Group exemptions and group returns

The IRS.gov website provides additional materials explaining federal tax rules and procedures (1) for obtaining and maintaining group exemptions and (2) for filing group returns:

• Group exemptions
• Group returns

Revenue Procedure (Rev. Proc.) 2026-8 sets forth updated procedures to obtain recognition of exemption from federal income tax on a group basis for organizations described in Section 501(c) of the Internal Revenue Code (Code) that are affiliated with and under the general supervision or control of a central organization. This revenue procedure relieves each subordinate organization included in a group exemption letter from filing its own application for recognition of exemption. This revenue procedure also sets forth updated procedures a central organization must follow to maintain a group exemption letter. The general requirements to obtain and maintain a group exemption letter include:

1. Recognition of exemption.
   
   On or before the date it files a group application, a central organization described in IRC Section 501(c) must either (a) be recognized by the IRS as tax-exempt, (b) have filed an application, or (c) in the case of a central organization that has had its exemption automatically revoked, filed an application for reinstatement.
    
2. A minimum of five subordinate organizations.
   
   A central organization must have at least five subordinate organizations to obtain a group exemption letter, and it must have at least one subordinate organization to maintain the group exemption letter thereafter.
    
3. Only one group exemption letter.
   
   A central organization may maintain only one group exemption letter (except as provided in section 12.02(2)(a)(ii) of this revenue procedure which provides a transition period for preexisting group exemption letters).
    
4. An affiliation requirement.
   
   The central organization must have a relationship with its subordinate organizations. The central organization must demonstrate that each subordinate initially included or subsequently added to the group exemption letter is:
   • affiliated with the central organization and
      
   • subject to its general supervision or control.
     
     In addition to being affiliated with the central organization and subject to its general supervision or control, all subordinates initially indicated or subsequently added to the group exemption letter must meet the requirements of Rev. Proc. 2025-29, including having a/an:
      
     1. Matching requirement.
        
        All subordinate organizations under a group exemption letter must be described in the same paragraph of IRC Section 501(c). Subordinate organizations are not required to be described in the same paragraph of IRC Section 501(c) as the central organization.
         
     2. Uniform purpose requirement.
        
        Subordinate organizations that share the same purpose must have a uniform purpose statement in their governing instruments (charter, trust indenture, articles of association, etc.). If one or more subordinate organizations covered by a group exemption letter have a purpose that is different from the purpose of other subordinate organizations covered by the letter, the subordinate organizations that share a purpose must include the same uniform purpose statement in their governing instruments.
         
     3. Annual accounting period requirement.
        
        ​​​​​​​Subordinate organizations included on a group return filed by the central organization on behalf of those subordinate organizations must be on the same annual accounting period as the central organization.