichever is later.

There is an increase in excise taxes relatingto public charities, social welfare organizations,and private foundations.

There are additional standards for creditcounseling organizations.

The definition of convention or associationof churches have been modified.

Entities that are not required to file Form 990or 990-EZ must file Form 990-N, ElectronicNotice (e-Postcard) for Tax-ExemptOrganizations Not Required to File Form 990 or990-EZ available on the Urban Institute website.See the epostcard.form990.org website fordetails.

The requirements of disclosure to stateofficials relating to exempt organizations havebeen modified.

There are excise taxes imposed on excessbenefit transactions involving donor advisedfunds and sponsoring organizations.

There are excise taxes on prohibited tax

shelter transactions.There is a modification of recordkeeping

requirements for certain charitablecontributions.

IntroductionThis publication discusses the rules and proce-dures for organizations that seek recognition ofexemption from federal income tax under sec-tion 501(a) of the Internal Revenue Code (theCode). It explains the procedures you must fol-low to obtain an appropriate ruling or determi-nation letter recognizing your organization's ex-emption, as well as certain other informationthat applies generally to all exempt organiza-

tions. To qualify for exemption under the Code,your organization must be organized for one ormore of the purposes specifically designated inthe Code. Organizations that are exempt undersection 501(a) include those organizations de-scribed in section 501(c). Section 501(c) organ-izations are covered in this publication.

Chapter 1, Application, Approval, and Ap-peal Procedures, provides general informationabout the procedures for obtaining recognitionof tax-exempt status.

Chapter 2, Filing Requirements and Re-quired Disclosures, contains information aboutannual filing requirements and other mattersthat may affect your organization's tax-exemptstatus.

Chapter 3, Section 501(c)(3) Organizations,contains detailed information on various mattersaffecting section 501(c)(3) organizations, in-cluding a section on the determination of pr ivatefoundation status.

Chapter 4, Other Section 501(c) Organiza-tions, includes separate sections for specifictypes of organizations described in section501(c).

Chapter 5, Excise Taxes, provides informa-tion on when excise taxes may be imposed.

Organizations not discussed in this publi-cation. Certain organizations that may qualify

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for exemption are not discussed in this publica-tion, although they are included in the Organiza-tion Reference Chart. These organizations (andthe Code sections that apply to them) are as fol-lows.

Corporations organized under Acts of

Congress . . . . . . . . . . . . . . . . . . . . . . . 501(c)(1)

Teachers' retirement fund associations . . . 501(c)(11)

Mutual insurance companies . . . . . . . . . . 501(c)(15)

Corporations organized to finance crop

operations . . . . . . . . . . . . . . . . . . . . . . 501(c)(16)

Employee funded pension trusts (created

before June 25, 1959) . . . . . . . . . . . . . . 501(c)(18)

Withdrawal liability payment fund . . . . . . . 501(c)(22)

Veterans' organizations (created before

1880) . . . . . . . . . . . . . . . . . . . . . . . . . . 501(c)(23)

National Railroad Retirement Investment

Trust . . . . . . . . . . . . . . . . . . . . . . . . . . 501(c)(28)

Religious and apostolic associations . . . . 501(d)

Cooperative hospital service

organizations . . . . . . . . . . . . . . . . . . . . 501(e)

Cooperative service organizations of

operating educational organizations . . . . . 501(f)

Section 501(c)(24) organizations (section4049 ERISA trusts) are neither discussed in thetext nor listed in the Organization ReferenceChart.

Similarly, farmers' cooperative associationsthat qualify for exemption under section 521,qualified state tuition programs described insection 529, and pension, profit-sharing, andstock bonus plans described in section 401(a)are not discussed in this publication. If you thinkyour organization falls within one of these cate-gories, contact the IRS for any additional infor-mation you need. For telephone assistance, call1-877-829-5500.

Check the Table of Contents at the begin-ning of this publication to determine whetheryour organization is described in this publica-tion. If it is, read the chapter (or section) that ap-plies to your type of organization for the specificinformation you must give when applying for

recognition of exemption.

Organization Reference Chart. The Organi-zation Reference Chartenables you to locate ata glance the section of the Code under whichyour organization might qualify for exemption. Italso shows the required application form and, ifyour organization meets the exemption require-ments, the annual return to be filed (if any), andwhether or not a contribution to your organiza-tion will be deductible by a donor. It also de-scribes each type of qualifying organization andthe general nature of its activities.

You may use the Organization ReferenceChart to determine the Code section that youthink applies to your organization. Any corre-

spondence with the IRS (in requesting forms orotherwise) will be expedited if you indicate inyour correspondence the appropriate Codesection. Check the IRS website, IRS.gov, forthe latest updates, Tax Information for Charities& Other Non-Profits, www.irs.gov/charities/index.html.

Comments and suggestions. We welcomeyour comments about this publication and yoursuggestions for future editions.

You can send your comments fromwww.irs.gov/formspubs. Click on More infor-mation and then on Give us feedback onforms and publications.

Or you can send your comments to us at thefollowing address:

Internal Revenue ServiceTax Forms and Publications Division1111 Constitution Ave. NW, IR-6526Washington, DC 20224

We respond to many letters by telephone.Therefore, it would be helpful if you would in-clude your daytime phone number, includingthe area code, in your correspondence.

If you wish telephone assistance, please call1-877-829-5500. This toll-free telephone serv-ice is available Monday through Friday.

1.

Application,

Approval, and

Appeal

Procedures

IntroductionIf your organization is one of the organizationsdescribed in this publication and is seeking rec-ognition of tax-exempt status from the IRS, youshould follow the procedures described in thischapter and the instructions that accompanythe appropriate application forms.

For information on section 501(c)(3) organi-zations, go to Section 501(c)(3) Organizations,chapter 3. If your organization is seeking ex-emption under one of the other paragraphs ofsection 501(c), see chapter 4.

TopicsThis chapter discusses:

Application procedures that generally

apply to all organizations discussed in thispublication, including the applicationforms;Rulings and determination letters(approvals/disapprovals);Appeal procedures available if an adversedetermination letter is proposed; andGroup exemption letters.

Application Procedures

Oral requests for recognition of exemption willnot be considered by the IRS. Your application

for recognition of tax-exempt status must be inwriting using the appropriate forms as dis-cussed below.

Forms Required

If your organization is seeking recognition of ex-emption from federal income tax, it must use aspecific application prescribed by the IRS inRevenue Procedure 2016-5, 2016-1 I.R.B. 188.

If your organization is a central organizationwith exempt status, see Group Exemption Let-ter, later. All applications must be signed by anauthorized individual.

Form 1023, Application for Recognition ofExemption. File Form 1023 if you are seekingrecognition of exemption under section:

501(c)(3) Corporations, organized and op-erated exclusively for religious, charitable,scientific, testing for public safety, literary,or educational purposes, or to foster na-tional or international amateur sports, orprevention of cruelty for children or ani-mals,

501(e) Cooperative hospital service organ-ization,501(f) Cooperative service organization ofoperating educational organizations,501(k) Certain organizations providingchild care,501(n) Charitable risk pools, and

501(q) Credit counseling organizations.

New Form 1023-EZ. In 2014, the IRS createda new form, Form 1023EZ, Streamlined Appli-cation for Recognition of Exemption Under Sec-tion 501(c)(3) of the Internal Revenue Code. Itcan be used by smaller organizations seekingexemption with the IRS. Generally, these are or-ganizations which have assets of $250,000 or

less and annual gross receipts of $50,000 orless. See Revenue Procedure 2016-5, 2016-1I.R.B. 188.

Form 1024, Application for Recognition ofExemption Under Section 501(a). File Form1024 if you are seeking recognition of exemp-tion under section:

501(c)(2) Title holding corporations,

501(c)(4) Civic leagues, social welfare or-ganizations,501(c)(5) Labor, agricultural, or horticul-tural organizations,501(c)(6) Business leagues, chambers ofcommerce, etc.,501(c)(7) Social clubs,

501(c)(8) Fraternal beneficiary societies,orders, or associations,501(c)(9) Voluntary employees beneficiaryassociations,501(c)(10) Domestic fraternal societies, or-ders, etc.,501(c)(12) Benevolent life insurance asso-ciations, mutual ditch or irrigation compa-nies, mutual or cooperative telephonecompanies,501(c)(13) Cemetery companies,

501(c)(15) Mutual insurance companies orassociations,

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501(c)(17) Trusts providing for the pay-ment of supplemental unemployment com-pensation benefits,501(c)(19) A post, organization, auxiliaryunit, etc. of past or present members of theArmed Forces of the United States, and501(c)(25) Title holding corporations ortrusts.

Form 8718, User Fee for Exempt OrganizationDetermination Letter Request, must also besent along with Form 1024.

Letter application. If your organization isseeking recognition of exemption under section501(c)(11), (14), (16), (18), (21), (22), (23),(26), (27), (28), or (29), submit a letter applica-tion with Form 8718. See Required Inclusionsfor the information to include with the letter ap-plication.

Form 1028. Use Form 1028, Application forRecognition of Exemption Under Section 521 ofthe Internal Revenue Code, if your organizationis a farmers cooperative seeking recognition ofexemption under section 521. You must alsosubmit Form 8718.

Form 8871. Use Form 8871, Political Organi-zation Notice of Section 527 Status, if you are apolitical organization seeking to be treated astax-exempt under section 527 unless an excep-tion applies. See Political Organization IncomeTax Return, later.

Some organizations do not have to use spe-cific application forms. The application your or-ganization must use is specified in the chapterin this publication dealing with your kind of or-ganization. It is also shown in the OrganizationReference Chart, later.

Power of attorney. If your organization ex-pects to be represented by an individual suchas an attorney, CPA, officer or other person au-

thorized to practice before the IRS, whether inperson or by correspondence, you must file aForm 2848, Power of Attorney and Declarationof Representative, with your exemption applica-tion. The power of attorney must specifically au-thorize an individual to represent your organiza-tion. You cannot name an organization, firm,etc. as your representative. Form 2848 can beused for this purpose. The categories of individ-uals who can represent you before the IRS arelisted on the form.

Non-exemption for terrorist organizations.An organization that is identified or designatedas a terrorist organization within the meaning ofsection 501(p)(2) is not eligible to apply for rec-ognition of exemption.

User fee. The law requires the payment of auser fee for determination letter requests suchas your application for recognition of tax-ex-empt status. If you are filing Form 1023, userfee information is included in Revenue Proce-dure 2016-8, 2016-1 I.R.B. 243. If you are filingForm 1023-EZ, the user fee must be submittedthrough pay.gov. If you are required to apply forrecognition of exemption by submitting Form1024, a letter application, etc. and you must paya user fee, you should use Form 8718 to figurethe amount of your user fee and to pay it. Your

payment must accompany your request. TheIRS will not process a request unless the feehas been paid. Additional information regardinguser fees, including specific amounts, is con-tained in Revenue Procedure 2016-8, 2016-1,I.R.B. 243.

For the current user fee amount andprocessing time for applications go toIRS.gov and select Charities and

Non-Profits from the buttons near the top.Next, select the underlined link Applying forTax-Exempt Status for the latest user fees or Iwant to check the status of my application formore information. You can also call1-877-829-5500.

Required Inclusions

Employer identification number (EIN). Ev-ery exempt organization must have an EIN,whether or not it has any employees. An EIN isrequired before an exemption application issubmitted. Information on how to apply for anEIN can be found online at Employer IDNumbers (EIN). The EIN is issued immediatelyonce the application information is validated.

If you previously applied for an EIN andhave not yet received it, or you are unsurewhether you have an EIN, please call ourtoll-free customer account services number,1-877-829-5500, for assistance.

Organizing documents. If you are submittinga Form 1023 or Form 1024, your applicationshould include a copy of the organizing or ena-bling document that is signed by a principal offi-cer or is accompanied by a written declarationsigned by an authorized individual certifyingthat the document is a complete and accuratecopy of the original or meets the requirementsof a conformed copy.

If your organizing or enabling document arearticles of incorporation, include evidence that itwas filed and approved by a state official. (Forexample, a stamped Filed copy dated by theSecretary of State isprima facieevidence that itwas filed and approved by a state official.) Acopy of the articles of incorporation can also besubmitted with a written declaration signed byan authorized individual indicating the copy iscomplete and was filed and approved by thestate, including the date filed.

Bylaws. Bylaws alone are not organizingdocuments. However, if your organization hasadopted bylaws, include a current copy. Thebylaws need not be signed if submitted as anattachment.

If your organization's name has been offi-cially changed by an amendment to your organ-izing instruments, you should also attach a con-formed copy of that amendment to yourapplication.

Bylaws may be considered an organ-izing document only if they are prop-erly structured (includes name, pur-

pose, signatures, and intent to form anorganization).

Conformed copy. A conformed copy is acopy that agrees with the original and allamendments to it. If the original document

TIP

TIP

required a signature, the copy should either besigned by a principal officer or, if not signed, beaccompanied by a written declaration signed byan authorized officer of the organization. Witheither option, the officer must certify that thedocument is a complete and accurate copy ofthe original. A certificate of incorporation shouldbe approved and dated by an appropriate stateofficial.

Attachments. When submitting attachments,

every attachment should show your organiza-tion's name and EIN. It should also state that itis an attachment to your application form andidentify the part and line item number to which itapplies.

Original documents. Do not submit origi-nal documents because they become part ofthe IRS file and cannot be returned.

Description of activities. Your applicationmust include a full description of the proposedactivities of your organization, including each ofthe fundraising activities of a section 501(c)(3)organization and a narrative description of an-ticipated receipts and contemplated expendi-tures. When describing the activities in whichyour organization expects to engage, you mustinclude the standards, criteria, procedures, orother means that your organization adopted orplanned for carrying out those activities.

To determine the information you need toprovide, you should study the part of this publi-cation that applies to your organization. The ap-propriate chapter will describe the purposesand activities that your organization must pur-sue, engage in, and include in your applicationin order to achieve exempt status.

Often, your organization's articles of organi-zation (or other organizing instruments) containdescriptions of your organization's purposesand activities.

Your application should describe completelyand in detail your past, present, and plannedactivities.

Financial data. Unless you are filing Form1023-EZ, you must include in your applicationfinancial statements showing your receipts andexpenditures and a balance sheet for the cur-rent year and the 3 preceding years (or for thenumber of years your organization was in exis-tence, if less than 4 years). For each accountingperiod, you must describe the sources of yourreceipts and the nature of your expenditures.

If you have not yet begun operations, orhave operated for less than 1 year, a proposedbudget for 2 full accounting periods and a cur-

rent statement of assets and liabilities will beacceptable.

Exempt status established in application. Ifyour application and its supporting documentsshow that your organization meets the require-ments for tax-exempt status under the Codesection you applied, the IRS will issue a favora-ble determination letter or ruling.

Miscellaneous Procedures

To help in processing your application, be sureto attach all schedules, statements, and other

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documents required by the application form. Ifyou do not attach them, you may have to resub-mit your application or you may otherwise en-counter a delay in processing your application.

Incomplete application. If an application isnot complete and does not contain all the re-quired attachments found under Required Inclu-sions, the IRS will return it to you for comple-tion. The IRS will no longer request the missinginformation if the application is incomplete. See

Revenue Procedure 2016-5.If the IRS returns the application or requests

additional information from you, that applicationwill be considered filed on the date the substan-tially completed application is postmarked, or ifno postmark, received at the IRS.

For applications that are returned to the ap-plicant because they are not complete, the userfee will be returned or refunded.

Additional information may be requested ifnecessary to clarify the nature of your organiza-tion.

Application made under wrong paragraphof section 501(c). Occasionally, an organiza-tion appears to qualify for exemption under a

paragraph of section 501(c) that is differentfrom the one for which the organization applied.If the application was made on Form 1024,which applies to more than one paragraph ofsection 501(c), the organization can be recog-nized as exempt under any paragraph to whichthe form applies if the organization has agreedto have its application considered under thatparagraph. It must also supply any additional in-formation required for the application under thenew paragraph.

Different application form needed. If adifferent application form is required for your or-ganization, the IRS will so advise your organiza-tion. Although supporting information previously

furnished need not be duplicated, you must pro-vide any necessary additional information re-quired for the application. If your reply is not re-ceived within a limited time, your application willbe processed only for the paragraph underwhich you originally applied.

When a specific application form is neededfor the paragraph under which your organiza-tion qualifies, that form is required before a let-ter recognizing exemption can be issued. Thisincludes cases in which a determination letter ismodified to recognize an organization's exemptstatus under a paragraph other than the para-graph under which it originally established ex-emption.

IRS responses. Organizations that submit acomplete application will receive an acknowl-edgment from the IRS. Others will receive a let-ter requesting more information or returning anincomplete application. These letters will besent out as soon as possible after receipt of theorganization's application.

Withdrawal of application. An applicationmay be withdrawn at any time before the issu-ance of a ruling or determination letter upon thewritten request of a principal officer or author-ized representative of your organization. How-ever, the withdrawal will not prevent the infor-mation contained in the application from being

used by the IRS in any subsequent examinationof your organization's returns. The informationforwarded with an application will not be re-turned to your organization and, generally,when an application is withdrawn, the user feepaid will not be refunded.

Requests for withholding of informationfrom the public. The law requires many ex-empt organizations and private foundations tomake their application forms and annual infor-

mation returns available for public inspection.The law also requires the IRS to make availablefor public inspection, in accordance with section6104 and the related regulations, your ap-proved application for recognition of exemption(including any papers submitted in support ofthe application) and the ruling or determinationletter (discussed later, under Rulings and Deter-mination Letters.)

Any information submitted in the applicationor in support of it that relates to any trade se-cret, patent, process, style of work, or appara-tus, upon request, can be withheld from publicinspection if the IRS determines that the disclo-sure of such information would adversely affectthe organization. Your request must:

1. Identify the material to be withheld (thedocument, page, paragraph, and line) byclearly marking it Not Subject To PublicInspection.

2. Include the reasons for your organization'sposition that the information is of the typethat can be withheld from public inspec-tion.

3. Be filed with the office where your organi-zation files the documents in which thematerial to be withheld is contained.

Where to file. Send your application for recog-nition of exempt status (other than a Form1023-EZ) and Form 8718, (if required) to:

Internal Revenue ServicePO Box 12192Covington, KY 41012-0192

Your application will be considered by EODeterminations, who will either issue a favora-ble determination letter to your organization, orissue an adverse determination letter denyingthe exempt status claimed in the application.Applications for exempt status on a Form1023-EZ must be electronically submittedthrough pay.gov. Paper submissions will not beaccepted.

Form 8940, Request for MiscellaneousDetermination. You can request miscellane-ous determinations under sections 507, 509(a),4940, 4942, 4945, and 6033 with Form 8940.Nonexempt charitable trusts also file Form 8940for an initial determination of section 509(a)(3)status or change to their type. See Form 8940and instructions for more information.

Requests other than applications.Requests other than applications forrecognition of exemption or Form

8940 (for example, requests for rulings involv-ing feeder organizations, application of excise

taxes to activities of private foundations, taxa-tion of unrelated business income, etc.) shouldbe sent to:

Internal Revenue ServiceAttention: EO Letter RulingsPO Box 27720McPherson StationWashington, DC 20038

These requests, similar to applications for rec-

ognition of exemption previously discussed,must be accompanied by the appropriate userfee. The schedule for user fees, including thosefor requests other than applications, can befound in Revenue Procedure 2015-8, 2015-1I.R.B. 235.

Prior Referral to EO Technical. As describedin section 5 of Revenue Procedure 2016-5, EODeterminations generally issues determinationletters. However, in limited circumstances appli-cations that were previously transferred to EOTechnical for processing will be worked underthe procedures described in the Revenue Pro-cedure. EO Determinations can request techni-cal advice from the Office of Chief Counsel(TE/GE) on any question that cannot be re-solved on the basis of law, regulations, or aclearly applicable revenue ruling or other pub-lished precedent.

Reminder. The law requires payment of a userfee for determination letter requests. Go toIRS.gov/Charities and select ExemptOrganizations User Fees to find the requiredpayment. Payment must accompany each re-quest.

Rulings andDetermination Letters

Public charity status. A new section 501(c)(3) organization will be classified as a publiclysupported organization and not a private foun-dation if it can show when it applies for tax-ex-empt status that it reasonably can be expectedto be publicly supported.

An organization must describe fully the ac-tivities in which it expects to engage. This in-cludes standards, procedures, or other meansadopted or planned by the organization for car-rying out its activities, expected sources offunds, and the nature of its contemplated ex-penses.

When an organization does not supply theinformation previously mentioned under Appli-cation Procedures, or fails to furnish a suffi-ciently detailed description of its proposed ac-tivities to permit a conclusion that it will clearlybe exempt, a proposed adverse determinationletter or ruling may be issued.

Adverse determination. A proposed adverseruling or determination letter will be issued to anorganization that has not provided sufficientlydetailed information to establish that it qualifiesfor exemption or if the information provided es-tablishes that it does not qualify for exemption.



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An organization can appeal a proposed ad-verse ruling or determination letter. See AppealProcedures, later.

Expedited Handling. Revenue Procedure2014-19, 2014-32 I.R.B. 266, clarifies that Ex-empt Organization Determination letters con-tinue to be eligible for expedited handling undersection 4.08 of Revenue Procedure 20165,20161 I.R.B. 188.

Effective Date of Exemption

A ruling or determination letter recognizing ex-emption is usually effective as of the date offormation of an organization if, the organiza-tion submitted the application for recognition ofexemption within 27 months of the date of for-mation and during the period before the date ofthe ruling or determination letter, its purposesand activities were those required by the law.Upon obtaining recognition of exemption, theorganization can file a claim for a refund of in-come taxes paid for the period for which its ex-empt status is recognized.

If an organization is required to alter its ac-

tivities or substantially amend its charter toqualify, the ruling or determination letter recog-nizing exemption will be effective as of thedate specified in the letter. If a nonsubstan-tive amendment is made, such as correction ofa clerical error in the enabling instrument or theaddition of a dissolution clause, exemption willordinarily be recognized as of the date of forma-tion if the activities of the organization beforethe ruling or determination are consistent withthe exemption requirements.

A ruling or determination letter recognizingexemption cannot be relied on if there is a ma-terial change, inconsistent with exemption, inthe character, the purpose, or the method of op-

eration of the organization. Also, a ruling or de-termination letter cannot be relied on if it isbased on any inaccurate material factual repre-sentations.

For more information about the effectivedate of exemption, see Revenue Procedure20165, section 11.

Revocation or Modificationof Exemption

A ruling or determination letter recognizing ex-emption may be revoked or modified by:

1. A notice to the organization to which theruling or determination letter originally wasissued,

2. Enactment of legislation or ratification of atax treaty,

3. A decision of the United States SupremeCourt,

4. Issuance of temporary or final regulations,or

5. Issuance of a revenue ruling, a revenueprocedure, or other statement published inthe Internal Revenue Bulletin or Cumula-tive Bulletin.

6. Section 6033(j), for failure to file a requiredannual return or notice, for three consecu-tive years, automatically.

When revocation takes effect. If the organi-zation omitted or misstated a material fact, op-erated in a manner materially different from thatoriginally represented, or, with regard to organi-zations to which section 503 applies, engagedin a prohibited transaction (such as divertingcorpus or income from its exempt purpose), the

revocation or modification may be retroactive.

Material change in organization. If there is amaterial change, inconsistent with exemption,in the character, purpose, or method of opera-tion of the organization, revocation or modifica-tion will ordinarily take effect as of the date ofthat material change.

Relief from retroactivity. If a ruling or de-termination letter was issued in error or the IRSchanged its position after issuing a letter or rul-ing, and if section 7805(b) relief is granted, ret-roactivity of the revocation or modification ordi-narily will be limited to a date not earlier thanthat on which the original ruling or determinationletter was modified or revoked. For more infor-mation on requesting section 7805(b) relief, seeRevenue Procedure 2016-2, 2016-1 I.R.B. 102,sec. 14 (or later update).

Foundations. The determination of the ef-fective date is the same for the revocation ormodification of foundation status or operatingfoundation status unless the effective date isexpressly covered by statute or regulations.

Written notice. If an EO area manager con-cludes, as a result of examining an informationreturn or considering information from any othersource, that a ruling or determination lettershould be revoked or modified, the organizationwill be advised in writing of the proposed action

and the reasons for it.The organization will also be advised of its

right to protest the proposed action by request-ing Appeals Office consideration. The appealprocedures are discussed next.

Appeal Procedures

If your organization applies for recognition oftax-exempt status and Rulings and Agreementsdecides your organization does not qualify, yourorganization will be advised of its rights to pro-test the determination by requesting AppealsOffice consideration. Your organization mustsubmit a statement of its views fully explainingits reasoning. The statement must be submittedwithin 30 days from the date of the adverse de-termination letter and must state whether itwishes Appeals Office consideration.

Representation. A principal officer or trusteecan represent an organization at any level ofappeal within the IRS. Also, an attorney, certi-fied public accountant, or individual enrolled topractice before the IRS can represent the or-ganization.

If the organization's representative attends aconference without a principal officer or trustee,the representative must file a proper power of

attorney or a tax information authorization be-fore receiving or inspecting confidential infor-mation. Form 2848 or Form 8821, Tax Informa-tion Authorization, as appropriate (or any otherproperly written power of attorney or authoriza-tion), can be used for this purpose. These formscan be obtained from the IRS. For more infor-mation, see Publication 947, Practice Beforethe IRS and Power of Attorney.

Appeals OfficeConsideration

Rulings and Agreements will consider the state-ment protesting and appealing (hereinafter ap-pealing) the adverse determination and decideif the information affects its determination. If theappeal does not provide a basis to reconsiderits adverse determination, it will forward the ap-peal and case file to the Appeals Office. Formore information about the role of the AppealsOffice, see Publication 892, How to Appeal anIRS Decision on Tax-Exempt Status. The ap-peal should include the following information.

1. The organization's name, address, day-time telephone number, and employer

identification number.2. A statement that the organization wants to

protest the determination.

3. A copy of the letter showing the determi-nation you disagree with, or the date andsymbols on the determination letter.

4. A statement of facts supporting the organi-zation's position in any contested factualissue.

5. A statement outlining the law or other au-thority the organization is relying on.

6. A statement as to whether a conference atthe Appeals Office is desired.

The statement of facts in item 4 must be de-clared true under penalties of perjury. This maybe done by adding to the protest the followingsigned declaration:

Under penalties of perjury, I declare that I

have examined the statement of facts

presented in this protest and in any

accompanying schedules and statements and,

to the best of my knowledge and belief, it is

true, correct, and complete.

Signature.

If the organization's representative submits theappeal, a substitute declaration must be inclu-ded, stating:

1. That the representative prepared the ap-peal and accompanying documents, and

2. Whether the representative knows person-ally that the statements of fact contained inthe appeal and accompanying documentsare true and correct.

Be sure the appeal contains all of the infor-mation requested. Incomplete appeals will bereturned for completion.



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If a conference is requested, it will be held atthe Appeals Office, unless the organization re-quests that the meeting be held at a field officeconvenient to both parties.

The Appeals Office, after considering the or-ganization's appeal as well as information pre-sented in any conference held, will notify the or-ganization of its decision and issue anappropriate determination letter. An adversedecision can be appealed to the courts (dis-

cussed later).

The Appeals Office must request technicaladvice on any exempt organization issue con-cerning qualification for exemption or founda-tion status for which there is no published prec-edent or for which there is reason to believe thatnonuniformity exists. If an organization believesthat its case involves such an issue, it shouldask the Appeals Office to request technical ad-vice.

Any determination letter issued on the basisof technical advice from Rulings and Agree-ments cannot be appealed to the Appeals Of-fice for those issues that were the subject of the

technical advice from Rulings and Agreements.

Administrative Remedies

In the case of an application under section501(c), or 501(d) and exempt from tax under501(a), all of the following actions, called ad-ministrative remedies, must be completed byyour organization before an unfavorable rulingor determination letter from the IRS can be ap-pealed to the courts.

1. The filing of a substantially completed ap-plication Form 1023, Form 1024 or groupexemption request under section 501(c),or 501(d) and exempt from tax under

501(a) (described earlier in this chapter) orthe filing of a request for a determination offoundation status (see Private Founda-tions and Public Charitiesin chapter 3).

2. In the case of a late-filed application, re-questing relief under Regulations section301.9100 regarding applications for exten-sions of time for making an election or ap-plication for relief from tax (seeApplicationfor Recognition of Exemptionin chap-ter 3).

3. The timely submission of all additional in-formation requested to perfect an exemp-tion application or request for determina-tion of private foundation status.

4. Exhaustion of all administrative appealsavailable within the IRS.

The actions just described will not be con-sidered completed until the IRS has had a rea-sonable time to act upon the appeal or protest,as the case may be.

An organization will not be considered tohave exhausted its administrative remedies be-fore the earlier of:

1. The completion of the steps just listed andthe sending by certified or registered mailof a notice of final determination, or

2. The expiration of the 270-day period inwhich the IRS has not issued a notice of fi-nal determination and the organization hastaken, in a timely manner, all reasonablesteps to secure a ruling or determination.

270-day period. The 270-day period will beconsidered by the IRS to begin on the date asubstantially completed Form 1023, Form 1024,or group exemption request is sent to the IRS.See Application Procedures, earlier, for infor-

mation needed to complete Form 1023 or Form1024.

If the application does not contain all of therequired items, it will not be further processedand may be returned to the applicant for com-pletion. The 270-day period, in this event, willnot be considered as starting until the date theapplication is remailed to the IRS with the re-quested information, or, if a postmark is not evi-dent, on the date the IRS receives a substan-tially completed application.

Appeal to Courts

If the IRS issues an unfavorable determination

letter or ruling to your organization and youhave exhausted all the administrative remediesjust discussed, your organization can seek judi-cial remedies.

For example, if your organization has paidthe tax resulting from the adverse determinationand met all other statutory prerequisites, it canfile suit for a refund in a U.S. District Court orthe U.S. Court of Federal Claims. Or, if your or-ganization elected not to pay the tax deficiencyresulting from the adverse determination andmet all other statutory prerequisites, it can filesuit for a redetermination of the tax deficienciesin the United States Tax Court. For more infor-mation on these types of suits, get Publication

556, Examination of Returns, Appeal Rights,and Claims for Refund.

In certain situations, your organization canfile suit for a declaratory judgment in the U.S.District Court for the District of Columbia, theU.S. Court of Federal Claims, or the U.S. TaxCourt. This remedy is available if your organiza-tion received an adverse notice of final determi-nation, or if the IRS failed to make a timely de-termination on your initial or continuingqualification or classification as an exempt or-ganization. However, your exempt status claimmust be as:

An organization qualifying under section501(c), or 501(d) and exempt from tax un-

der 501(a).An organization to which a deduction for acontribution is allowed under section170(c)(2),An organization that is a private foundationunder section 509(a),A private operating foundation under sec-tion 4942(j)(3), orA cooperative organization that is exemptfrom tax under section 521.

Adverse notice of final determination. Theadverse notice of final determination referred toabove is a ruling or determination letter sent by

certified or registered mail holding that your or-ganization:

Is not described in section 501(c), 501(d)and exempt from tax under 501(a), or sec-tion 170(c)(2),Is a private foundation as defined in sec-tion 4942(j)(3), orIs a public charity described in a part ofsection 509(a) or section 170(b)(1)(A)other than the part under which your or-ganization requested classification.

Favorable court rulings - IRS procedure. Ifa suit results in a final determination that yourorganization is exempt from tax, the IRS will is-sue a favorable ruling or determination letter,provided your organization has filed an applica-tion for exemption and submitted a statementthat the underlying facts and applicable law arethe same as in the period considered by thecourt.

Group Exemption Letter

A group exemption letter is a ruling or determi-nation letter issued to a central organization

recognizing on a group basis the exemption un-der section 501(c) of subordinate organizationson whose behalf the central organization hasapplied for recognition of exemption.

A central organization is an organization thathas one or more subordinates under its generalsupervision or control.

A subordinate organization is a chapter, lo-cal, post, or unit of a central organization. Acentral organization may be a subordinate itself,such as a state organization that has subordi-nate units and is itself affiliated with a national(central) organization.

A subordinate organization may or may not

be incorporated, but it must have an organizingdocument. A subordinate that is organized andoperated in a foreign country cannot be inclu-ded in a group exemption letter. A subordinatedescribed in section 501(c)(3) cannot be inclu-ded in a group exemption letter if it is a privatefoundation described in section 509(a).

If your organization is a subordinate control-led by a central organization (for example, achurch, a veterans' organization, or a fraternalorganization), you should check with the centralorganization to see if it has been issued a groupexemption letter that covers your organization.If it has, you do not have to file a separate appli-cation unless your organization no longer wantsto be included in the group exemption letter.

If the group exemption letter does not coveryour organization, ask your central organizationabout being included in the next annual groupruling update that it submits to the IRS.

Central OrganizationApplication Procedure

If your organization is a central organizationwith affiliated subordinates under its control, itcan apply for a group exemption letter for itssubordinates, provided it has obtained recogni-tion of its own exemption before or concurrently



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with the group exemption. You should make theapplication for such subordinates by letter in-stead of submitting either Form 1023 or 1024.This procedure relieves each of the subordi-nates covered by a group exemption letter fromfiling its own application. A central organizationobtains its own recognition of exemption bysending its application to the IRS addressshown on Form 8718 or Form 1023.

If the central organization has previously ob-tained recognition of its own exemption, it mustindicate its employer identification number andthe date of the letter recognizing its exemption.It need not forward documents already submit-ted. However, if it has not already done so, thecentral organization must submit a copy of anyamendment to its governing instruments or in-ternal regulations as well as any informationabout changes in its character, purposes, ormethod of operation.

Employer identification number. The centralorganization must have an EIN before it submitsa completed exemption or group exemption ap-plication. Each subordinate must have its ownEIN, even if it has no employees. When submit-ting its group exemption application, the central

organization must provide an EIN for each sub-ordinate organization.

Information required for subordinate organ-izations. In addition to the information requiredto obtain recognition of its own exemption, thecentral organization must submit information forthose subordinates to be included in the groupexemption letter. The information should be for-warded in a letter signed by a principal officer ofthe central organization setting forth or includ-ing as attachments the following.

1. Information verifying that the subordinates:

a. Are affiliated with the central organi-zation at the close of its annual ac-

counting period;

b. Are subject to its general supervisionor control;

c. Are all eligible to qualify for exemptionunder the same paragraph of section501(c), though not necessarily theparagraph under which the central or-ganization itself is exempt;

d. Are not private foundations if the ap-plication for a group exemption letterinvolves section 501(c)(3);

e. Are all on the same accounting periodas the central organization if they areto be included in group returns; and

f. Are organizations that have beenformed within the 15-month periodpreceding the date of submission ofthe group exemption application ifthey are claiming section 501(c)(3)status and are subject to the require-ments of section 508(a) and wish tobe recognized as exempt from theirdates of creation (a group exemptionletter may be issued covering subordi-nates, one or more of which have notbeen organized within the 15-monthperiod preceding the date of submis-sion, if all subordinates are willing to

be recognized as exempt only fromthe date of application).

2. A detailed description of the purposes andactivities of the subordinates, including thesources of receipts and the nature of ex-penditures.

3. A sample copy of a uniform governing in-strument (such as a charter or articles ofassociation) adopted by the subordinates,or, in its absence, copies of representative

instruments.4. An affirmation to the effect that, to the best

of the officer's knowledge, the purposesand activities of the subordinates are asstated in (2) and (3), above.

5. A statement that each of the subordinateshas provided a written authorization to thecentral organization, signed by an author-ized officer of the subordinate, agreeing tobe included in the group exemption (seealso New 501(c)(3) organizations thatwant to be included, later in this section).

6. A list of subordinates to be included in thegroup exemption letter to which the IRShas issued an outstanding ruling or deter-mination letter relating to exemption.

7. If the application for a group exemption let-ter involves section 501(c)(3) and is sub-ject to the provisions of the Code requiringthat it give timely notice that it is not a pri-vate foundation (see Private Foundationsin chapter 3), an affirmation to the effectthat, to the best of the officer's knowledgeand belief, no subordinate to be includedin the group exemption letter is a privatefoundation as defined in section 509(a).

8. For each subordinate that is a schoolclaiming exemption under section 501(c)(3), the information required by RevenueRuling 71-447, 1971-2 C.B. 230 and Rev-enue Procedure 75-50, 1975-2 C.B. 587(these requirements are fully described inchapter 3, under Private Schools; see alsoSchedule B, Form 1023).

9. For any school affiliated with a church, theinformation to show that the provisions ofRevenue Ruling 75-231, 1975-1 C.B. 158,have been met.

10. A list of the names, mailing addresses, ac-tual addresses if different, and EINs ofsubordinates to be included in the groupexemption letter. A current directory ofsubordinates may be furnished instead ofthe list if it includes the required informa-

tion and if the subordinates not to be inclu-ded in the group exemption letter are iden-tified.

New 501(c)(3) organizations that want to beincluded. A new organization, described insection 501(c)(3), that wants to be included in agroup exemption letter must submit its authori-zation (as explained in item number 5, earlier,under Information required for subordinate or-ganizations) to the central organization beforethe end of the 15th month after it was formed inorder to satisfy the requirement of section508(a). The central organization must also in-clude this subordinate in its next annual sub-

mission of information, as discussed later, un-der Information Required Annually.

Keeping the GroupExemption Letter in Force

Continued effectiveness of a group exemptionletter is based on the following conditions.

1. The continued existence of the central or-ganization.

2. The continued qualification of the centralorganization for exemption under section501(c).

3. The submission by the central organiza-tion of the information regarding its subor-dinate organizations that is required annu-ally (described under InformationRequired Annually).

4. The annual filing of an information return(Form 990, for example) by the central or-ganization if required.

The continued effectiveness of a group exemp-tion letter as to a particular subordinate is basedon these four conditions, as well as on the con-

tinued conformity by the subordinate to the re-quirements for inclusion in a group exemptionletter, the authorization for inclusion, and theannual filing of any required information returnfor the subordinate.

Information Required Annually

To maintain a group exemption letter, the cen-tral organization must submit annually, at least90 days before the close of its annual account-ing period, all of the following information.

1. Information about all changes in the pur-poses, character, or method of operationof the subordinates included in the group

exemption letter.2. A separate list (that includes the names,

mailing addresses, actual addresses if dif-ferent, and EINs of the affected subordi-nates) for each of the three following cate-gories.

a. Subordinates that have changed theirnames or addresses during the year.

b. Subordinates no longer to be includedin the group exemption letter becausethey no longer exist or have disaffili-ated from or withdrawn their authori-zation to the central organization.

c. Subordinates to be added to thegroup exemption letter because theyare newly organized or affiliated orbecause they have recently author-ized the central organization to in-clude them.

An annotated directory of subordinateswill not be accepted for this purpose. Ifthere were none of the above changes,the central organization must submit astatement to that effect.

3. The same information about new subordi-nates that was required in the initial appli-cation for group exemption. (Thisinformation is listed in items 1 through 10,



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under Information required for subordinateorganizations, earlier.) If a new subordi-nate does not differ in any material re-spects from the subordinates included inthe application for group exemption, how-ever, a statement to this effect may besubmitted in lieu of detailed information.

The organization should send this in-formation to:

Ogden Service CenterMail Stop 6271Ogden, UT 84201-4749

Submitting the required informationannually does not relieve the centralorganization or any of its subordinates

of the duty to submit any other information thatmay be required by an EO area manager to de-termine whether the conditions for continuedexemption are being met.

Events CausingLoss of Group Exemption

A group exemption letter no longer has effect,for either a particular subordinate or the groupas a whole, when:

1. The central organization notifies the IRSthat it is going out of existence,

2. The central organization notifies the IRS,by its annual submission or otherwise, thatany of its subordinates will no longer fulfillthe conditions for continued effectiveness,explained earlier, or

3. The IRS notifies the central organization orthe affected subordinate that the group ex-emption letter will no longer have effect for

some or all of the group because the con-ditions for continued effectiveness of agroup exemption letter have not been ful-filled.

When notice is given under any of these threeconditions, the IRS will no longer recognize theexempt status of the affected subordinates untilthey file separate applications on their own be-half or the central organization files completesupporting information for their reinclusion inthe group exemption at the time of its annualsubmission. However, when the notice is givenby the IRS and the withdrawal of recognition isbased on the failure of the organization to com-ply with the requirements for recognition oftax-exempt status under the particular subsec-

tion of section 501(c), the revocation will ordina-rily take effect as of the date of that failure. Thenotice, however, will be given only after the ap-peal procedures described earlier in this chap-ter are completed.

CAUTION

!

2.

Filing

Requirements

and RequiredDisclosures

IntroductionMost exempt organizations (including privatefoundations) must file various returns and re-ports at some time during (or following the closeof) their accounting period.

TopicsThis chapter discusses:

Annual information returns

Unrelated business income tax return

Employment tax returns

Political organization income tax return

Reporting requirements for a politicalorganizationDonee information return

Information provided to donors

Report of cash received

Public inspection of exemptionapplications, annual returns, and politicalorganizations reporting formsRequired disclosures

Miscellaneous rules

Useful ItemsYou may want to see:

Publication

Circular E, Employer's Tax Guide

Employer's Supplemental Tax Guide

Employer's Tax Guide to FringeBenefits

Tax on Unrelated Business Income ofExempt Organizations

Form (and Instructions)

Employer's Quarterly Federal TaxReturn

Return of Organization Exempt FromIncome Tax

Short Form Return ofOrganization Exempt From IncomeTax

Public Charity Status and PublicSupport

15

15-A

15-B

598

941

990

990-EZ

Schedule A (Form 990 or 990-EZ)

Schedule of Contributors

Political Campaign and LobbyingActivities

SupplementalFinancial Statements

SchoolsStatement of

Activities Outside the United States

Supplemental Information RegardingFundraising or Gaming Activities

Hospitals

Grants and OtherAssistance to Organizations,Governments, and Individuals in theUnited States

CompensationInformation

SupplementalInformation on Tax-Exempt Bonds

Transactions With Interested Persons

NoncashContributions

Liquidation, Termination, Dissolution,or Significant Disposition of Assets

Supplemental Information to Form990

Related

Organizations and UnrelatedPartnerships

Return of Private Foundation orSection 4947(a)(1) NonexemptCharitable Trust Treated as a PrivateFoundation

Information and Initial Excise TaxReturn for Black Lung Benefit Trustsand Certain Related Persons

Exempt Organization BusinessIncome Tax Return

Estimated Tax on UnrelatedBusiness Taxable Income forTax-Exempt Organizations

U.S. Income Tax Return forCertain Political Organizations

Return of Certain Excise TaxesUnder Chapters 41 and 42 of theInternal Revenue Code

Election/Revocation of Election byan Eligible Section 501(c)(3)Organization To Make ExpendituresTo Influence Legislation

Return of Excise Tax on ExcessContributions to Black Lung BenefitTrust Under Section 4953 and

Schedule B (Form 990, 990-EZ, or990-PF)

Schedule C (Form 990 or 990-EZ)

Schedule D (Form 990)

Schedule E (Form 990 or 990-EZ)

Schedule F (Form 990)

Schedule G (Form 990 or 990-EZ)

Schedule H (Form 990)

Schedule I (Form 990)

Schedule J (Form 990)

Schedule K (Form 990)

Schedule L (Form 990 or 990-EZ)

Schedule M (Form 990)

Schedule N (Form 990 or 990-EZ)

Schedule O (Form 990 or 990-EZ)

Schedule R (Form 990)

990-PF

990-BL

990-T

990-W

1120-POL

4720

5768

6069

Chapter 2 Filing Requirements and Required Disclosures Page 9


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Computation of Section 192Deduction

Application for Automatic Extensionof Time to File Certain BusinessIncome Tax, Information, and OtherReturns

Certification by Churches andQualified Church-ControlledOrganizations Electing Exemptionfrom Employer Social Security and

Medicare Taxes

Donee Information Return

Report of Cash Payments Over$10,000 Received in a Trade orBusiness

Political Organization Declarationfor Electronic Filing of Notice ofSection 527 Status

Change of Address orResponsible Party-Business

Application for Extension of Time toFile an Exempt Organization Return

Information Return for TransfersAssociated with Certain PersonalBenefits Contracts

Political Organization Notice ofSection 527 Status

Political Organization Report ofContributions and Expenditures

Disclosure by Tax-Exempt EntityRegarding Prohibited Tax ShelterTransaction

Notice of Income from DonatedIntellectual Property

Request for Miscellaneous

Determination

See chapter 6 for information about gettingthese publications and forms.

Annual InformationReturns

Every organization exempt from federal incometax under section 501(a) must file an AnnualExempt Organization Returnexcept:

1. A church, an interchurch organization oflocal units of a church, a convention or as-sociation of churches,

2. An integrated auxiliary of a church,

3. A church-affiliated organization that is ex-clusively engaged in managing funds ormaintaining retirement programs,

4. A school below college level affiliated witha church or operated by a religious order,

5. Church-affiliated mission societies if morethan half of their activities are conductedin, or are directed at persons in, foreigncountries,

6. An exclusively religious activity of any reli-gious order,

7004

8274

8282

8300

8453-X

8822-B

8868

8870

8871

8872

8886-T

8899

8940

7. A state institution, the income of which isexcluded from gross income under section115,

8. A corporation described in section 501(c)(1) that is organized under an Act of Con-gress, an instrumentality of the UnitedStates, and is exempt from Federal in-come taxes,

9. A stock bonus, pension, or profit-sharingtrust that qualifies under section 401 (re-

quired to file Form 5500,Annual Return/Report of Employee Benefit Plan),

10. A religious or apostolic organization de-scribed in section 501(d) (required to fileForm 1065, U.S. Return of Partnership In-come),

11. A governmental unit or an affiliate of agovernmental unit that meets the require-ments of Revenue Procedure 95-48,1995-2 C.B. 418, www.irs.gov/pub/irs-tege/rp1995-48.pdf,

12. A private foundation described in section501(c)(3) and exempt under section501(a) (required to file Form 990-PF, Re-turn of Private Foundation),

13. A political organization that is a state or lo-cal committee of a political party, a politi-cal committee of a state or local candi-date, a caucus or association of state orlocal officials, or required to report underthe Federal Election Campaign Act of1971 as a political committee,

14. An exempt organization (other than a pri-vate foundation) that normally has annualgross receipts of $50,000 or less (requiredto file Form 990-N, Electronic Notice), or

15. A foreign organization, or an organizationlocated in a U.S. possession, that normallyhas annual gross receipts from sources

within the United States of $50,000 orless.

Supporting OrganizationAnnual Information Return

For tax years ending after August 17, 2006, allsection 509(a)(3) supporting organizations arerequired to file Form 990 or 990-EZ with the IRSregardless of the organization's gross receipts,unless it qualifies as one of the following:

1. An integrated auxiliary of a church;

2. The exclusively religious activities of a reli-gious order; or

3. An organization, the gross receipts ofwhich are normally not more than $5,000,that supports a section 509(a)(3) religiousorder.

If the organization is described in item (3)above, then it must submit Form 990-N (e-Post-card) unless it voluntarily files Form 990 or990-EZ.

On its annual information return, at Part I,Schedule A (Form 990 or 990-EZ) a supportingorganization must:

List the section 509(a)(3) organizations towhich it provides support,

Indicate whether it is a Type I, Type II, orType III supporting organization, andCertify that the organization is not control-led directly or indirectly by disqualified per-sons (other than by foundation managersand other than one or more publicly sup-ported organizations).

Annual Electronic FilingRequirement for Small Tax-ExemptOrganizations

Small tax-exempt organizations with annualgross receipts normally $50,000 or less mustsubmit Form 990-N, Electronic Notice (e-Post-card) for Tax-Exempt Organizations Not Re-quired to File Form 990 or 990-EZ, with the IRSeach year, if they choose not to file a Form 990or 990-EZ. Form 990-N requires the followinginformation:

The organization's legal name, and mailingaddress;Any name under which it operates anddoes business;Its Internet website address (if any);

Its taxpayer identification number;

The name and address of a principal offi-cer;Organization's annual tax period;

Verification that the organization's annualgross receipts are normally $50,000 orless; andNotification if the organization has termina-ted.

Form 990-N is due by the 15th day of thefifth month after the close of the tax year. Fortax years beginning after December 31, 2006,any organization that fails to meet its annual re-porting requirement for 3 consecutive years willautomatically lose its tax-exempt status. To re-gain its exempt status an organization will have

to reapply for recognition as a tax-exempt or-ganization.

Exceptions. This filing requirement doesnot apply to:

Churches, their integrated auxiliaries, andconventions or associations of churches;Organizations that are included in a groupreturn;Private foundations required to file Form990-PF; andSection 509(a)(3) supporting organizationsrequired to file Form 990 or Form 990-EZ.

Forms 990 and 990-EZ

Exempt organizations, other than private foun-dations, must file their annual information re-turns on Form 990 or 990-EZ, unless exceptedfrom filing or allowed to submit Form 990-N, de-scribed earlier.

Generally, political organizations with grossreceipts of $25,000 ($100,000 for a qualifiedstate or local political organization (QSLPO)) ormore for the tax year are required to file Form990 or 990-EZ unless specifically excepted

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from filing the annual return. The following politi-cal organizations are not required to file Form990 or Form 990-EZ.

A state or local committee of a politicalparty.A political committee of a state or localcandidate.A caucus or association of state or local of-ficials.A political organization that is required toreport as a political committee under the

Federal Election Campaign Act.A 501(c) organization that has expendi-tures for influencing or attempting to influ-ence the selection, nomination, election, orappointment of any individual for a federal,state, or local public office.

Form 990-EZ. This is a shortened version ofForm 990. It is designed for use by small ex-empt organizations and nonexempt charitabletrusts.

Beginning in tax year 2010, an organizationcan file either Form 990 or 990-EZ if it meetsthe following:

1. Its gross receipts during the year are lessthan $200,000.

2. Its total assets (line 25, column (B) ofForm 990-EZ) at the end of the year areless than $500,000.

If your organization does not meet either ofthese conditions, you cannot file Form 990-EZ.Instead, you must file Form 990.

Group return. A group return on Form 990may be filed by a central, parent, or like organi-zation for two or more local organizations, noneof which is a private foundation. This return is inaddition to the central organization's separateannual return if it must file a return. It cannot beincluded in the group return. See the instruc-tions for Form 990 for the conditions underwhich this procedure may be used.

In any year that an organization isproperly included as a subordinate or-ganization on a group return, it should

not file its own Form 990.

Schedule A (Form 990 or 990-EZ). Organi-zations, other than private foundations, that aredescribed in section 501(c)(3) and that are oth-erwise required to file Form 990 or 990-EZ mustalso complete Schedule A of that form.

Schedule B (Form 990, 990-EZ, or 990-PF).Organizations that file Form 990 or 990-EZ usethis schedule to provide required information re-garding their contributors.

Schedule O (Form 990). Organizations thatfile Form 990 must use this schedule to providerequired additional information or if additionalspace is needed.

Other schedules may be required to be filedwith Form 990 or 990-EZ. See the instructionsfor Form 990 or the instructions for Form990-EZ for more information.

Report significant new or changed programservices and changes to organizationaldocuments. An organization should report

TIP

new significant program services or significantchanges in how it conducts program services,and significant changes to its organizationaldocuments, on its Form 990 rather than in a let-ter to EO Determinations. EO Determinationsno longer issues letters confirming the tax-ex-empt status of organizations that report newservices or significant changes, or changes toorganizational documents. See MiscellaneousRules, Organization Changes and Exempt Sta-tus, later.

Form 990-PF

All private foundations exempt under section501(c)(3) must file Form 990-PF. These organi-zations are discussed in chapter 3.

Electronic Filing

You may be required to file Form 990, Form990-EZ, or Form 990-PF, and related forms,schedules, and attachments electronically.

If an organization is required to file a returnelectronically but does not, the organization isconsidered to have not filed its return. See Reg-

ulations section 301.6033-4 for more informa-tion.

The IRS may waive the requirement to fileelectronically in cases of undue hardship. Forinformation on filing a waiver, see Notice2010-13, 2010-4 I.R.B. 327, available atwww.irs.gov/ir/2010-04_IRSB/ar14.html.

Form 990. An organization is required tofile Form 990 electronically if it files at least 250returns during the calendar year and has totalassets of $10 million or more at the end of thetax year.

Form 990-PF. An organization is requiredto file Form 990-PF electronically if it files atleast 250 returns during the calendar year.

Due Date

Forms 990, 990-EZ, or 990-PF must be filed bythe 15th day of the fifth month after the end ofyour organization's accounting period. Thus, fora calendar year taxpayer, Forms 990, 990-EZ,or 990-PF are due May 15 of the followingyear.If any due date falls on a Saturday, Sun-day, or legal holiday, substitute the next busi-ness day.

Extension of time to file. Use Form 8868 torequest an automatic 6-month extension of timeto file Forms 990, 990-EZ, or 990-PF.

When filing Form 8868 for an automatic6-month extension, neither a signature, nor anexplanation is required.

Application for exemption pending. An or-ganization that claims to be exempt under sec-tion 501(a) but has not established its exemptstatus by the due date for filing an informationreturn must complete and file Form 990,990-EZ, 990N, or 990-PF (if it considers itselfa private foundation), unless the organization isexempt from Form 990-series filing require-ments. If the organization's application is pend-ing with the IRS, it must so indicate on Forms

990, 990-EZ, or 990-PF (whichever applies) bychecking the application pending block at thetop of page 1 of the return. For more informationon the filing requirements, see the Instructionsfor Forms 990, 990-EZ, and 990-PF.

State reporting requirements. Copies ofForms 990, 990-EZ, or 990-PF may be used tosatisfy state reporting requirements. See the in-structions for those forms.

Form 8870. Organizations that filed a Form990, 990-EZ, or 990-PF, and paid premiums orreceived transfers on certain life insurance, an-nuity, and endowment contracts (personal ben-efit contracts), must file Form 8870. For moreinformation, see Form 8870 and the instructionsfor that form.

Form 8822-B. If you moved during the year, fillout Form 8822-B, Change of Address or Re-sponsible Party-Business. Also, if your Re-sponsible Party changed this year, you mustalso fill out Form 8822-B. The ResponsibleParty is the tax-exempt organizations Princi-pal Officer as defined in the Form 990 instruc-tions, in the Glossarysection.

Automatic Revocation

If the organization fails to file a Form 990,990-EZ, or 990-PF, or fails to submit a Form990-N, as required, for 3 consecutive years, itwill automatically lose its tax-exempt status byoperation of law. The list of organizationswhose tax-exempt status has been automati-cally revoked is available on IRS.gov. This list(Auto-Revocation List) may be viewed andsearched on Exempt Organizations SelectCheck. The Auto-Revocation List includes eachorganization's name, Employer IdentificationNumber (EIN) and last known address. It alsoincludes the effective date of the automatic rev-

ocation and the date it was posted to the list.The IRS updates the list monthly to include ad-ditional organizations that lose their tax-exemptstatus.

Tax Effect of Loss of Tax-ExemptStatus

If your organizations tax-exempt status is auto-matically revoked, you may be required to fileone of the following federal income tax returnsand pay any applicable income taxes:

Form 1120, U.S. Corporation Income TaxReturn, due by the 15th day of the 3rdmonth after the end of your organizationstax year, or

Form 1041, U.S. Income Tax Return forEstates and Trusts, due by the 15th day ofthe 4th month after the end of your organi-zations tax year.

In addition, a section 501(c)(3) organizationthat loses its tax-exempt status cannot receivetax-deductible contributions and will not beidentified in the IRS Business Master File ex-tract as eligible to received tax-deductible con-tributions, or be included in Exempt Organiza-tions Select Check (Pub. 78 database).

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An organization whose exemption was auto-matically revoked must apply for tax exemptionin order to regain its tax exemption (even if itwas not originally required to apply). In somesituations, an organization may be able to ob-tain exemption retroactive to its date of revoca-tion. Similarly, if the central organization with aGroup Exemption Number is automatically re-voked, each subsidiary may need to apply forexemption as an independent organization.

For more information about automatic revo-cation, go to IRS.gov and select Charities &Non-Profitsand then select Revoked? Reinsta-ted? Learn More.

Penalties

Penalties for failure to file. Generally, an ex-empt organization that fails to file a required re-turn must pay a penalty of $20 a day for eachday the failure continues. The same penalty willapply if the organization does not give all the in-formation required on the return or does notgive the correct information. This penalty is in-dexed for inflation for returns required to be filedafter December 31, 2014.

Maximum penalty. The maximum penaltyfor any one return is the smaller of $10,000 or5% of the organization's gross receipts for theyear.

Organization with gross receipts over $1million. For an organization that has gross re-ceipts of over $1 million for the year, the penaltyis $100 a day up to a maximum of $50,000.

Managers. If the organization is subject tothis penalty, the IRS may specify a date bywhich the return or correct information must besupplied by the organization. Failure to complywith this demand will result in a penalty im-posed upon the manager of the organization, or

upon any other person responsible for filing acorrect return. The penalty is $10 a day for eachday that a return is not filed after the periodgiven for filing. The maximum penalty imposedon all persons with respect to any one return is$5,000.

Exception for reasonable cause. Nopenalty will be imposed if reasonable cause forfailure to file timely can be shown.

Unrelated BusinessIncome Tax Return

Even though your organization is recognized astax exempt, it still may be liable for tax on its un-related business income. Unrelated businessincome is income from a trade or business, reg-ularly carried on, that is not substantially relatedto the charitable, educational, or other purposethat is the basis for the organization's exemp-tion. If your organization has $1,000 or more ofunrelated business income, you must file Form990-T in addition to your required annual infor-mation return.

Estimated tax. Quarterly estimated taxpayments are due if your organization expectsto owe $500 or more in tax including unrelated

business income. Use Form 990-W to figureyour organization's estimated tax payments.

Travel tour programs. Travel tour activitiesthat are a trade or business are an unrelatedtrade or business if the activities are not sub-stantially related to the purpose to which tax ex-emption was granted to the organization.

Whether travel tour activities conducted byan organization are substantially related to theorganization's tax exempt purpose is deter-

mined by looking at all the relevant facts andcircumstances, including, but not limited to, howa travel tour is developed, promoted, and oper-ated.

Example. ABC, a university alumni associ-ation, is tax exempt as an educational organiza-tion under section 501(c)(3). As part of its activi-ties, ABC operates a travel tour program. Theprogram is open to all current members of ABCand their guests. ABC works with travel agentsto schedule approximately ten tours annually tovarious destinations around the world. Mem-bers of ABC pay $1,000 to XYZ Travel Agencyto participate in a tour. XYZ pays ABC a perperson fee for each participant. Although the lit-

erature advertising the tours encourages ABCmembers to continue their lifelong learning byjoining the tours, and a faculty member ofABC's related university frequently joins the touras a guest of the alumni association, none ofthe tours include any scheduled instruction orcurriculum related to the destinations being vis-ited. The travel tours made available to ABC'smembers do not contribute importantly to theaccomplishment of ABC's educational purpose.Rather, ABC's program is designed to generaterevenues for ABC by regularly offering its mem-bers travel services. Therefore, ABC's tour pro-gram is an unrelated trade or business.

For additional information on unrelated busi-ness income, see Publication 598 and the In-

structions for Form 990-T.

EmploymentTax Returns

Every employer, including an organization ex-empt from federal income tax, who pays wagesto employees is responsible for withholding, de-positing, paying, and reporting federal incometax, social security and Medicare (FICA) taxes,and federal unemployment tax (FUTA), unlessthat employer is specifically excepted by lawfrom those requirements, or if the taxes clearlydo not apply.

For more information, obtain a copy of Publi-cation 15, which summarizes the responsibili-ties of an employer, Publication 15-A, Publica-tion 15-B, and Form 941.

Small Business Health Care Tax Credit. Ifyour small tax-exempt organization provideshealth care coverage for your workers you mayqualify for the small business health care taxcredit. Go to IRS.gov and select AffordableCare Act Tax Provisions for more details. SeeSmall Business Health Care Tax Credit atwww.irs.gov/newsroom/article/0,,id=223666,00.html.

New guidance provides transition relief foremployee health insurance expenses. No-tice 2014-06 provides guidance on section 45Rfor certain small employers that cannot offer aqualified health plan through a Small BusinessHealth Options Program (SHOP) Exchange be-cause the employers principal business ad-dress is in a county in Washington or Wisconsinin which a QHP through a SHOP Exchange willnot be available for 2014. See Notice 20146.

Trust fund recovery penalty. If any personrequired to collect, truthfully account for, andpay over any of these taxes willfully fails to sat-isfy any of these requirements or willfully tries inany way to evade or defeat any of them, thatperson will be subject to a penalty. The penaltyis equal to the tax evaded, not collected, or notaccounted for and paid over. The term personincludes:

An officer or employee of a corporation, or

A member or employee of a partnership.

Exception. The penalty is not imposed onany unpaid volunteer director or member of aboard of trustees of an exempt organization ifthe unpaid volunteer serves solely in an hono-

rary capacity, does not participate in theday-to-day or financial operations of the organi-zation, and does not have actual knowledge ofthe failure on which the penalty is imposed.

This exception does not apply if it results inno one being liable for the penalty.

FICA and FUTA tax exceptions. Paymentsfor services performed by a minister of a churchin the exercise of the ministry, or a member of areligious order performing duties required bythe order, are generally not subject to FICA orFUTA taxes.

FUTA tax exception. Payments for serv-ices performed by an employee of a religious,

charitable, educational, or other organizationdescribed in section 501(c)(3) that are generallysubject to FICA taxes if the payments are $100or more for the year, are not subject to FUTAtaxes.

FICA tax exemption election. Churchesand qualified church-controlled organizationscan elect exemption from employer FICA taxesby filing Form 8274.

To elect the exemption, Form 8274 must befiled before the first date on which a quarterlyemployment tax return would otherwise be duefrom the electing organization. The organizationcan make the election only if it is opposed forreligious reasons to the payment of FICA taxes.

The election applies to payments for serv-

ices of current and future employees other thanservices performed in an unrelated trade orbusiness.

Revoking the election. The election canbe revoked by the IRS if the organization fails tofile Form W-2, Wage and Tax Statement, for 2years and fails to furnish certain informationupon request by the IRS. Such revocation willapply retroactively to the beginning of the2-year period.

Definitions. For purposes of this election,the term church means a church, a conventionor association of churches, or an elementary or

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secondary school that is controlled, operated,or principally supported by a church or by aconvention or association of churches.

The term qualified church-controlled organi-zation means any church-controlled section501(c)(3) tax-exempt organization, other thanan organization that both:

1. Offers goods, services, or facilities forsale, other than on an incidental basis, tothe general public at other than a nominalcharge that is substantially less than thecost of providing such goods, services, orfacilities, and

2. Normally receives more than 25% of itssupport from the sum of governmentalsources and receipts from admissions,sales of merchandise, performance ofservices, or furnishing of facilities, in activi-ties that are not unrelated trades or busi-nesses.

Effect on employees. If a church or quali-fied church-controlled orga

Documents

Publication 557 (Rev