25.7.3 Group Exemption Procedures

Manual Transmittal

December 06, 2017


(1) This transmits revised IRM 25.7.3, Group Exemption Procedures, Exempt Organization/Business Master File Handbook (EO/BMF).

Material Changes

(1) Only date changes made for recertification purposes.

Effect on Other Documents

This supersedes IRM 25.7.3 dated 01/01/2017.


Tax Exempt and Government Entities

Effective Date


Sean O’Reilly
Director, Business Systems Planning
Government Entities and Shared Services
Tax Exempt and Government Entities

Overview of Group Exemption Procedures

  1. A central organization which is tax exempt under IRC 501(c) may obtain exemption recognition, on a group basis, for subordinate organizations under its general supervision or control. The purpose of the group exemption is to relieve subordinate organizations from filing their own exemption applications.

Group Exemption Requirements

  1. Central organizations that apply for a group exemption letter must obtain their own exempt status recognition. See Sec. 4 of Rev. Proc. 80–27 , 1980–1 C.B. 677, for the requirements for inclusion in a group exemption letter.

  2. Central organizations must establish that the subordinates included in the group exemption letter are:

    1. Affiliated with it.

    2. Subject to its general supervision or control.

    3. Exempt under the same IRC 501(c) paragraph.


      The subordinates don’t need to share the same 501(c) paragraph with the central organization.

    4. Not a private foundation, as described in IRC 509(a), if requesting IRC 501(c)(3) status.

    5. In the same accounting period as the central organization, if included in a group return.

    6. Not organized and operated in a foreign country.

  3. Subordinate organizations seeking IRC 501(c)(3) exemption recognition are subject to the 15-month provision of IRC 508(a).

    1. If all subordinate organizations have been formed within the 15-month period before the group exemption application submission date, the subordinate organizations may receive exemption recognition effective as of their creation dates.

    2. However, the IRS may issue a group exemption letter covering subordinates, one or more of which haven’t been organized within the 15-month period before the submission date, if all subordinates are willing to accept exemption recognition as of the application date.

  4. To be included in the group exemption letter, each subordinate organization must submit written authorization to the central organization.

    1. A duly authorized officer of the subordinate must sign the authorization.

    2. The central organization must keep the authorization for as long as the group exemption is in effect.

Exempt Organizations Rulings and Agreements Responsibilities

  1. All applications, except those meeting certain criteria, undergo review by Exempt Organization Ruling and Agreements (EO R&A) in Cincinnati, OH.

  2. EO R&A:

    1. Issues group exemption ruling or determination letters.

    2. Prepares the EO/BMF vouchers on Form 2363–A.

Establishing and Changing Group Exemptions

  1. The following procedures apply for establishing and changing group exemption designations on the EO/BMF.

New Group Exemptions

  1. When ready to issue a group exemption letter, prepare a Form 2363-A voucher in duplicate.

  2. Stamp or annotate Form 2363-A in the upper margin "New Group Exemption Letter" and leave the floating field area (new group exemption number) blank.

  3. Use Form 3210, Document Transmittal, to send the original Form 2363-A to the Ogden Submission Processing Center (OSPC), along with a copy of the list of the subordinates included in the group determinations.

    1. Include all EINs known and attach any SS-4s.

    2. Annotate the subordinate listing, "Form SS-4 previously forwarded to IRS" for each entity, if appropriate.

  4. File a duplicate copy of Form 2363-A in the administrative case file for any follow-up action (i.e., shipment lost in transit, unpostables, etc.).

  5. Enter the following information on the Form 2363-A:

    1. Parent’s name control and EIN (document, transaction and definer codes may be left blank)

    2. Appropriate subsection code (SS)

    3. Foundation code (TF), if the SS is 03

    4. Appropriate classification code(s) (CL)

    5. Status code and date (ST)

    6. Appropriate affiliation code (AF)

    7. Group ruling date (RD)

    8. Organization type (TO)

    9. Fiscal year (FY)

    10. File folder number (FF)

    11. NAICS and NTEE code(s)

    12. Deductibility code year (DY)

    13. Pension plan (PP)

    14. Between 10–35 characters in the remarks area (RM)

    15. Parent’s name, leave address area blank

    16. Appropriate Form 990 filing requirement (see IRM (6))

    17. If appropriate, enter a Form 990-T filing requirement

    18. Preparer’s name and symbols

  6. Use these codes to indicate the appropriate Form 990 filing requirement:

    Code Form 990 Filing Requirement
    01 All subordinates over $50,000 gross receipt, or if unknown.
    02 All subordinates $50,000 or less.
    06 Church or integrated auxiliary of a church. Enter an asterisk (*) in the 990 box if the group ruling is for a church. 1
    07 501(c)(1) government instrumentality.


    1. Enter in the shaded area to the right of the filing requirements section: "Enter 1 if N/A or 6, if a true church or unknown." This alerts OSPC employees to give a non-integrated auxiliary of a church filing a Form 990 a filing requirement of 1, or give an integrated auxiliary of a church, or if it is unknown whether an entity is integrated or non-integrated, a filing requirement of 6.

Changing Group Exemptions

  1. Use these procedures to change group exemptions.

    IF changing… THEN…
    The group exemption Prepare Form 2363-A.
    An existing group exemption Process Form 2363-A for the central (parent) organization and affected subordinates.
    From an individual to group exemption Document Code 80 (TC 0l6).
  2. If the group ruling affects all subordinates, update all entities covered under the group ruling by using the GEN in the "From GEN" field of the floating field area and the name control and EIN of the parent. This changes all entities established with the specific GEN entered, e.g., subsection/classification change for all entities.


    Use the correct GEN, Name Control and EIN of the parent, as both are validated by the computer and if either does not validate, the change will be unpostable.

  3. EO R&A: prepare mass change Form 2363-A, Request for IDRS Input for BMF/EO Entity Change, as follows:

    1. Floating fields

    2. Enter new data as appropriate

    3. Fixed fields: Leave blank (can’t be used for mass changes)

    4. Remarks section

    5. Check document code 81 at the top

    6. Forward mass posting voucher under separate cover to the local terminal input function

    7. In addition to the mass posting voucher, prepare another Form 2363-A marked "Pilot Voucher" in the upper right-hand corner, entering the same data elements as listed in IRM (1).

  4. You can only change the following fields en masse:

    1. Subsection/classification/foundation codes

    2. Status code and date

    3. New GEN with affiliation code entered and ruling date (merger)

    4. Deductibility code and year

    5. Activity codes (NAICS and NTEE)

    6. DOL (only if all subordinates are located within the same district)

    7. File folder number

    8. Abbreviation name

    9. Fiscal year/month (only if all subordinates are included in a group return)

Group Exemption Mergers

  1. EO R&A: When you complete the review and approval process, send group ruling merger correspondence ( i.e., the merger of two group rulings or two group rulings merging to form a new group) to Ogden Campus, Attn: Entity Control Function. OSPC:

    1. Update the BMF (except name and address changes for subordinates) to reflect the mergers.

    2. Prepare and distribute new pilot vouchers to the administrative file in Cincinnati.

  2. EO R&A: If we already recognized a subordinate as tax exempt under IRC 501(c), prepare Form 2363-A to change the individual ruling/determination status to a group exemption status.

OSPC Responsibilities

  1. OSPC:

    1. Establish the group exemption number (GEN) on masterfile.

    2. Maintain the annual supplemental group ruling information (SGRI) listing.

Supplemental Group Ruling Information (SGRI)

  1. To maintain a group exemption letter, the central organization must submit annually to the IRS various statements and listings as described in Sec. 6 of Rev. Proc. 80-27. This material is due 90 days before the close of its annual accounting period. Group returns are filed at OSPC which processes EO returns.

  2. A "List of Parent and Subsidiary Accounts" systemically generates for each central organization (except churches). This list generates six months before the end of the central’s accounting period and contains:

    1. Central’s EIN, name, address, GEN and filing requirement.

    2. Each subordinate’s EIN, name, address, filing requirement and status (active or inactive).

  3. Central organizations may use this listing to provide annual SGRI updates on their subordinate units. However, they may submit their own listing if it contains all information required by Rev. Proc. 80–27.

  4. OSPC must write to the central organization, if they:

    1. Don’t receive the supplemental information within 90 days before the end of the parents’ accounting period.

    2. Receive incomplete SGRI listings.

Group Exemption Roster

  1. Document 6023, Group Exemption Roster, helps us identify organizations covered by group exemptions and provides key exemption data. It serves as a convenient reference to outstanding group exemptions when we:

    1. Process applications for exemption.

    2. Prepare vouchers for the BMF System.

    3. Respond to requests for group exemption information.

    4. Process unpostable Forms 990, Return of Organization Exempt from Income Tax.

  2. The roster reprints semiannually to reflect all active parent accounts as of the date of issuance. It contains a(n):

    1. Alphabetical listing of organizations covered by group exemptions.

    2. Numerical listing in group exemption number (GEN) order.

    3. Table of BMF abbreviations for group exemption organizations, where applicable. It also identifies the number of organizations with the same GEN.

  3. The alphabetic listing for each group exemption includes the:

    1. Name of the organization

    2. The home city and state of the central organization

    3. The IRC 501(c) exemption subsection

    4. The group exemption letter date

    5. Group exemption number (GEN)

    6. Parents’ EIN

    7. BMF standard abbreviation for the organization (where applicable)

  4. The names of the central organizations are alphabetically listed as they appear on BMF.

  5. The table of BMF abbreviations lists the abbreviations in alphabetic sequence and is cross-referenced to the organization’s name as it appears in the main listing.

  6. There’s no requirement for a central organization to certify that its group roster doesn’t contain subordinate organizations that are currently autorevoked.


    However, Notice 2011-44 states that an organization whose exemption has been revoked for failure to file for three years can’t reinstate that exemption by joining a group exemption ruling as a subordinate or getting the central organization to add it back to the group exemption roster. The autorevoked entity must apply for exemption, whether or not it was originally required to so apply.

Group Exemption Number (GEN) File

  1. The GEN file is a computer file controlling the EO/BMF accounts of every parent or subordinate organization containing a GEN. It:

    1. Ensures every group exemption has only one parent account.

    2. Prevents a subordinate account from establishing unless a parent containing that GEN already exists.

    3. Stops invalid GEN’s or affiliation codes from passing on to the EO/BMF.

  2. IDRS compares every entity change transaction containing either a "From GEN" or "New GEN" to the GEN file before posting to the EO/BMF.

    1. Transactions failing to pass GEN file validity checks unpost with Unpostable Code 370, and return to the initiator.

    2. Transactions that pass GEN file validity checks generate either new or updated accounts on the GEN file, and post to the EO/BMF.

  3. The GEN file contains the following information:

    1. Parent EIN, name control, affiliation code and organization name.

    2. Subordinate EIN, name control and affiliation code.

Group Returns

  1. A central organization may file, in addition to its own annual information return, a group return on behalf of two or more of its subordinate organizations covered by a group exemption letter which are:

    1. Affiliated with the central organization at the close of its annual accounting period.

    2. Subject to the central organization’s general supervision.

    3. Tax exempt under the same IRC 501(c) paragraph.


      The subordinate organizations don’t have to share the same paragraph of the central organization.

    4. Filed on the basis of the established annual accounting period of the central organization.


    See 26 CFR Reg. 1.6033–2(d).

  2. An agency of the federal, state, or local government, although not required to file information returns for itself, may file a group return on Form 990 on behalf of subordinates under its supervision covered by a group exemption letter.

  3. The group return may include only those exempt subordinates that:

    1. Authorized in writing to include them in the return.

    2. Provided statements specifying gross income, receipts and disbursements to the central organization.

    3. Gave required related information to be stated in the return.

  4. Organizations file the group return with the OSPC, which processes EO returns. Filing a group return is in lieu of filing separate returns for each of the subordinate organizations included in the group return.

  5. The group return has separate schedules attached which include names, addresses and ElNs of all subordinates, both included and excluded from the return.

  6. Since exempt subordinate units may opt in or out of a group return, OSPC establishes all subordinates in a new group letter on the EO/BMF with a Form 990 filing requirement of "1" (gross receipts are over $50,000). This ensures that we check for return filings for subordinate units which do not elect to be included in a group return are checked for return filings.

  7. Some central organizations generally include all exempt subordinates in a group return and operate in such a manner as to eliminate the need for separate return controls on the EO/BMF for subordinates.

  8. Campus processing of group returns includes:

    1. Perfecting the return.

    2. Posting the receipt of the group return for the central organization.

    3. Posting of satisfaction of filing requirements (TC 590) to the EO/BMF accounts of exempt subordinate organizations included in the group return.

    4. Subsequent storage and maintenance of the return.

  9. When an exempt central organization files a separate return for itself and files a group return for its subordinates, BMF won’t accept both returns unless there are separate entity records, each with a different EIN.

    1. When there is only one entity record, OSPC prepares Form 2363-A to reflect the same entity data as that found on the pilot voucher entry. OSPC adds the words "Group Return" to the end of the name of the organization and assigns a separate EIN the new entity entry.

    2. The deductibility code is 2 and filing requirement code is 3 (990 — Group Return). This permits both returns to post to BMF (one individual and one group return). The group return entry won’t appear in the cumulative list.

Federally-Chartered Organizations

  1. Certain organizations covered by group exemption letters and required to file EO returns (including both central and subordinate organizations) aren’t on the EO/BMF. This includes subordinate units of federally-chartered IRC 501(c)(1) exempt organizations controlled and regulated by another government agency and subject to the supervision, periodic audit and examination procedures of the agency. In these cases, an EO/BMF account exists for the central organization only.

    1. Federal credit unions

    2. Federal Deposit Insurance Corporation

    3. Federal home loan banks

    4. Federal land banks

    5. Federal intermediate credit banks

    6. Federal National Mortgage Association

    7. Federal land bank associations (formerly national farm loan associations)

    8. Federal reserve banks

    9. Federal Savings and Loan Insurance Corporation (FSLIC)

    10. Public Housing Administration

  2. State and municipal instrumentalities aren’t tax exempt under IRC 501(c)(1).

  3. IRC 501(c)(1) refers to certain instrumentalities of the United States organized under Acts of Congress. In order to establish IRC 501(c)(1) exemption, Congress must specifically:

    1. Provide for the corporation’s exemption in the Internal Revenue Code,

    2. Provide in a non-Code provision of a revenue act, or

    3. List the corporation in IRC 501(c)(1).

  4. IRC 501(c)(1) exempt organizations aren’t subject to the Form 990 filing requirement provisions of IRC 6033 if they are corporations wholly owned by:

    1. The United States

    2. An agency

    3. An instrumentality thereof

State-Chartered Credit Unions

  1. We may omit state-chartered credit unions covered by group returns, included in group exemptions, from the EO/BMF.

    1. IRC 501(c)(14)(A) provides exemption from federal income tax for credit unions without capital stock, organized and operated for mutual purposes and without profit. State law determines whether organizations are credit unions. Generally, we consider an organization formed under a state credit union law, subject to the supervision of a state agency, such as a state banking commissioner, to be a state-chartered credit union.

    2. State-chartered credit unions are authorized in most states.


      Alaska, Delaware, Hawaii, Nevada, South Dakota, Wyoming and the District of Columbia.

    3. To qualify as a credit union under IRC 501(c)(14)(A), a credit union must hold a charter under a state credit union law, and operate without profit and for the mutual benefit of its members.

State-Chartered Credit Union
  1. A state agency may file a Form 990, group information return, for the exempt state-chartered credit unions under its supervision and control (Rev. Rul. 60–364 , 1960–2 C.B. 382.)

    1. The parent organizations filing group returns are usually controlling state agencies who are neither entitled to exemption under IRC 501(a), nor required to file Forms 990 on their own behalf. Most, but not all, state agencies filing group returns for credit unions in their states obtained a group exemption from the IRS.

    2. This presents an exception to other parent organizations which file group returns. Other parent organizations must obtain group exemption numbers and must file Forms 990 for themselves, in addition to any group return filed on behalf of their subordinates.

  2. We process group returns filed by controlling state agencies for their state-chartered credit unions on the EO/BMF according to whether or not we issued the state a group exemption.

    1. OSPC processes group returns filed by states in receipt of group exemptions in the same manner as normal group returns. OSPC assigns a Form 990 filing requirement of "3" (group return filer), and adds the words "group return" to the end of the parent’s name line.

    2. OSPC processes group returns filed by states not in receipt of group exemptions according to whether the parent organization has an account established on the EO/BMF.

    IF… THEN…
    Group returns filed by States that Assign these accounts a…
    Don’t have accounts on the EO/BMF. Establish on MF with IDRS Transaction Code 000. Form 990 Filing Requirement of "01" and add "group return" to the EO/BMF following the name line.
    Have accounts on the EO/BMF. Update on MF with IDRS Transaction Code 016. Form 990 Filing Requirements of "01" and also add "group return" to the name line.