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Tax-Exempt Activities

The IRS devotes significant resources to meeting the special needs of tax-exempt organizations, employee retirement benefit plans, and Government entities in complying with tax laws. While these entities are not subject to Federal income tax, they nonetheless represent a significant aspect of tax administration. Although information on the administration, processing, and examination of returns filed by these entities is provided throughout the IRS Data Book, Section 6 focuses on issues related to governance. New for Fiscal Year (FY) 2016 are data on the Protecting Americans from Tax Hikes (PATH) Act of 2015, which requires an organization to notify the IRS of its intent to operate as a Section 501(c)(4) organization within 60 days of formation. The submission of this notice does not constitute a request for a determination letter recognizing the organization as tax-exempt under section 501(c)(4); these data are reported in a new table, 24b. 

Graphic 1 shows the number of IRS recognized tax-exempt organizations, nonexempt charitable trusts, and nonexempt split-interest trusts in fiscal year 2016. Religious, charitable, and similar organizations make up 77 percent of the total number of IRS recognized tax-exempt organizations, nonexempt charitable trusts, and nonexempt split interest trusts.

View details (XLS). For additional graphs from this section, download the PDF of this year’s Data Book.

Highlights of the Data

  • In Fiscal Year (FY) 2016, the IRS recognized almost 1.8 million organizations, including new determinations, as tax-exempt. Almost 1.6 million of these organizations were tax-exempt under Internal Revenue Code section 501(c). The majority of these organizations were charities tax-exempt under Internal Revenue Code Section 501(c)(3) (Table 25).

  • Issuing rulings, providing technical assistance, and issuing opinion letters on prototype plans, and correspondence compose the 639 technical activities for FY 2016. The IRS devoted additional regulatory resources to voluntary compliance closures (Table 22).

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Page Last Reviewed or Updated: 30-Mar-2017