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New IRS Filing Requirement for Certain Subordinates in a Tax Exempt Group Ruling


Synopsis
Rev. Proc. 2013-10 states that, effective January 7, 2013, subordinate organizations included in a group exemption letter that are seeking a change in their public charity status must do so by filing with the IRS Form 8940, Request for Miscellaneous Determination Under Section 507, 509(a), 4940, 4942, 4945, and 6033 of the Internal Revenue Code, as well as the user fee and information, documentation, and other materials required by Form 8940.

Suggested action
Organizations that have obtained a group exemption letter for subordinate organizations exempt under Section 501(c)(3) may want to consider a review of the subordinates’ public charity status and whether any changes to such status may be necessary.

Issue
Rev. Proc. 2013-10 is this year’s annual update of IRS procedures for issuing rulings and determination letters on reclassification of public charity status under Section 509(a)(1), (2), and (3) and certain other matters.   The requirement that subordinate organizations wishing to change public charity status must do so by filing Form 8940 is new.

In a related development, the IRS is asking more than 2,000 exempt organizations with a group exemption letter to complete a questionnaire. For additional information, please see Tax Alert: Tax Exempt Group Rulings under IRS Scrutiny.

Contact:
Please visit CohnReznick’s Not-for-Profit and Education webpage and contact Thomas Lanning, Partner, at 646-834-4108 or Phil Royalty, Director, at 916-930-5222.

 


Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.

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