Down Payment Assistance Programs: Treatment of Seller-Funded Down Payment Assistance Organizations
How does Revenue Ruling 2006-27 affect seller-funded down payment assistance programs sponsored by tax-exempt organizations?
Revenue Ruling 2006-27 states that organizations operating seller-funded programs do not meet the legal requirements for tax exemption under section 501(c)(3). Because the ruling is a statement of current law, it will apply to any tax period for which the statute of limitations is open.
Interested parties can verify an organization’s tax-exempt status using the on-line database at IRS.gov (click on Charities & Non-Profits and then click on EO Select Check). The on-line database also provides a list of organizations whose exemption determination the IRS has recently revoked.