This site provides information regarding tax exempt homeowners associations.  We hope that you will find the information on this site helpful in understanding the differences between the various Internal Revenue Code (IRC) Sections under which an association may qualify for tax exemption.  This site is not a discussion of associations that are exempt under IRC Section 528 simply by virtue of filing Form 1120-H, but deals with associations that are exempt under IRC Sections 501(c)(4) and 501(c)(7).

Homeowners associatons that qualify as exempt organizations under IRC Section 501(c)(4) are completely exempt from income taxes, except for any unrelated business activities.  Associations that qualify under IRC Section 501(c)(7) are exempt on member activities, but pay taxes on net income from nonmember activities and investment earnings.

This site is maintained by Gary Porter, CPA, who has more than twenty years of experience with  homeowners association taxation, and has provided tax exemption services for more than 60 homeowners associations.

Background information on tax exempt Homeowners Associations

IRC Section 501 was established by congress to provide a taxing scheme for non profit organizations.  Two specific subsections of IRC Section 501 that can potentially apply to homeowners associations are Sections 501(c)(4) and 501(c)(7).

IRC Section 501(c)(4) deals with “Social Welfare” organizations that serve a public benefit.  Few homeowners associations will qualify under this section, but for those that do, the tax savings can be substantial.  While the benefits of this section are generous, the qualification criteria are very stringent.  The tax savings for most associations comes from the fact that interest income earned by an association exempt under this section is not taxable income.  In addition, in some states, tax exempt associations become exempt from state sales tax.  For those associations, the sales tax savings can be even larger than the income tax savings.  Associations exempt under this section file Form 990 and are relieved of the tax risks associated with filing Form 1120.

IRC Section 501(c)(7) deals with “Recreational” organizations.  The primary type of organization that qualifies for exemption under this section is a country club.  Again, very few homeowners associations will qualify for exemption under this section because of the stringent qualification requirements.  Contrasted to IRC Section 501(c)(4), associations exempt under IRC Section 501(c)(7) are not completely tax exempt.  They will pay taxes on their interest income, and on most net non member income. Associations exempt under this section file Form 990 and are relieved of the tax risks associated with filing Form 1120.

Applicable tax law

In addition to the basic Code section, there are numerous other citations that MUST be considered by any association that is contemplating applying for tax exemption. The most important of these citations are listed on the attached sheet (Tax Citations).

In addition, there are dozens of other citations that apply; Revenue Rulings, Court cases, Private Letter Rulings, General Counsel Memoranda, Revenue Procedures, and Technical Advice Memoranda.  The preparer of the exemption application must possess a working knowledge of these rulings in order to safely prepare the application. 

The most important of the above rulings is Treasury Regulation 1.337(d)-4.  This regulation is unknown to many tax practitioners that attempt to prepare exemption applications, because the subject matter is corporate reorganizations.  However, changing a corporation from taxable to tax exempt is considered a corporate reorganization, so the Regulation applies.  The impact of this Regulation can be devastating to an association, because the Regulation essentially applies a transfer tax on taxable corporations that become tax exempt.  The tax is based on the excess of the fair market value of the assets transferred (say, a golf course), over their tax basis.  Since most association common area assets will have no tax basis, the fair market value equals the taxable gain.  In the case of a $10,000,000 golf course, the full amount would be taxable, and at the maximum corporate tax rates.

Our experience, and a private letter ruling to the IRS (withdrawn once we got the answer we wanted, so it is not published) has allowed us to determine a SAFE way to avoid the potential negative impact of Treasury Regulation 1.337(d)-4.

If the tax preparer who is preparing your exemption application is unaware of Treasury Regulation 1.337(d)-4, or does not know how to safely navigate around its negative provisions, you are taking an enormous risk by filing your tax exemption application. 

Our firm has been hired in several instances to “fix” defective applications prepared by others.  We have also successfully gained tax exemption where other CPAs and even tax lawyers have tried and failed.  That simply makes the process more expensive for the association.  We have also been successful in regaining tax exempt status after it has been revoked by the IRS as a result of an audit.  Having the right professional representation when you’re undergoing an IRS audit is very important.

Articles about tax exempt homeowners associations

1)  Tax Exempt Homeowners Associations – the Complete Guide
2)  Regulation 1.337(d)-4 – Closing the Door on Tax Exempt Homeowners Associations
3)  CAI Victory in Amending Proposed regulation 1.337(d)-4
4)  IRC Section 501(c)(4) and Gated Associations

Ask the Expert

If you think your association may qualify for tax exemption, but you’re not really sure, please call Gary Porter at 805-496-1883 for 30 minute free, no obligation, consultation.  Gary Porter has successfully completed more than 60 exemption applications for homeowners associations, including several gated associations.  Once we have reviewed your data and said “it’s a go,” we have a 100% success rate (so far) in gaining tax exemption for the associations for which we have filed applications.  Cumulative tax savings for our association clients exceeds $18,000,000 to date.

Please contact Gary Porter for your association tax exemption services.  We serve associations nationwide.

Background information on Gary Porter, CPA

Gary Porter, CPA is licensed by the California Board of Accountancy and the Nevada Board of Accountancy.  His CPA practice is limited to Common Interest Realty Associations, including homeowners associations, condominium associations, timeshare associations, fractional ownership associations, and condo hotel associations.  Mr. Porter is the co-author of the PPC (Practitioners Publishing Company) Guide to Homeowners Associations and Other Common Interest Realty Associations, and Homeowners Association Tax Library.  He is also the author of more than 200 published articles on financial matters related to homeowners associations.  He has been working with homeowners associations since 1976


For related information, please go to:

Gary Porter CPA website

HOA taxation site

 

 

IRS Revenue Procedure 2016-41

Requirement tonotifythe IRSofintentto operate asasection501(c)(4)organization

Summary

Section 405(c) of the PATH Act amended section 6652(c) to impose penalties for failure to file the notification by the date and in the manner prescribed in section 506 (and implementing regulations). In particular, section 6652(c)(4)(A) imposes a penalty on an organization that fails to submit the notification equal to $20 per day for each day the failure continues, up to a maximum of $5,000. Additionally, section 6652(c)(4)(B) imposes a similar penalty on persons who fail to timely submit the notification in response to a written request by the Secretary.

26CFR 1.506. Requirement tonotifythe IRSofintentto operate asasection501(c)(4)organization.

Rev. Proc. 2016-41

SECTION 1.PURPOSE


This revenue proceduresetsforththe procedure for anorganizationtonotifytheInternal Revenue Service(IRS), consistentwithsection506 ofthe Internal RevenueCode(Code), that it isoperating as anorganizationdescribedinsection501(c)(4) of theCode(asection501(c)(4) organization).

  1. 1Ingeneral. Section506,added totheCode onDecember 18, 2015,bythe Protecting Americansfrom TaxHikes Act 2015L. 114-113, Q) (thePATH requires asection 501(c)(4) organization, no laterthan 60days after theis established,to notifytheSecretaryof the Treasury(thethat itis as asection501(c)(4) organization. Therequirementtosubmitthisnotificationappliestosection 501(c)(4) organizations after December 18,2015, and tocertainsection501(c)(4) organizationsexisting onthat
  2. 2Termsusedinthis revenueprocedure.For purposesthis revenueprocedure--
  3. “Form8976”means theForm 8976,Notice Intent to OperateUnder Section501(c)(4), whichis usedbyanto notifythe IRSthat itis as asection 501(c)(4) organization, as required bysection506 the
  4. “Date Organization” meansthedate onwhichthewas formedas alegal Generally, for corporationsformedintheUnited States,the date ofrefers tothedate that thecharter or articles incorporationwereapprovedbytheappropriatestateFor unincorporated organizations, thedate ofrefers tothedate that theconstitution or articles association were
  5. “State
  6. “DeterminationLetter” meansawrittenstatement issuedinresponse toanapplication for recognition exemption fromfederal incometaxunder sections501or521byEO Rulings andAgreements(the officeinIRSExemptOrganizations is primarilyresponsible for determinations exempt status,taxpayer assistance,andassistancetoEOoran AppealsOffice(anyunder thedirection andcontrol theChief,
  7. “Form1024”means theForm 1024,Applicationfor Recognition of ExemptionUnder Section 501(a),whichis the formsubmitted byanseeking aDetermination Letter recognizing exemption under section 501(a) asandescribed insection 501(c)(2), or

SECTION 2.BACKGROUND

  1. 1Section405 ofthePATHActaddedsection506 totheCode,requiring anto notifytheIRSthat it is as asection 501(c)(4) organization. Inaddition, section 405(b) and thePATHAct amendedsections6033(f) (relating toinformation that section501(c)(4) organizations mayberequiredtoinclude on theirannual informationand 6652(c) ofthe Code(relating topenaltiesfor certainfailures bytax-exempt tocomply withfiling or disclosureSee§§ 6033(f)(2), 6652(c)(4).
  2. 2Under section 405(f) of thePATH Act,section 506 andtherelated amendmentstosections6033and 6652 oftheCode applytosection 501(c)(4) organizations exceptforanythat had,onor beforeDecember18,2015--
  3. Applied fora Determination Letter that recognizes theas asection 501(c)(4) organization(using Form 1024);or
  4. Filed at leastone annual information return or noticerequiredunder section6033(a)(1) orForm990, Return ofOrganizationExempt FromIncomeTax, ifeligible, Form990-EZ,Short FormReturn ofOrganizationExempt FromIncomeTax, orForm990-N (e-Postcard)).
    1. 3Section506(a)provides thatthenotificationisdueno laterthan 60 days aftertheis Section 405(f)(2)thePATH Actprovides,for inexistenceDecember 18,2015, thatmust submitthe notification, thatthe notificationisdue nolater thanJune 15,2016,180days after the date enactmentthePATH Act.
      1. 4Section6033(f)(2) requires asection 501(c)(4) organizationsubmitting thenotificationunder section506(a) toincludewithitsfirstannual informationreturnaftersubmitting the notificationanyadditional informationprescribed byregulationthatsupports the treatmentas andescribedin section 501(c)(4).As amended, section 6652(c)(4) imposespenaltiesforfailuretosubmit thenotificationunder section506(a) bythedateandin the manner prescribedin
      2. 5The TreasuryDepartment and the IRSissuedNotice2016-09, 2016-6306,toprovideinterimguidanceregarding section 405 thePATH Specifically, Notice2016-09 extendedthe due date for submittingthe notification undersection 506 until atleast 60days fromthe date that implementing regulationsareissued into provideadequatetransition time fortocomplywiththenewNotice2016-09 further stated thatno penaltiesunder section 6652(c)(4) wouldapplytoasection 501(c)(4) organizationthat submitsthenotification bythe duedate providedinthe
      3. 6OnJuly12,2016, the TreasuryDepartment andthe IRSpublished TD9775(81FR regulations thatprescribethe manner inwhichasection 501(c)(4) organizationmust submitthenotification under sectionThetemporaryregulationsprovidethatthenotification must besubmittedon Form 8976,“NoticeIntent toOperateUnder Section501(c)(4),” or its Inaddition,thetemporaryregulationsclarifythatsubmissionthenotificationdoesnotconstitutearequestbyanforaDeterminationLetterfromtheIRSthatitqualifiesfortax-exempt
    2. 7As notedinsectionthis revenueprocedure,anysection501(c)(4)that hadapplied foraDeterminationLetter thatrecognizes theas describedin section 501(c)(4) orfiledaForm990(or, if eligible, Form990-EZ,orForm990-N) onor beforeDecember 18, 2015, is excepted under section 405 thePATH Actfrom the requirement tosubmitthe notificationunder sectionSincetheenactmentthe PATH Act but prior totheavailabilityofthe newelectronic Form8976for submitting thenotification,additional section501(c)(4) organizationsmayhave filedwiththeIRSin the same manner.To reducetheburden on these section 501(c)(4) and theIRS, the temporaryregulationsrelievethese fromtherequirement to submit theSpecifically, thetemporaryregulationsprovidethatanisnotrequiredtosubmitthenotificationifitapplied foraDetermination Letter that recognizes theas described insection501(c)(4)(using FormorfiledaForm 990 (or, ifeligible, Form990-EZ orForm990-N) afterDecember 18, 2015, but or beforeJuly8, For that donot qualifyfor this relief, thetemporaryregulations also provideatransitionrulethat extends thedue date thenotificationuntil September 6,

SECTION 3.APPLICABILITYANDTIMINGOF REQUIREMENT TO SUBMITNOTIFICATION ON FORM 8976

  1. .1General rule.Except as providedinparagraphthis revenueprocedure,a section 501(c)(4) organizationmust submita completedForm 8976 totheIRSwithin60days after its Date of
  2. 2Special rulesfor were onorbeforeJuly8, 2016.
  1. Asection501(c)(4) organizationis not requiredtosubmittheForm 8976if,onor beforeJuly8, 2016,theeither--
  2. AppliedForm 1024 foraDetermination Letter that recognizes theas a section501(c)(4) organization;or
  3. Filed at least annual informationreturnornotice requiredunder section6033(a)(1) orForm990, if eligible, Form990-EZor Form 990-N).
    1. AnthathasaDateOrganizationonor beforeJuly8, 2016, andis notdescribedinsection this revenue procedure must submitacompletedForm8976 tothe IRSonorbeforeSeptember 6,

SECTION 4.PROCEDUREFOR SUBMITTING FORM 8976

  1. 1MethodSubmission.
  1. Form8976must besubmitted onlineat at www.services.irs.gov/registration/.Paper submissions willnotbe accepted and will betreated as incompleteForms 8976as describedin section 4.05(4) of this revenueOnlyForms 8976 that arecomplete andproperlysubmitted withinthe meaning of this revenue procedurewill beaccepted for processing bytheSee sectionthis revenueprocedure for therequirementsfora completedForm 8976.As describedinsection5.01 this revenueprocedure, anincompleteForm8976will not beaccepted for processing bytheIRSevenif it has beensuccessfullysubmitted through
  2. Theindividual submitting Form 8976 on behalf asection501(c)(4)must establishan accountat tosubmitForm8976 electronically. The IRSmaysend electronicallytothe account theindividual submitting Form8976on behalf thetheconfirmationtransmittal Form 8976described insection 6.02 this revenueprocedure, the noticenon-acceptance forprocessing ofForm 8976described insection 5 this revenue procedure, and/or the acknowledgement receiptForm8976describedin section 6.01 this revenueAccordingly, theshouldensurethattheindividual is authorizednottosubmitthe Form8976 but also to receivethesecommunicationsrelating tothe
    1. 2Userfee. Consistent withsection506(e), aForm8976mustbeaccompanied by payment the correctuserfee Thecorrectuserfeefor 2016is$50.In futureyears, the user feewill besetforthin theinstructions or publications withrespect totheForm 8976.Payment confirmations are providedthroughthe Additional information aboutpayment submissioncanbe foundunder FrequentlyAskedQuestionsat
    2. 3Penaltyforlate submission.Anthat submitsacompletedForm 8976after thedue datespecifiedinsections3.01orthis revenueproceduremaybesubjectto penalties providedinsection6652(c)(4), asdescribedinsection 8this revenue procedure.
    3. 4RequirementsforcompletedForm8976. For purposesthis revenue procedure, a Form 8976submitted byanis completeifit:
    4. Provides accurateresponsesfor eachrequiredlineitem of the form,consistent withthe forminstructions,including--
    5. Name of the
    6. Address the
    7. EmployerIdentification Number (EIN) ofthe organization;
    8. Date ofOrganization;
    9. State
    10. Statementthatthe purpose ofthe organizationis toas either asocial welfare organization/civic league, or association of employees; and
    11. Month the annualaccounting period ends.
  1. Includes anattestation that theinformationprovidedis correct andtheindividual submitting theForm 8976isauthorizedtosubmitthe Form 8976behalf the and
  2. Isaccompaniedbythecorrectuserfee,as describedinsection thisrevenue
    1. 5IncompleteForms 8976. AForm 8976submitted byanwill not be consideredcompleteif--
  3. Anyrequiredlineitem theelectronicform is incomplete orunintelligible;
    1. The nameor EIN donotmatchtherecords intheIRSBusinessMaster File;
      1. The toinclude payment thecorrectuser fee;or
      2. Therequired informationis submittedonan improperform or inanyimproper

SECTION 5.NON-ACCEPTANCEFOR PROCESSING

  1. 1IncompleteForm8976. Asubmitted Form8976 that is notacompletedForm 8976withinthe meaning ofsection 4.04 this revenueprocedurewill not be acceptedfor processing bytheThe benotified thenon-acceptance ofitsform andanyuserfeethat was paidwill bereturned orThemaythen submitacompletedForm8976 withanewuserfee.
  2. 2SubmissionForm8976byexcepted. If an Form 8976is not accepted for processing because theis excepted fromsection506 under section 405(f)thePATH Act (an organizationthat, orbeforeDecember18,2015,had applied foraDetermination Letter thatrecognizes it asdescribedinsection 501(c)(4) of theCode(using Form 1024) orfiledaForm 990 (or, if eligible, aForm990-EZor 990-N)), thewillbe notified thenon-acceptance of itsform andanyuserfeethat was paidwill bereturned or
  3. 3Submission multiple Forms8976.Anshould not submitmore thanForm If anattempts to submitmore thanForm8976,thefirst Form8976will beaccepted forThewill benotified thenon-acceptance of anysubsequentformand anyuser feethatwas paidinconnectionwithasubsequentformwill bereturnedor

SECTION 6.ACKNOWLEDGMENTOFRECEIPT UNDER SECTION 506

  1. 1Ingeneral.Within60days receiving an completed andproperly submitted Form 8976,theIRS will sendtheanacknowledgment itsreceipt asrequiredbysection 506(c) of theThe acknowledgment will besentelectronicallytothe accountthroughwhichthe Form8976wasTheacknowledgment is not a determination oftax-exempt Seesection 7.02 this revenue
  2. 2Confirmation transmittal is notacknowledgment.Theelectronic platformfor submitting the Form 8976will automaticallysupplyaconfirmationwhenansubmitsaForm 8976.However, that confirmationisnottheacknowledgment requiredbysection506(c) of theTheIRS will sendan acknowledgment electronicallyas providedinsection 6.01 this revenueprocedureafterprocessing of the Form 8976is

SECTION 7.EFFECT OF SUBMISSION OFFORM 8976

  1. 1Form 8976is not arequestfora determination.Submission oftheForm8976 doesnotconstitute arequestforaDeterminationLetter that recognizes theas asection 501(c)(4) organization. Seesectionthis revenueAn submittedForm 8976isnottopublic inspectionunder section6104(a)(1) anditis not anapplicationwithinthe meaning ofsection
  2. 2Acknowledgment required bysection 506(c) is not a determination exempt statusbythe IRS. Acknowledgmentreceipt an Form8976is not a determination oftax-exempt statusbythe
  1. 3Declaratoryjudgmentprovisions ofsection 7428donot apply. Because Form 8976is not a requestforaDetermination Letter and theacknowledgment receipt Form8976 is not a determination bytheIRS,the declaratoryjudgment provisions section 7428donot
  2. 4Requirement to file annual information returns.Asection 501(c)(4) organization mustfileapplicable annual information returns or notices, asrequiredbysection6033(a) or separate from andwithout regardtoits submission of Form
  3. 5Separateprocedurebywhichan mayrequest a Determination Letter.This revenueprocedure does not address theseparate procedure bywhichan mayrequest aDeterminationLetter recognizing theasasection 501(c)(4) organization. Anwishing tosubmita requestforaDeterminationLetterfromtheIRSthatitqualifiesfortax-exempt status shoulddoso in the mannerprescribed in 2016-5,2016-1 188,orasuccessor revenue
  4. 6

SECTION 8.PENALTIESFOR FAILURETOTIMELYSUBMIT AFORM 8976

  1. 1Failureto submit atimelyForm8976as required undersection506.An thatfails tosubmitacompletedForm8976 bythe due date describedinsection 3.01orthis revenue procedure, asapplicable, willbesubjecttothepenalties providedinsection 6652(c)(4), unless it is shownthat the failurewas duetoreasonable
  2. (1)Penalty. Anfails tosubmit acompleted Form8976 bythe due date must payapenaltyof$20 for each dayduring whichsuchfailureHowever, thetotal imposed onthe organization forfailuretosubmitForm8976 shallnotexceed $5,000. 3
  3. Penalty. If an to submitacompletedForm 8976bythe duedate,theIRSmaysenda written demand, requesting that thesubmit theForm 8976 byaspecified future datethat theIRSdeterminesisreasonable under theIfthe organizationfails tosubmit theForm8976onorbeforethedate specified inthedemand, the personorpersons responsible forsuch failuremustpayapenalty $20for eachdayafter thedatespecified inthedemandduring whichsuch failureFor thesepurposes, theterm“person”means any director, trustee,employee, member, or whosedutyit is tosubmittheFormIf more thanpersonis responsible forafailure tosubmittheForm8976,all such persons shall bejointlyandseverally liablewithrespect tothepenaltyfor such failure. However, thetotal amountimposedall personsresponsible for such failureshall not exceed $5,000.
    1. .2Requestingrelief froma section6652(c)(4)penalty. Under section 6652(c)(5) andthe regulationsthereunder, relief from apenaltyimposed bysection6652(c)(4) maybeif it is established tothesatisfaction theIRSthat the failureto timelysubmittheForm8976 was dueto reasonable cause.Thecorrespondence fromtheIRSregarding thepenaltywill provideinstructions onhowtosubmitarequestfor penalty 4
    2. 3Example of asituationinwhichreasonablecauserelief fromthe penaltyonthe organization wouldbeappropriate.OrganizationO isformed under thelaws a foreigncountryandfora number of years during whichit conducts noactivitiesinthe United Statesandhasno income from InOctober 2016,Ocommences intheUnitedStatesfromwhichit anticipates incomethat will bereportedonaForm 990(or requirethefiling ofaForm 990-N) and promptlynotifies theIRSitsintent toas asection501(c)(4) organizationbysubmitting Form 8976.Becausethe date submission ofForm 8976 is more than 60days after its Date ofOrganization, O receives a penaltyletterfrom theBasedthese facts, O’sfailureis duetoreasonable cause,andOmayrelief fromthe penaltydescribedinsection 8.01(1) of this revenueprocedurebysubmitting arequestin accordancewith theinstructionsinthecorrespondence fromtheIRSregarding the

SECTION 9.EFFECTIVEDATE

This revenue procedureis effectiveJuly8,2016.

SECTION 10. PAPERWORKREDUCTIONACT

Thecollection ofinformationcontained inthis revenue procedure will bereviewedand,pending receipt andevaluation ofpubliccomments,approved bytheOffice ofManagementandBudget inaccordancewiththePaperwork ReductionAct(44USC3507) under control number1545-2268.

Thecollection ofinformationinsection4 of this revenueprocedureis requiredtosatisfytherequirementimposed bysection 506of the Codeto notifytheSecretaryof anorganization’s intentto operate under section 501(c)(4).This informationwill beusedbytheIRStoprocess theForm8976for completeness insatisfactionof the statutoryrequirementandtodetermine applicabilityof thepenalties imposed by

section 6652(c)(4) oftheCode.The burden forthe collectionof informationcontainedinsection4 ofthis revenue procedurewill bereflectedin the burden estimate for Form8976.

Anagencymaynotconduct or sponsor, andpersonis not requiredtorespondto,acollection ofinformationunless thecollection ofinformation displays avalidOMBnumber.

Booksand recordsrelating tothecollectionofinformation mustberetained as longas their contentsmaybecome material in the administrationof anyinternal revenuelaw.Generally, taxreturnsandtaxreturninformationareconfidential, asrequiredbysection6103.

SECTION 11. REQUESTFOR COMMENTS

The TreasuryDepartment andthe IRSrequest commentsonthis revenueprocedure, whichwill be considered in making anyfutureupdate tothese procedures.

Comments shouldrefer to Rev. Proc. 2016-41,and should besubmittedto:

Internal Revenue ServiceAttn:CC:PA:LPD:PR

(Rev. Proc. 2016-41)Room 5203

P.O. Box7604

BenFranklinStationWashington, DC 20044

Submissionsalso maybe handdeliveredMondaythroughFridaybetweenthe hoursof8am and4 pmtoCC:PA:LPD:PR (Rev. Proc. 2016-41), Courier’sDesk, InternalRevenueService, 1111Constitution Avenue,N.W.Washington,DC Alternatively,commentsmaybesubmittedelectronicallyviathe following email address: This email address is being protected from spambots. You need JavaScript enabled to view it.. Pleaseinclude“Rev. Proc. 2016-41” in the

subject lineof anyelectronic communication.All comments will beavailablefor publicinspectionandcopying.

SECTION 12. DRAFTING INFORMATION

Theprincipal authorofthis revenue procedureis ChelseaRubinof the Office ofAssociate ChiefCounsel (TaxExempt andGovernment Entities). For additionalinformation,pleasecontact Ms.Rubin at202-317-5800(notatoll-freenumber).

 

Treasury Decision 9775

Summary

Treasury Decision 9775 establishes Temporary Regulations for IRC Section 506.

TD 9775 Requirement to Notify the IRS of Intent to Operate as a Section 501(c)(4) Organization; Final and Temporary Regulations 07/08/2016

AGENCY: Internal Revenue Service (IRS), Treasury

ACTION: Final and temporary regulations.

SUMMARY: This document contains final and temporary regulations relating to the requirement, added by the Protecting Americans from Tax Hikes Act of 2015, that organizations must notify the IRS of their intent to operate under section 501(c)(4) of the Internal Revenue Code (Code). The regulations affect organizations described in section 501(c)(4) (section 501(c)(4) organizations) that are organized after December 18, 2015, and certain section 501(c)(4) organizations existing on that date. The text of the temporary regulations serves as the text of the proposed regulations set forth in the related notice of proposed rulemaking (REG-101689-16) published in the Proposed Rules section in this issue of the Federal Register.

DATES: Effective Date: These regulations are effective on July 8, 2016. Applicability Date: For date of applicability, see §1.506-1T(f). FOR FURTHER INFORMATION CONTACT: Chelsea Rubin at (202) 317-5800 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information contained in these final and temporary regulations will be reviewed and, pending receipt and evaluation of public comments, approved by the Office of Management and Budget under control number 1545-2268.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

For further information concerning this collection of information, please refer to the preamble to the cross-referencing notice of proposed rulemaking published in the Proposed Rules section of this issue of the Federal Register. Books and records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

Background

This Treasury decision contains temporary regulations under section 506 of the Code. Section 405 of the Protecting Americans from Tax Hikes Act of 2015 (Pub. L. No. 114-113, div. Q) (the PATH Act), enacted on December 18, 2015, added section 506 to the Code and amended sections 6033 and 6652. Because the statutory provisions were effective upon enactment and certain section 501(c)(4) organizations must notify the IRS within 60 days of formation, these temporary regulations are necessary to provide prompt guidance to enable section 501(c)(4) organizations to satisfy the new statutory notification requirement and provide appropriate transition relief.

1. Section 501(c)(4) Organizations

Section 501(a) of the Code generally provides that an organization described in section 501(c) is exempt from federal income tax. Section 501(c)(4) describes certain civic leagues or organizations operated exclusively for the promotion of social welfare and certain local associations of employees. An organization is described in section 501(c)(4) and exempt from tax under section 501(a) if it satisfies the requirements applicable to such status. Subject to certain exceptions, section 6033, in part, requires organizations exempt from taxation under section 501(a) to file annual information returns or notices, as applicable. Although an organization may apply to the IRS for recognition that the organization qualifies for tax-exempt status under section 501(c)(4), there is no requirement to do so (except as provided in section 6033(j)(2), which requires organizations that lose tax-exempt status for failure to file required annual information returns or notices and want to regain tax-exempt status to apply to obtain reinstatement of such status). Accordingly, a section 501(c)(4) organization that files annual information returns or notices, as required under section 6033, need not seek an IRS determination of its qualification for tax exempt status in order to be described in and operate as a section 501(c)(4) organization.

2. The PATH Act

Section 405(a) of the PATH Act added section 506 to the Code, requiring an organization to notify the IRS of its intent to operate as a section 501(c)(4) organization. In addition, section 405(b) and (c) of the PATH Act amended sections 6033(f) and 6652(c), relating to information that section 501(c)(4) organizations may be required to include on their annual information returns and penalties for certain failures by tax-exempt organizations to comply with filing or disclosure requirements, respectively.

Section 506(a) requires a section 501(c)(4) organization, no later than 60 days after the organization is established, to notify the Secretary of the Department of the Treasury (Secretary) that it is operating as a section 501(c)(4) organization (the notification). Section 506(b) provides that the notification must include: (1) the name, address, and taxpayer identification number of the organization; (2) the date on which, and the state under the laws of which, the organization was organized; and (3) a statement of the purpose of the organization. Section 506(c) requires the Secretary to send the organization an acknowledgment of the receipt of its notification within 60 days. Section 506(d) permits the Secretary to extend the 60-day notification period for reasonable cause. Section 506(e) provides that the Secretary shall impose a reasonable user fee for submission of the notification. Section 506(f) provides that, upon request by an organization, the Secretary may issue a determination with respect to the organization's treatment as a section 501(c)(4) organization and that the organization's request will be treated as an application for exemption from taxation under section 501(a) subject to public inspection under section 6104. (1) In addition, the PATH Act amended section 6033(f) to require a section 501(c)(4) organization submitting the notification to include with its first annual information return after submitting the notification any additional information prescribed by regulation that supports the organization's treatment as a section 501(c)(4) organization.

The PATH Act also amended section 6652(c) to impose penalties for failure to submit the notification by the date and in the manner prescribed in regulations. In particular, section 6652(c)(4)(A) imposes a penalty on an organization that fails to submit the notification equal to $20 per day for each day such failure continues, up to a maximum of $5,000. Additionally, section 6652(c)(4)(B) imposes a similar penalty on persons who fail to timely submit the notification in response to a written request by the Secretary.

Section 405(f) of the PATH Act provides that, in general, the requirement to submit the notification and the related amendments to sections 6033 and 6652 apply to section 501(c)(4) organizations that are established after December 18, 2015, the date of enactment of the PATH Act. Section 405(f)(2) of the PATH Act provides that these provisions also apply to any other section 501(c)(4) organizations that had not, on or before the date of enactment of the PATH Act: (1) applied for a written determination of recognition as a section 501(c)(4) organization (using Form 1024, "Application for Recognition of Exemption Under Section 501(a)"); or (2) filed at least one annual information return or notice required under section 6033(a)(1) or (i) (that is, a Form 990, "Return of Organization Exempt From Income Tax," or, if eligible, Form 990-EZ, "Short Form Return of Organization Exempt From Income Tax," or Form 990-N (e-Postcard)). Organizations described in section 405(f)(2) of the PATH Act must submit the notification within 180 days after the date of enactment of the PATH Act.

3. Notice 2016-09

The Treasury Department and the IRS issued Notice 2016-09 (2016-6 IRB 306 (February 8, 2016)) to provide interim guidance regarding section 405 of the PATH Act. Specifically, Notice 2016-09 extended the due date for submitting the notification until at least 60 days from the date that implementing regulations are issued in order to provide adequate transition time for organizations to comply with the new requirement to submit the notification. Notice 2016-09 further stated that no penalties under section 6652(c)(4) would apply to a section 501(c)(4) organization that submits the notification by the due date provided in the regulations.

With respect to the separate procedure by which an organization may request a determination from the IRS that it qualifies for tax-exempt status under section 501(c)(4), Notice 2016-09 stated that organizations seeking IRS recognition of section 501(c)(4) status should continue using Form 1024 until further guidance is issued. Notice 2016-09 also clarified that the filing of Form 1024 does not relieve an organization of the requirement to submit the notification. The Treasury Department and the IRS received a public comment in response to Notice 2016-09, which was considered in drafting these temporary regulations.

Explanation of Provisions

1. Overview of Temporary Regulations

The temporary regulations prescribe the manner in which an organization must notify the IRS, consistent with section 506, that it is operating as a section 501(c)(4) organization. In addition, the temporary regulations clarify that the submission of the notification does not constitute a request by an organization for a determination from the IRS that it qualifies for tax-exempt status.

2. The Notification

The IRS has developed a new electronic form, Form 8976, "Notice of Intent to Operate Under Section 501(c)(4)," for use by organizations submitting the notification. In accordance with section 506(a), the temporary regulations generally require a section 501(c)(4) organization to submit the notification to the IRS on Form 8976 (or its successor) no later than 60 days after the date the organization is organized. The Form 8976 must be submitted in accordance with the form and its instructions.

Consistent with section 506(b), the temporary regulations specify that the notification must include: (1) the name, address, and taxpayer identification number of the organization; (2) the date on which, and the state or other jurisdiction under the laws of which, the organization was organized; and (3) a statement of the purpose of the organization. In addition, the temporary regulations provide that the notification must include such additional information as may be specified in published guidance in the Internal Revenue Bulletin or in other guidance, such as forms or instructions, issued with respect to the notification. To ensure that the statutorily required items of information in the notification are correlated accurately within existing IRS systems, Form 8976 requires organizations to provide their annual accounting period.

The temporary regulations also provide that the notification must be accompanied by payment of the reasonable user fee authorized by section 506(e), which will be set forth by published guidance in the Internal Revenue Bulletin or in other guidance, such as forms or instructions, issued with respect to the notification. Consistent with section 506(d), the temporary regulations state that the 60-day period for submitting the notification may be extended for reasonable cause.

Further, the temporary regulations provide that, within 60 days after receipt of the notification, the IRS will send the organization an acknowledgment of such receipt. The temporary regulations clarify that this acknowledgment is not a determination with respect to tax-exempt status. Thus, it is not a determination on which an organization may rely or a determination or a failure to make a determination with respect to which the organization may seek declaratory judgment under section 7428. For further information regarding the interaction of the section 506 notification requirement with the separate procedure by which an organization may request an IRS determination that it qualifies for tax-exempt status under section 501(c)(4), see section 5 of this

Explanation of Provisions.

Finally, the temporary regulations provide that additional guidance on the procedures for submitting the notification may be provided in published guidance in the Internal Revenue Bulletin or in other guidance, such as forms or instructions, issued with respect to the notification. On July 8, 2016, the IRS released Rev. Proc. 2016-41, 2016-30 IRB xxxx, which provides additional information on the procedure for submitting the Form 8976.

A public comment submitted in response to Notice 2016-09 suggested that section 506(a) should not apply to foreign organizations that do not conduct significant activities (other than investment activities) in the United States, even if the organizations may be required to submit a Form 990 to the IRS. As the commenter notes, foreign section 501(c)(4) organizations generally are required to file an annual information return or notice with the IRS under section 6033. See Rev. Proc. 2011-15, §3 (2011-3 IRB 322). Section 506(a) does not include an exception from the requirement to submit the notification for foreign section 501(c)(4) organizations. The Treasury Department and the IRS have determined that the regulations should not create such an exception because the requirement to submit the notification is intended to replace the former practice under which section 501(c)(4) organizations (both domestic and foreign) might not notify the IRS that they claim section 501(c)(4) status until they file a Form 990 return or notice. Accordingly, the temporary regulations clarify that a section 501(c)(4) organization must submit the notification whether it is organized in the United States or outside the United States. However, a foreign organization may be eligible for relief from penalties under section 6652 if it submits the notification promptly after first commencing activities or receiving income that would cause it to have a filing requirement under section 6033. Rev. Proc. 2016-41 includes an example to illustrate the availability of this relief.

3. Special Rules for Organizations Organized on or Before July 8, 2016

Under section 405(f)(2) of the PATH Act, the requirement to submit the notification does not apply to certain organizations that notified the IRS of their existence on or before December 18, 2015. The Treasury Department and the IRS recognize that, since the enactment of the PATH Act but before the availability of the new electronic Form 8976 for submitting the notification, additional section 501(c)(4) organizations may have notified the IRS of their existence by applying for a written determination of tax-exempt status or filing a required annual information return or notice. Accordingly, to reduce the burden on these organizations and the IRS, the temporary regulations provide relief from the requirement to submit the notification for any section 501(c)(4) organization that, on or before July 8, 2016, either: (1) applied for a written determination of recognition as a section 501(c)(4) organization (using Form 1024); or (2) filed at least one annual return or notice required under section 6033(a)(1) or (i) (that is, a Form 990 or, if eligible, Form 990-EZ or Form 990-N).

In order to allow adequate transition time for organizations that do not qualify for this transition relief to submit the notification in the manner prescribed by these regulations, the temporary regulations provide that an organization that was organized on or before July 8, 2016, will have until September 6, 2016, which is 60 days from the date that the regulations are filed with the Federal Register, to submit the notification.

4. Failure to Submit the Notification

For information on the applicable penalties for failure to submit the notification, the temporary regulations refer to section 6652(c)(4), which imposes penalties on the organization and on persons who fail to timely submit the notification in response to a written request by the Secretary, as well as section 6652(c)(5), which provides a reasonable cause exception, and section 6652(c)(6), which provides other special rules that generally apply for purposes of section 6652(c) penalties.

Under section 6652(c)(5), no penalty will be imposed with respect to a failure to submit the notification if it is shown that such failure is due to reasonable cause. Rev. Proc. 2016-41 addresses reasonable cause for abating a section 6652(c)(4) penalty.

Under section 6652(c)(6), the section 6652(c)(4)(B) penalty imposed on "persons" who fail to timely submit the notification in response to a written request by the Secretary applies to any officer, director, trustee, employee, or other individual who is under a duty to submit the notification. In addition, under section 6652(c)(6), if more than one person is liable for the section 6652(c)(4)(B) penalty, all such persons will be jointly and severally liable with respect to the failure to submit the notification.

5. Separate Procedure by Which an Organization May Request an IRS Determination That It Qualifies for Section 501(c)(4) Exempt Status Section 506(f) provides that an organization subject to the section 506 notification requirement may request a determination to be treated as an organization described in section 501(c)(4). This indicates that the procedure by which an organization may request a determination that it is described in section 501(c)(4) is separate from the procedure for submitting the notification. Accordingly, the temporary regulations provide that submission of the notification does not constitute a request for an IRS determination that the organization qualifies for tax-exempt status under section 501(c)(4). Rather, an organization that seeks IRS recognition of tax-exempt status under section 501(c)(4) must separately request a determination in the manner prescribed in Revenue Procedure 2016-5, or its successor.

If an organization receives a determination from the IRS recognizing tax exempt status, the organization's application, supporting papers, and final determination letter are open to public inspection under section 6104(a)(1) and (d). The notification, by contrast, is not open for public inspection because it is not an application within the meaning of section 6104.

6. No Additional Information Required on Form 990 or 990-EZ at this Time

Section 6033(f)(2), as amended by the PATH Act, provides that the IRS may require an organization that submits the notification to include additional information in support of the organization's treatment as an organization described in section 501(c)(4) on the first Form 990 or 990-EZ, as applicable, filed by the organization after submitting the notification. The temporary regulations do not prescribe any additional information to be reported on Form 990 or 990-EZ at this time. The IRS will monitor the notification process to determine whether additional information is needed.

Statement of Availability of IRS Documents

For copies of recently issued revenue procedures, revenue rulings, notices, and other guidance published in the Internal Revenue Bulletin, please visit the IRS website at http://www.irs.gov.

Special Analyses

Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory assessment is not required. It has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. For applicability of the Regulatory Flexibility Act, please refer to the cross-referencing notice of proposed rulemaking published in the Proposed Rules section of this issue of the Federal Register. Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Drafting Information

The principal author of these regulations is Chelsea R. Rubin, Office of Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the Treasury Department and the IRS participated in their development.

List of Subjects

26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 602

Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

Accordingly, 26 CFR parts 1 and 602 are amended as follows:

PART 1-INCOME TAXES

Paragraph 1. The authority citation for part 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par 2. Section 1.506-1T is added to read as follows:

Reg § 1.506-1T.

§1.506-1T Organizations required to notify Commissioner of intent to operate under section 501(c)(4) (temporary).

(a) Notification requirement-(1) In general. Except as provided in paragraph (b) of this section, an organization (whether domestic or foreign) described in section 501(c)(4) must, no later than 60 days after the date the organization is organized, notify the Commissioner that it is operating as an organization described in section 501(c)(4) by submitting a completed Form 8976, "Notice of Intent to Operate Under Section 501(c)(4)," or its successor (the notification). The notification must be submitted in accordance with the form and its instructions. The notification must include the information specified in paragraph (a)(2) of this section and be accompanied by payment of the user fee described in paragraph (a)(3) of this section. Additional guidance on the procedure for submitting the notification may be provided in published guidance in the Internal Revenue Bulletin (see §601.601(d)(2) of this chapter) or in other guidance, such as forms or instructions, issued with respect to the notification.

(2) Contents of the notification. The notification must include the following information:

(i) The name, address, and taxpayer identification number of the organization.

(ii) The date on which, and the state or other jurisdiction under the laws of which, the organization was organized (that is, formed as a legal entity). For an organization formed outside the United States, the jurisdiction is the foreign country under the laws of which it is organized.

(iii) A statement of the purpose of the organization.

(iv) Such additional information as may be specified in published guidance in the Internal Revenue Bulletin (see §601.601(d)(2) of this chapter) or in other guidance, such as forms or instructions, issued with respect to the notification.

(3) User fee. The notification must be accompanied by payment of the user fee set forth by published guidance in the Internal Revenue Bulletin (see §601.601(d)(2) of this chapter) or in other guidance, such as forms or instructions, issued with respect to the notification.

(4) Extension for reasonable cause. The Commissioner may, for reasonable cause, extend the 60-day period for submitting the notification.

(b) Special rules for organizations that were organized on or before July 8, 2016-(1) Notification requirement does not apply to organizations that filed with the IRS on or before December 18, 2015. The requirement to submit the notification does not apply to any organization described in section 501(c)(4) that, on or before December 18, 2015, either-

(i) Applied for a written determination of recognition as an organization described in section 501(c)(4) in accordance with §1.501(a)-1 and all applicable guidance published in the Internal Revenue Bulletin (see §601.601(d)(2) of this chapter), forms, and instructions; or

(ii) Filed at least one annual information return or annual electronic notification required under section 6033(a)(1) or (i).

(2) Transition relief available for organizations that filed with the IRS on or before July 8, 2016. An organization described in section 501(c)(4) is not required to submit the notification if, on or before July 8, 2016, the organization either-

(i) Applied for a written determination of recognition as an organization described in section 501(c)(4) in accordance with §1.501(a)-1 and all applicable guidance published in the Internal Revenue Bulletin (see §601.601(d)(2) of this chapter), forms, and instructions; or

(ii) Filed at least one annual information return or annual electronic notification required under section 6033(a)(1) or (i).

(3) Extended due date. An organization that was organized on or before July 8, 2016, and is not described in paragraph (b)(1) or (2) of this section, will satisfy the requirement to submit the notification if the notification is submitted on or before September 6, 2016.

(c) Failure to submit the notification. For information on the penalties for failure to submit the notification, the applicable reasonable cause exception, and applicable special rules, see section 6652(c)(4) through (6).

(d) Acknowledgment of receipt. Within 60 days after receipt of the notification, the Commissioner will send the organization an acknowledgment of such receipt. This acknowledgment is not a determination by the Commissioner that the organization qualifies for exemption under section 501(a) as an organization described in section 501(c)(4). See paragraph (e) of this section.

(e) Separate procedure by which an organization may request an IRS determination that it qualifies for section 501(c)(4) tax-exempt status. Submission of the notification does not constitute a request by an organization for a determination by the Commissioner that the organization qualifies for exemption under section 501(a) as an organization described in section 501(c)(4). An organization seeking IRS recognition of its tax-exempt status must separately request such a determination in accordance with §1.501(a)-1 and all applicable guidance published in the Internal Revenue Bulletin (see §601.601(d)(2) of this chapter), forms, and instructions.

(f) Effective/applicability date. This section applies on and after July 8, 2016.

(g) Expiration date. The applicability of this section expires on or before July 8, 2019.

***** John Dalrymple,

Deputy Commissioner for Services and Enforcement.

Approved: June 24, 2016.

Mark J. Mazur,

Assistant Secretary of the Treasury (Tax Policy).

[FR Doc. 2016-16338 Filed: 7/8/2016 11:15 am; Publication Date: 7/12/2016]

(1) The separate procedure by which an organization may request a determination of tax-exempt status is prescribed in Rev. Proc. 2016-5, 2016-1 IRB 188, or its successor.

Treasury Regulations 1.506-1T

Organizations required to notify Commissioner of intent to operate under section 501(c)(4)

Summary

Issuance of this temporary regulation triggered the 60 day submission deadline for Form 8976 for any existing organizations that may desire to seek tax exemption under IRC Section 501(c)(4). Associations may still continue to self-declare exempt status after the 60 day period has expired on September 6, 2016, but may be subject to the $ 20 per day penalty, to a maximum of $5,000.

§1.506-1T. Organizations required to notify Commissioner of intent to operate under section 501(c)(4) (temporary).

(a) Notification requirement-(1) In general. Except as provided in paragraph (b) of this section, an organization (whether domestic or foreign) described in section 501(c)(4) must, no later than 60 days after the date the organization is organized, notify the Commissioner that it is operating as an organization described in section 501(c)(4) by submitting a completed Form 8976, "Notice of Intent to Operate Under Section 501(c)(4)," or its successor (the notification). The notification must be submitted in accordance with the form and its instructions. The notification must include the information specified in paragraph (a)(2) of this section and be accompanied by payment of the user fee described in paragraph (a)(3) of this section. Additional guidance on the procedure for submitting the notification may be provided in published guidance in the Internal Revenue Bulletin (see §601.601(d)(2) of this chapter) or in other guidance, such as forms or instructions, issued with respect to the notification.

(2) Contents of the notification. The notification must include the following information:

(i) The name, address, and taxpayer identification number of the organization.

(ii) The date on which, and the state or other jurisdiction under the laws of which, the organization was organized (that is, formed as a legal entity). For an organization formed outside the United States, the jurisdiction is the foreign country under the laws of which it is organized.

(iii) A statement of the purpose of the organization.

(iv) Such additional information as may be specified in published guidance in the Internal Revenue Bulletin (see §601.601(d)(2) of this chapter) or in other guidance, such as forms or instructions, issued with respect to the notification.

(3) User fee. The notification must be accompanied by payment of the user fee set forth by published guidance in the Internal Revenue Bulletin (see §601.601(d)(2) of this chapter) or in other guidance, such as forms or instructions, issued with respect to the notification.

(4) Extension for reasonable cause. The Commissioner may, for reasonable cause, extend the 60-day period for submitting the notification.

(b) Special rules for organizations that were organized on or before July 8, 2016-(1) Notification requirement does not apply to organizations that filed with the IRS on or before December 18, 2015. The requirement to submit the notification does not apply to any organization described in section 501(c)(4) that, on or before December 18, 2015, either-

(i) Applied for a written determination of recognition as an organization described in section 501(c)(4) in accordance with §1.501(a)-1 and all applicable guidance published in the Internal Revenue Bulletin (see §601.601(d)(2) of this chapter), forms, and instructions; or

(ii) Filed at least one annual information return or annual electronic notification required under section 6033(a)(1) or (i).

(2) Transition relief available for organizations that filed with the IRS on or before July 8, 2016. An organization described in section 501(c)(4) is not required to submit the notification if, on or before July 8, 2016, the organization either-

(i) Applied for a written determination of recognition as an organization described in section 501(c)(4) in accordance with §1.501(a)-1 and all applicable guidance published in the Internal Revenue Bulletin (see §601.601(d)(2) of this chapter), forms, and instructions; or

(ii) Filed at least one annual information return or annual electronic notification required under section 6033(a)(1) or (i).

(3) Extended due date. An organization that was organized on or before July 8, 2016, and is not described in paragraph (b)(1) or (2) of this section, will satisfy the requirement to submit the notification if the notification is submitted on or before September 6, 2016.

(c) Failure to submit the notification. For information on the penalties for failure to submit the notification, the applicable reasonable cause exception, and applicable special rules, see section 6652(c)(4) through (6).

(d) Acknowledgment of receipt. Within 60 days after receipt of the notification, the Commissioner will send the organization an acknowledgment of such receipt. This acknowledgment is not a determination by the Commissioner that the organization qualifies for exemption under section 501(a) as an organization described in section 501(c)(4). See paragraph (e) of this section.

(e) Separate procedure by which an organization may request an IRS determination that it qualifies for section 501(c)(4) tax-exempt status. Submission of the notification does not constitute a request by an organization for a determination by the Commissioner that the organization qualifies for exemption under section 501(a) as an organization described in section 501(c)(4). An organization seeking IRS recognition of its tax-exempt status must separately request such a determination in accordance with §1.501(a)-1 and all applicable guidance published in the Internal Revenue Bulletin (see §601.601(d)(2) of this chapter), forms, and instructions.

(f) Effective/applicability date. This section applies on and after July 8, 2016.

(g) Expiration date. The applicability of this section expires on or before July 8, 2019.

***** John Dalrymple,

Deputy Commissioner for Services and Enforcement.

Approved: June 24, 2016.

Mark J. Mazur,

Assistant Secretary of the Treasury (Tax Policy).