IRS issues new interim guidance for supporting organizations and grantors. . Notice 2014-4, 2014-2 I.R.B. 274, provides further interim guidance for section 509(a)(3) supporting organizations and their grantors about the application of certain requirements enacted as part of the Pension Protection Act of 2006. The notice provides transitional rules for Type III supporting organizations that want to qualify as “functionally integrated” because they support governmental entities. The notice also provides additional interim guidance for private foundations and sponsoring organizations that maintain donor-advised funds on the procedures to be followed in determining whether a potential grantee is a Type I, Type II or functionally integrated Type III supporting organization. See Notice 2014–4.
New guidance provides transition relief for employee health insurance expenses. . Notice 2014-6, 2014-2 I.R.B. 279, provides guidance on section 45R for certain small employers that cannot offer a qualified health plan through a Small Business Health Options Program (SHOP) Exchange because the employer’s principal business address is in a county in Washington or Wisconsin in which a QHP through a SHOP Exchange will not be available for 2014. See Notice 2014–6.
Final regulations under section 501(r) issued in December 2014. . The IRS issued final regulations that provide comprehensive substantive guidance regarding the requirements for charitable hospital organizations added by the Patient Protection and Affordable Care Act, Public Law 111-148 (124 Stat. 119 (2010)) (the “Affordable Care Act”). The Affordable Care Act enacted section 501(r), which imposes additional requirements on hospital organizations that are (or seek to be) recognized as described in section 501(c)(3). The final regulations provide guidance on all of the requirements imposed by section 501(r), including the requirement to conduct a community health needs assessment (CHNA); establish a written financial assistance policy (FAP) and policy relating to emergency medical care; limit certain charges; and forgo extraordinary collection actions until reasonable efforts have been made to determine whether an individual is eligible for assistance under the hospital’s FAP. The regulations also provide guidance on the consequences for failing to meet the section 501(r) requirements, including the $50,000 excise tax under section 4959 for failing to meet the CHNA requirements, and on associated reporting requirements. See Regulations section 1.501(r)-0–7 and the proposed regulations preceding those regulations for details.
Correction and disclosure procedures under section 501(r). . Notice 2014-3, 2014-3 I.R.B. 408, contains a proposed revenue procedure that provides correction and disclosure procedures under which certain failures to meet the requirements of section 501(r) will be excused for purposes of sections 501(r)(1) and 501(r)(2)(B). See Notice 2014–3 or later guidance.
New Form 1023-EZ. . For 2014, the IRS created a new form, Form 1023–EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. It can be used by smaller organizations seeking exemption with the IRS. Generally, these are organizations which have assets of $250,000 or less and annual gross receipts of $50,000 or less. See Revenue Procedure 2015-5, 2015-1 I.R.B. 186. To determine if you are eligible to file Form 1023-EZ, you must complete the Form 1023-EZ Eligibility Worksheet in the Form 1023-EZ instructions.
Exempt Organizations Division Limited the Types of Cases that Are Referred to Exempt Organizations (“EO”) Technical, and Provided for Administrative Review of EO Technical Determinations. . As described in section 5 of Revenue Procedure 2015-9, 2015-2 I.R.B. 249, EO Determinations generally issues determination letters. However, as described 5.02, in limited circumstances applications that were previously transferred to EO Technical (or its successor) for processing will be worked in EO Technical under the procedures described in the Revenue Procedure. This specifically includes the opportunity for the applicant to request consideration by Appeals of a proposed adverse determination, in addition to requested a conference with EO Technical (or its successor). In May, 2014, EO drafted interim guidance for allowing Appeals Office review of proposed adverse determinations made by EO Technical. The guidance, published on May 19, 2014, permits any organization whose application for tax-exempt status has been referred to EO Technical to request Appeals Office review of a proposed adverse determination under the same procedures applicable to organizations receiving a proposed adverse determination from EO Determinations.
Future developments. . The IRS has created a page on IRS.gov for information about Publication 557, at www.irs.gov/pub557. Information about any future developments affecting Publication 557 (such as legislation enacted after we release it) will be posted on that page.
The Patient Protection and Affordable Care Act (ACA). The ACA added several new laws. This includes a new excise tax on indoor tanning services, a small business health care tax credit, additional requirements for tax-exempt hospitals, and the section 501(c)(29) CO-OP program. For more information, go to IRS.gov and select Affordable Care Act Tax Provisions.
Electronic filing requirement for large organizations. For tax years ending on or after December 31, 2006, only organizations that file 250 returns during the calendar year and that have total assets of $10 million or more are required to file Form 990 electronically. For more information, go to e-file for Charities and Non-Profits.
Section 501(c)(15) gross receipts. The definition of gross receipts for purposes of determining whether small insurance companies qualify 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. Excise taxes are imposed under section 4965 on certain tax-exempt organizations entering into prohibited tax shelter transactions. See the Regulations in T.D. 9492, Excise Taxes on Prohibited Tax Shelter Transactions and Related Disclosure Requirements, 2010-33 I.R.B. 242. See IRS Issues Final Regulations Regarding Excise Taxes on Prohibited Tax Shelter Transactions and Related Disclosure Requirement.
Pension Protection Act of 2006 tax changes. The Pension Protection Act of 2006 made numerous changes to the tax law provisions affecting tax-exempt organizations. Unless otherwise noted, most of the changes became effective on August 17, 2006. For key provisions, go to The Pension Protection Act of 2006.
Section 501(c)(3) organizations must make their Form 990-T, Exempt Organization Business Tax Return (and proxy tax under section 6033(e)), open for public inspection for a period of 3 years from the date the Form 990-T is required to be filed (determined with regard to any extension of time for filing) or is actually filed, whichever is later.
There is an increase in excise taxes relating to public charities, social welfare organizations, and private foundations.
There are additional standards for credit counseling organizations.
The definition of convention or association of churches have been modified.
Entities that are not required to file Form 990 or 990-EZ must file Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ available on the Urban Institute website. See the epostcard.form990.org website for details.
The requirements of disclosure to state officials relating to exempt organizations have been modified.
There are excise taxes imposed on excess benefit transactions involving donor advised funds and sponsoring organizations.
There are excise taxes on prohibited tax shelter transactions.
There is a modification of recordkeeping requirements for certain charitable contributions.
This publication discusses the rules and procedures for organizations that seek recognition of exemption from federal income tax under section 501(a) of the Internal Revenue Code (the Code). It explains the procedures you must follow to obtain an appropriate ruling or determination letter recognizing your organization's exemption, as well as certain other information that applies generally to all exempt organizations. To qualify for exemption under the Code, your organization must be organized for one or more of the purposes specifically designated in the Code. Organizations that are exempt under section 501(a) include those organizations described in section 501(c). Section 501(c) organizations are covered in this publication.
Chapter 1, Application, Approval, and Appeal Procedures, provides general information about the procedures for obtaining recognition of tax-exempt status.
Chapter 2, Filing Requirements and Required Disclosures, contains information about annual filing requirements and other matters that may affect your organization's tax-exempt status.
Chapter 3, Section 501(c)(3) Organizations, contains detailed information on various matters affecting section 501(c)(3) organizations, including a section on the determination of private foundation status.
Chapter 4, Other Section 501(c) Organizations, includes separate sections for specific types of organizations described in section 501(c).
Chapter 5, Excise Taxes, provides information on when excise taxes may be imposed.
|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)|
Internal Revenue Service
Tax Forms and Publications Division
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
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