The Treasury Department and IRS today released for publication in the Federal Register temporary regulations (T.D. 9775), and by cross-reference, proposed regulations (REG-101689-16) concerning the requirement under section 506—added by the Protecting Americans from Tax Hikes Act of 2015 (PATH Act)—that organizations must notify the IRS of their intent to operate under section 501(c)(4).
The IRS also today issued an advance version of Rev. Proc. 2016-41 [PDF 78 KB] that sets forth the procedure for an organization to notify the IRS—pursuant to the requirements of section 506—that the organization is operating as a section 501(c)(4) organization.
The rules affect organizations described in section 501(c)(4)—generally, certain civic leagues or organizations operated exclusively for the promotion of social welfare and certain local associations of employees—that are organized after December 18, 2015, and certain section 501(c)(4) organizations existing on that date.
The temporary regulations prescribe the manner in which a section 501(c)(4) organization must submit the notification under section 506, and provide that the notification must be submitted on Form 8976, Notice of Intent to Operate Under Section 501(c)(4), (or a successor form). In addition, the temporary regulations clarify that a submission of the notification does not constitute a request by an organization for a “determination letter” from the IRS that it qualifies for tax-exempt status.
The preamble to the temporary regulations notes that the statutory provisions of section 506 were effective upon enactment (December 18, 2015) and that certain section 501(c)(4) organizations must notify the IRS within 60 days of formation. Accordingly, the regulations are being issued to provide “prompt guidance” to enable section 501(c)(4) organizations to satisfy the new statutory notification requirement and provide appropriate transition relief.
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