The IRS released an advance version of Notice 2016-9 that extends the date for section 501(c)(4) organizations to notify the IRS of their intent to operate for at least 60 days from the date temporary regulations are issued.
Newly enacted section 506 requires an organization to notify the IRS of its intent to operate as an organization described in section 501(c)(4) and generally applies to social welfare organizations described in section 501(c)(4) that are established after December 18, 2015.
Notice 2016-09 [PDF 19 KB] provides that the Treasury Department and IRS intend to issue temporary regulations prescribing the manner in which organizations may comply with section 506. No penalties under section 6652(c)(4) will apply to a section 501(c)(4) organization that provides the section 506 notification by the due date provided in the regulations.
Newly enacted section 506(c) requires the IRS to acknowledge receipt of a section 506 notification; however, such acknowledgement is not a determination by the IRS that the organization qualifies for section 501(c)(4) tax-exempt status. Notice 2016-09 advises organizations seeking a determination of section 501(c)(4) status to continue using Form 1024, Application for Recognition of Exemption, until further guidance is issued. However, the filing of this form will not relieve an organization of the requirement to submit the notification required by section 506.
For more information, contact the Managing Director-in-Charge of KPMG's Washington National Tax Exempt Organizations Tax group
D. Greg Goller | +1 (703) 286 8391 | firstname.lastname@example.org
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