Final regulations Type III supporting organizations | KPMG | GLOBAL

Regulations: Payout requirement for non-functionally integrated Type III supporting organizations

Final regulations for Type III supporting organizations

The Treasury Department and IRS this afternoon released for publication in the Federal Register final regulations (T.D. 9746) regarding the distribution requirement for non-functionally integrated Type III supporting organizations. With today’s release, temporary regulations (that expired December 21, 2015) are withdrawn.


Related content

The final regulations [PDF 225 KB] are effective on the date of filing with the Federal Register (presumably today, December 21, 2015). The regulations are scheduled to be published in the Federal Register on December 23, 2015.

The temporary regulations expired December 21, 2015, and the final regulations generally adopt the provisions of the temporary regulations, except the final regulations include provisions that:

  • Conform the provision regarding the valuation of non-exempt-use assets to the section 4942 regulation provision that it cross-references (Reg. section 53.4942(a)-2(c)(2)) 
  • Replace references in Reg. section 1.509(a)-4 to the temporary regulations with references to these final regulations

Future regulations to be proposed

The preamble to the final regulations indicates an intention of the IRS and Treasury to publish proposed regulations in the near future that would make one change to these final regulations—that is, the future regulations would be proposed to remove a provision that reduces the distributable amount by the amount of taxes subtitle A of the Code imposes on a supporting organization during the immediately preceding tax year. 

The to-be-issued proposed regulations would also propose specific rules, including transition relief, regarding the requirements for a functionally integrated Type III supporting organization that supports governmental supported organizations. Such supporting organizations may continue to rely on Section 3.01 of Notice 2014-4 until such proposed regulations are published in the Federal Register.


For more information, contact the Managing Director-in-Charge of KPMG's Washington National Tax Exempt Organizations Tax group:

D. Greg Goller | (703) 286-8391 |

© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Request for proposal