Proposed regulations on “good faith determinations”. Proposed regulations modify standards for making a good faith determination that a foreign organization is a charitable organization, grants to which may be qualifying distributions and not taxable expenditures. The proposed regulations identify a broader class of tax practitioners upon whose written advice a private foundation may base a “good faith determination.” See, Proposed Regulations: Reliance Standards for Making Good Faith Determinations, REG-134974-12, 2012-47 I.R.B. 553. Prop. Regs. on Good Faith Determinations.
New Requirements for section 501(c)(3) Hospitals Under the Affordable Care Act. The Affordable Care Act (ACA), enacted March 23, 2010, added new requirements that hospital organizations must satisfy in order to be described in section 501(c)(3), as well as new reporting requirements and excise taxes. On June 22, 2012, the Service issued a notice of proposed rulemaking that addresses the new requirements enacted by the ACA applicable to section 501(c)(3) hospital organizations. See, Proposed Regulations: Additional Requirements for Charitable Hospitals, REG-13026-11, 77 Fed. Reg. 38148. On April 3, 2013, the Service issued proposed regulations on the ACA's community health needs assessment (CHNA) requirements. The proposed regulations also discuss the related reporting and excise tax requirements for charitable hospitals and the consequences for failure to satisfy the section 501(r) requirements. See, Proposed Regulations: Community Health Needs Assessments for Charitable Hospitals, REG-106499-12, 78 Fed. Reg. 20,523.
Timing of when an Organization is exempt for Federal Tax Purposes. As noted in section 2.03(4) of Revenue Procedure 2013-9, 2013-2 I.R.B. 267, the provisions in section 11.01 regarding the effect of determination letters or rulings recognizing exempt status of organizations described in section 501(c), other than sections 501(c)(3), (9), (17), and (29), have been revised. Prior to this year, and back to 1962, when such organizations applied for recognition, the IRS would usually recognize the organizations as tax exempt from the date of formation, no matter how long the interval between the date of formation and the date of application. In addition to the practical difficulties of ascertaining an organization's purposes and activities for this period, such recognition is now potentially inconsistent with the provisions of section 6033(j), which automatically revokes the exempt status of an organization that fails to file required Form 990 series returns or notices for three consecutive years. The new procedure adopts a practice similar to the rule for section 501(c)(3) organizations for these organizations, generally permitting recognition from the date of formation if the organization has:
always met the requirements for exemption,
has applied within 27 months from the end of the month in which it was organized,
and has not failed to file required Form 990 series returns or notices for three consecutive years.
Section 11.01(3) notes: an organization that otherwise meets the requirements for tax-exempt status and the issuance of a determination letter or ruling that does not meet the requirements for recognition from date of formation will generally be recognized from the postmark date of its application.
Exempt Organizations Select Check. The IRS has developed an on-line search tool, Exempt Organizations Select Check, that allows users to select an exempt organization and check certain information about its federal tax status and filings. It consolidates three former search sites into one, providing expanded search capability and a more efficient way to search for organizations that:
Are eligible to receive tax-deductible charitable contributions (Publication 78 data). Users may rely on this list in determining deductibility of contributions, just as they did when Publication 78 was a separate electronic publication rather than part of Select Check.
Have had their tax-exempt status automatically revoked under the law because they have not filed Form 990 series returns or notices annually as required for three consecutive years (Auto-Revocation List).
Have filed a Form 990-N (e-Postcard) annual electronic notice.
In addition to searching for a particular organization, users may download a complete list of each of the three types of organizations through Exempt Organizations Select Check.
See also Revenue Procedure 2011-33, 2011-25 I.R.B. 887.
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) has changed. See Notice 2006-42, 2006-19 I.R.B. 878, Notice 2006-42.
Prohibited tax shelter transactions. New excise taxes are imposed under section 4965 on certain tax-exempt organizations entering into prohibited tax shelter transactions. See 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 has been modified.
Entities that are not required to file Form 990 or 990-EZ must file new Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ.
The requirements of disclosure to state officials relating to exempt organizations has been modified.
There are excise taxes imposed on excess benefit transactions involving donor advised funds and sponsoring organizations.
There are new 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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