IRC Section 506

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

Summary

In December 2015 new code section 506 was added to the Internal Revenue Code. At the same time, IRS Notice 2016-9 was issued to provide guidance to taxpayers for implementation of IRC Section 506. IRC Section 506 requires notification to IRS by any organization that intends to be recognized as a social welfare organization under IRC Section 501(c)(4). The notice is required no later than 60 days after the organization is established.

The effective date of this section is June 18, 2016. IRS Notice 2016-9 states that, until regulations are issued, the June 18, 2016 deadline is indefinitely extended.

Revenue Procedure 2016-41 provides detailed guidance.

Internal Revenue Code § 506 Organizations required to notify secretary of intent to operate under 501(c)(4).

  1. In general.

An organization described in section 501(c)(4) shall, not later than 60 days after the organization is established, notify the Secretary (in such manner as the Secretary shall by regulation prescribe) that it is operating as such.

  1. Contents of notice.

The notice required under subsection (a) shall include the following information:

(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.

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

(c)  Acknowledgment of receipt. - Not later than 60 days after receipt of such a notice, the Secretary shall send to the organization an acknowledgment of such receipt.

(d)  Extension for reasonable cause. - The Secretary may, for reasonable cause, extend the 60-day period described in subsection (a)

(e)  User fee. - The Secretary shall impose a reasonable user fee for submission of the notice under subsection (a)

(f)  Request for determination.

Upon request by an organization to be treated as an organization described in section 501(c)(4) , the Secretary may issue a determination with respect to such treatment. Such request shall be treated for purposes of section 6104 as an application for exemption from taxation under section 501(a).