IRS Notification of 501(c)(4) Status Has Been Extended

The IRS has issued a notice stating its intent to extend deadlines for organizations required to notify it of their 501(c)(4) tax-exempt status. Before President Obama signed the Protecting Americans from Tax Hikes (PATH) Act of 2015, such organizations could self-declare their tax-exempt status and file the required annual information return with the IRS. However, the PATH Act created additional requirements for organizations wishing to file under 501(c)(4) status.

Code Section 506, created by the PATH Act, requires that certain social welfare organizations notify the IRS  of their intent to operate as a 501(c)(4) tax-exempt organization. This requirement applies to organizations established after December 18th, 2015 as well as previously existing organizations that have not applied for a formal determination of their exempt status or filed a minimum of one annual information return. A determination letter is obtained by filing Form 1024 – Application for Recognition of Exemption Under Section 501(a). Organizations who have filed Form 1024 after December 18th, 2015 are still obligated to fulfill the notification requirement.

The IRS notification must contain the organization’s:

  • Name
  • Address
  • Taxpayer identification number
  • State under whose laws it was organized
  • Year of organization
  • Statement of organizational purpose

Upon receiving the notification, the IRS will send a notice of receipt within 60 days. This notice should not be interpreted as a determination letter of exempt status under Section 501(c)(4).

The PATH Act originally required that existing 501(c)(4) organizations submitted their notifications by June 15th, 2016 and that all new organizations submitted their notifications within 60 days after their establishment. However, the IRS recently extended these due dates with Notice 2016-9, stating that it intends to issue temporary regulations associated with the implementation of the notification requirement. To provide affected organizations additional time for compliance with these new regulations, the required notifications will be due 60 days (or more) after the regulations on this topic are issued. Until then, organizations should wait to submit notifications to the IRS.

J. Calvin Marks
J. Calvin Marks | Manager