New IRS 501(c)(4) Determination Letter Process and Form Established
In Revenue Procedure 2018-10, which is effective January 16, 2018, the IRS modified Revenue Procedure 2018-05 by applying the procedures for Exempt Organization Determination letters to a new IRS form 1024-A, Application for Recognition of Exemption Under Section 501(c)(4) of the Internal Revenue Code.
This Revenue Procedure provides exempt organizations with information and procedures for obtaining determination letters using Form 1024-A.
With the enactment of the PATH Act, IRC Section 506(f) was added, requiring organizations established after December 15, 2015 and who are seeking to qualify as an IRC Section 501(c)(4) to notify the IRS, within 60 days after the organization is established. The IRS created Form 8976 for organizations to provide this notification. Such Form be submitted online through IRS pay.gov, along with the required $50 fee, and is a one-time notification.
In addition, IRC Section 506(f) also provides that an organization desiring additional certainty regarding its tax-exempt status may also choose to separately file a request for a determination letter with the IRS, together with any applicable user fee. In response to this taxpayer option, pursuant to Revenue Procedure 2018-10, IRS procedures have also been changed to reflect the use of a new Form 1024-A, as well as implementing other minor changes.
The IRS now offers Form 1024-A (Application for Recognition of Exemption Under Section 501 (c)(4) of the Internal Revenue Code) for use by social welfare organizations that choose to be recognized as tax-exempt and that also wish to receive an IRS determination letter verifying their status.
To take advantage of certain state tax exemptions, receive non-profit postage privileges, and be publicly recognized as a tax-exempt organization, impacted organizations must file new Form 1024-A. Today, rules seem to be getting more complex. Organizations wishing to operate as an IRC Section 501(c)(4) entity should understand and comply with all IRS (and any required state) filings to ensure that all registration requirements are satisfied.
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