Publication 557

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Publication 557

Contents

Tax-Exempt

Status for Your

Organization

What's New

(Rev. January 2025)

.................. 2

Reminders . . . . . . . . . . . . . . . . . . . 2

Introduction . . . . . . . . . . . . . . . . . . 3

Chapter 1. Application, Approval,

and Appeal Procedures . . . . . . . . 4

Application Procedures . . . . . . . . . 4

Forms Required . . . . . . . . . . 4

Required Information and

Documents . . . . . . . . . . . 5

Miscellaneous Procedures . . . . 6

Determination Letters . . . . . . . . . . 6

Effective Date of Exemption . . . . 6

Revocation of Exemption . . . . . 6

Appeal Procedures . . . . . . . . . . . . 7

Independent Office of

Appeals Consideration . . . . 7

Administrative Remedies . . . . . 7

Appeal to Courts . . . . . . . . . . 8

Group Exemption Letter . . . . . . . . . 8

Central Organization

Application Procedure . . . . . 8

Keeping the Group

Exemption Letter in

Force . . . . . . . . . . . . . . 9

Events Causing Loss of

Group Exemption . . . . . . . . 9

Chapter 2. Filing Requirements

and Required Disclosures . . . . .

Annual Information Returns . . . . . .

Unrelated Business Income Tax

Return . . . . . . . . . . . . . . . .

Employment Tax Returns . . . . . . .

Political Organization Income

Tax Return . . . . . . . . . . . . . .

Reporting Requirements for a

Political Organization . . . . . . . .

Donee Information Return . . . . . . .

Information Provided to Donors . . . .

Report of Cash Received . . . . . . .

Public Inspection of Exemption

Applications, Annual

Returns, and Political

Organization Reporting

Forms . . . . . . . . . . . . . . . .

Required Disclosures . . . . . . . . .

Solicitation of

Nondeductible

Contributions . . . . . . . . .

Sales of Information or

Services Available Free

from Government . . . . . . .

Dues Used for Lobbying or

Political Activities . . . . . . .

Miscellaneous Rules . . . . . . . . . .

Organizational Changes

and Exempt Status . . . . . .

Modify or Obtain an NTEE

Code. . . . . . . . . . . . . .

Get forms and other information faster and easier at:

• IRS.gov (English)

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Feb 26, 2025

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Chapter 3. Section 501(c)(3)

Organizations . . . . . . . . . . . . .

Contributions to 501(c)(3)

Organizations . . . . . . . . . . . .

Application for Recognition of

Exemption . . . . . . . . . . . . . .

Articles of Organization . . . . . . . .

Publication 557 (Rev. 1-2025) Catalog Number 46573C

Department of the Treasury Internal Revenue Service www.irs.gov

Educational Organizations and

Private Schools . . . . . . . . . . .

Organizations Providing

Insurance . . . . . . . . . . . . . .

Other Section 501(c)(3)

Organizations . . . . . . . . . . . .

Private Foundations and Public

Charities . . . . . . . . . . . . . . .

Lobbying Expenditures . . . . . . . .

Chapter 4. Other Section 501(c)

Organizations . . . . . . . . . . . . .

501(c)(4) - Civic Leagues and

Social Welfare Organizations . . .

501(c)(5) - Labor, Agricultural,

and Horticultural

Organizations . . . . . . . . . . . .

501(c)(6) - Business Leagues,

etc. . . . . . . . . . . . . . . . . . .

501(c)(7) - Social and

Recreation Clubs . . . . . . . . . .

501(c)(8) and 501(c)(10) Fraternal Beneficiary

Societies and Domestic

Fraternal Societies . . . . . . . . .

501(c)(4), 501(c)(9), and 501(c)

(17) - Employees'

Associations . . . . . . . . . . . .

501(c)(12) - Local Benevolent

Life Insurance Associations,

Mutual Irrigation and

Telephone Companies, and

Like Organizations . . . . . . . . .

501(c)(13) - Cemetery

Companies . . . . . . . . . . . . .

501(c)(14) - Credit Unions and

Other Mutual Financial

Organizations . . . . . . . . . . . .

501(c)(19) - Veterans'

Organizations . . . . . . . . . . . .

501(c)(21) - Black Lung Benefit

Trusts . . . . . . . . . . . . . . . .

501(c)(2) - Title-Holding

Corporations for Single

Parent Corporations . . . . . . . .

501(c)(25) - Title-Holding

Corporations or Trusts for

Multiple Parent Corporations . . .

501(c)(26) - State-Sponsored

High-Risk Health Coverage

Organizations . . . . . . . . . . . .

501(c)(27) - Qualified

State-Sponsored Workers'

Compensation Organizations . . .

501(c)(29) - CO-OP Health

Insurance Issuers . . . . . . . . .

Chapter 5. Excise Taxes . . . . . . . . .

Prohibited Tax Shelter

Transactions . . . . . . . . . . . .

Excess Benefit Transactions . . . . .

Excess Business Holdings . . . . . .

Taxable Distributions of

Sponsoring Organizations . . . . .

Taxes on Prohibited Benefits

Resulting from Donor

Advised Fund Distributions . . . .

Excise Taxes on Private

Foundations . . . . . . . . . . . . .

Excise Taxes on Black Lung

Benefit Trusts . . . . . . . . . . . .

Excise Tax on Failure To Meet

the Community Health

Needs Assessment

Requirements . . . . . . . . . . .

Excise Tax on Executive

Compensation . . . . . . . . . . . 65

Excise Tax on Net Investment

Income of Certain Colleges

and Universities . . . . . . . . . . 65

How To Get Tax Help . . . . . . . . . . . . 66

Organization Reference Chart . . . . . . 69

Appendix. Sample Articles of

Organization . . . . . . . . . . . . . . 70

Appendix. Sample Articles of

Organization, continued . . . . . . . 72

Index

. . . . . . . . . . . . . . . . . . . . . 75

What's New

Future developments. The IRS has created a

page on IRS.gov for information about Publication 557, at IRS.gov/Pub557. Information about

any future developments affecting Publication

557 (such as legislation enacted after we release it) will be posted on that page.

Continuous-use publication. Publication 557

has been converted from an annual revision to

continuous use. Use these instructions for tax

year 2024 and subsequent years until a superseding revision is issued.

Reminders

Electronic Form 1024. As of January 3, 2022,

Form 1024, Application for Recognition of Exemption Under Section 501(a) or Section 521,

must be submitted for electronic filing on

Pay.gov. As part of the revision, applications for

recognition of exemption under Sections 501(c)

(11), (14), (16), (18), (21), (22), (23), (26), (27),

(28), (29), and 501(d) can no longer be submitted as letter applications. Instead, these requests must be made on the electronic Form

1024.

Also, organizations requesting determinations under Section 521 are now able to use the

electronic Form 1024 instead of Form 1028, Application for Recognition of Exemption Under

Section 521.

Update on mandatory e-filing. The Taxpayer

First Act, enacted July 1, 2019, requires tax-exempt organizations to electronically file information returns and related forms. The new law affects tax-exempt organizations in tax years

beginning after July 1, 2019.

• Forms 990-T and 4720 are available for

e-filing in 2022. In 2020, the IRS continued to accept paper Form 990-T, Exempt

Organization Business Income Tax Return,

and Form 4720, Return of Certain Excise

Taxes Under Chapters 41 and 42 of the Internal Revenue Code, pending conversion

into electronic format. As described below,

in 2021, the IRS announced e-filing is required for these forms.

For Form 990-T, any 2020, and any future year Form 990-T with a due date on or

after April 15, 2021, must be filed electronically and not on paper.

For Form 4720, any 2020, and any future year, Form 4720 filed by a private

foundation with a due date on or after July

15, 2021, must be filed electronically and

not on paper. Organizations other than private foundations that are required to file

Form 4720 are encouraged, but not required, to file Form 4720 electronically.

• Forms 990, 990-EZ, and 990-PF e-filing.

Form 990, Return of Organization Exempt

From Income Tax, and Form 990-PF, Return of Private Foundation or Section

4947(a)(1) Trust Treated as Private Foundation, for tax years ending July 31, 2020,

and later MUST be filed electronically.

Form 990-EZ, Short Form Return of Organizations Exempt from Income Tax, for

tax years ending July 31, 2021, and later

MUST be filed electronically. The transitional relief applicable to the Form 990-EZ

under which the IRS accepted either paper

or electronic filing of Form 990-EZ applied

only for tax years ending before July 31,

2021.

More information on software providers

is available on the Exempt Organizations

Modernized e-File (MeF) Providers page.

For more information, go to IRS: Recent

legislation

requires

tax

exempt

organizations to e-file forms.

Section 501(c)(21) trusts. Form 990-BL, Information and Initial Excise Tax Return for Black

Lung Benefit Trusts and Certain Related Persons, will be a historical form beginning with tax

year 2021. Section 501(c)(21) trusts can no longer file Form 990-BL and will file Form 990 (or

submit Form 990-N, if eligible) to meet their annual filing obligations under section 6033. Some

section 501(c)(21) trusts may also be required

to file Form 6069, Return of Certain Excise

Taxes on Mine Operators, Black Lung Trusts,

and Other Persons Under Sections 4951, 4952,

and 4953.

Reporting of donor information (Form 990,

990-EZ, and 990-PF). Final regulations provide that the requirement to report contributor

names and addresses on annual returns generally applies only to returns filed by Section

501(c)(3) organizations and Section 527 political organizations. All tax-exempt organizations

must continue to maintain the names and addresses of their substantial contributors in their

books and records.

IRS not accepting requests for group exemption numbers. The IRS will not accept

any requests for group exemption letters starting on June 17, 2020, until publication of the final revenue procedure or other guidance in the

Internal Revenue Bulletin. See Notice 2020-36.

Automatic revocation. Regarding automatic

revocation for the failure to file a return or notice

for 3 consecutive years, as required by section

6033, the Taxpayer First Act of 2019, P.L.

116-25, added a requirement that the IRS notify

the organization after the organization has failed

to file for 2 consecutive years. See Automatic

Revocation, later, for more information, including applicability dates.

Electronic Form 1023. Form 1023, Application for Recognition of Exemption under Section

501(c)(3) of the Internal Revenue Code, is available only as an electronic form filed on Pay.gov.

Publication 557 (1-2025)

Form 1023-EZ, Streamlined Application, is already on Pay.gov.

Tax on investment income of private foundations. The Taxpayer Certainty and Disaster

Tax Relief Act of 2019, reduced the 2% excise

tax on investment income of private foundations

to 1.39%. At the same time, the legislation repealed the 1% special rate that applied if the

private foundation met certain distribution requirements. The change is effective for taxable

years beginning after December 20, 2019.

Increase in UBTI for disallowed fringe repealed. The Taxpayer Certainty and Disaster

Tax Relief Act of 2019 retroactively repealed Internal Revenue Code Section 512(a)(7), which

increased unrelated business taxable income

by amounts paid or incurred for qualified transportation fringes. Congress had previously

enacted this provision for amounts paid or incurred after December 31, 2017.

Excise tax on executive compensation.

Section 4960, added by P.L. 115-97, effective

for tax years beginning after December 17,

2017, imposes an excise tax on an organization

that pays to any covered employee more than

$1 million in remuneration or pays an excess

parachute payment during the year starting in

2018. See Excise Tax on Executive Compensation, chapter 5. See also section 4960 and Form

4720, Return of Certain Excise Taxes Under

Chapters 41 and 42 of the Internal Revenue

Code, for more information.

Excise tax on net investment income of certain colleges and universities. Section 4968

imposes an excise tax on the net investment income of certain private colleges and universities. See Excise Tax on Net Investment Income

of Certain Colleges and Universities, chapter 5.

See also section 4968 and Form 4720, Return

of Certain Excise Taxes Under Chapters 41 and

42 of the Internal Revenue Code, for more information.

Separate UBTI calculation for each trade or

business. Organizations with more than one

unrelated trade or business must compute unrelated business taxable income (UBTI), including

for purposes of determining any net operating

loss deduction, separately with respect to each

such trade or business. See Unrelated Business Income Tax Return, chapter 2. See also

Schedule A (Form 990-T). The UBTI with respect to any such trade or business shall not be

less than zero when computing total UBTI.

Exception from the excise tax on excess

business holdings. Section 4943(g) created

an exception from the excise tax on excess

business holdings for certain independently operated enterprises whose voting stock is wholly

owned by a private foundation. For more details,

see Excess Business Holdings, chapter 5.

Organizational changes. For tax years beginning on or after January 1, 2018, the IRS will no

longer require a new exemption application from

a domestic section 501(c) organization that undergoes certain changes of form or place of organization, as described in Rev. Proc. 2018-15,

2018-9 I.R.B. 379.

Group exemptions. Beginning January 2019,

the IRS will no longer send the List of Parent

and Subsidiary Accounts to the central organizations. See Group Exemption Letter, later.

Publication 557 (1-2025)

Form 8976. Each new section 501(c)(4) organization must notify the IRS of its intent to operate as a section 501(c)(4) organization regardless of whether it will seek recognition of its

exempt status under section 501(c)(4). Use

Form 8976, Notice of Intent to Operate Under

Section 501(c)(4), to provide this notification.

Form 8976 may only be completed and submitted electronically at: Electronically Submit Your

Form 8976, Notice of Intent to Operate Under

Section 501(c)(4).

Forms, instructions, and publications. All

IRS forms, instructions and publications mentioned in this publication can be accessed on

IRS.gov from the Forms and Instructions page.

Introduction

This publication discusses the rules and procedures for organizations that seek recognition of

exemption from federal income tax under section 501(a) of the Internal Revenue Code (the

Code). It explains the procedures you must follow to obtain an appropriate determination letter

recognizing your organization's exemption, as

well as certain other information that applies

generally to all exempt organizations. To qualify

for exemption under the Code, your organization must be organized for one or more of the

purposes specifically designated in the Code.

Organizations that are exempt under section

501(a) include those organizations described in

section 501(c). Section 501(c) organizations

are covered in this publication.

Chapter 1, Application, Approval, and Appeal Procedures, provides general information

about the procedures for obtaining recognition

of tax-exempt status.

Chapter 2, Filing Requirements and Required Disclosures, contains information about

annual filing requirements and other matters

that may affect your organization's tax-exempt

status.

Chapter 3, Section 501(c)(3) Organizations,

contains detailed information on various matters

affecting section 501(c)(3) organizations, including a section on the determination of private

foundation status.

Chapter 4, Other Section 501(c) Organizations, includes separate sections for specific

types of organizations described in section

501(c).

Chapter 5, Excise Taxes, provides information on when excise taxes may be imposed.

Chapter 6, How to Get Tax Help, provides

tips and resources on where to find answers to

tax questions or other assistance.

Organizations not discussed in this publication. Certain organizations that may qualify

for exemption aren't discussed in detail in this

publication, although they are included in the

Organization Reference Chart and the application procedures discussed in Chapter 1. These

organizations (and the Code sections that apply

to them) are as follows:

Corporations organized under Acts of

Congress . . . . . . . . . . . . . . . . . . . . . . .

Teachers' retirement fund associations . . .

Mutual insurance companies . . . . . . . . . .

Corporations organized to finance crop

operations . . . . . . . . . . . . . . . . . . . . . .

Employee funded pension trusts (created

before June 25, 1959) . . . . . . . . . . . . . .

Withdrawal liability payment fund . . . . . . .

Veterans' organizations (created before

1880) . . . . . . . . . . . . . . . . . . . . . . . . . .

National Railroad Retirement Investment

Trust . . . . . . . . . . . . . . . . . . . . . . . . . .

Religious and apostolic associations . . . .

Cooperative hospital service

organizations . . . . . . . . . . . . . . . . . . . .

Cooperative service organizations of

operating educational organizations . . . . .

501(c)(1)

501(c)(11)

501(c)(15)

501(c)(16)

501(c)(18)

501(c)(22)

501(c)(23)

501(c)(28)

501(d)

501(e)

501(f)

Section 501(c)(24) organizations (section

4049 ERISA trusts) are neither discussed in the

text nor listed in the Organization Reference

Chart.

Similarly, farmers' cooperative associations

that qualify for exemption under section 521,

qualified state tuition programs described in

section 529, qualified ABLE programs described in section 529A, and pension, profit-sharing, and stock bonus plans described in section

401(a) aren't discussed in this publication. Visit

IRS.gov for more information on these types of

organizations. For telephone assistance, call 1–

877–829–5500.

Check the Table of Contents at the beginning of this publication to determine whether

your organization is described in this publication. If it is, read the chapter (or section) that applies to your type of organization for the specific

information you must give when applying for

recognition of exemption.

Organization Reference Chart. The Organization Reference Chart enables you to locate at

a glance the section of the Code under which

your organization might qualify for exemption. It

also shows the required application form and, if

your organization meets the exemption requirements, the annual return to be filed (if any), and

whether or not a contribution to your organization will be deductible by a donor. It also describes each type of qualifying organization and

the general nature of its activities.

You may use the Organization Reference

Chart to identify the Code section that you think

applies to your organization. Any correspondence with the IRS (in requesting forms or otherwise) can be responded to faster if you indicate

in your correspondence the appropriate Code

section. Check the IRS website, IRS.gov, for the

latest updates, Tax Information for Charities &

Other Non-Profits.

Comments and suggestions. We welcome

your comments about this publication and your

suggestions for future editions.

You can send us comments through

IRS.gov/FormComments. Or, you can write to

Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526,

Washington, DC 20224.

Although we can’t respond individually to

each comment received, we do appreciate your

feedback and will consider your comments as

we revise our tax forms, instructions, and publications. Don’t send tax questions, tax returns,

or payments to the above address.

Getting answers to your tax questions.

If you have a tax question not answered by this

publication or How to Get Tax Help section at

the end of this publication, go to the IRS Interactive Tax Assistant page at IRS.gov/Help/ITA

where you can find topics using the search feature or by viewing the categories listed.

Getting tax forms, instructions, and publications. Visit IRS.gov/Forms to download

current and prior-year forms, instructions, and

publications.

Ordering tax forms, instructions, and

publications. Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order prior-year

forms and instructions. The IRS will process

your order for forms and publications as soon

as possible. Don’t resubmit requests you’ve already sent us. You can get forms and publications faster online.

Application Procedures

Oral requests for recognition of exemption won't

be considered by the IRS. Your application for

recognition of tax-exempt status must be in writing using the appropriate forms, as discussed

below.

If your organization is seeking recognition of exemption from federal income tax, it must use a

specific application prescribed by the IRS in the

current year revenue procedure. If your organization is a central organization with exempt status, see Group Exemption Letter, later. All applications must be signed by an authorized

individual.

• Application procedures that generally

•

apply to all organizations discussed in this

publication, including the application

forms;

• Determination letters (approvals/

disapprovals);

• Appeal procedures available if an adverse

determination letter is proposed; and

• Group exemption letters.

•

This chapter discusses:

sociations;

• 501(c)(12) Benevolent life insurance asso-

• 501(c)(3) Corporations, organized and op-

•

Topics

ders, etc.;

• 501(c)(11) Teachers’ Retirement Fund As-

•

If your organization is one of the organizations

described in this publication and is seeking recognition of tax-exempt status from the IRS, you

should follow the procedures described in this

chapter and the instructions that accompany

the appropriate application forms.

For information on section 501(c)(3) organizations, go to Section 501(c)(3) Organizations,

chapter 3. If your organization is seeking exemption under one of the other paragraphs of

section 501(c), see chapter 4.

associations;

• 501(c)(10) Domestic fraternal societies, or-

Form 1023, Application for Recognition of

Exemption Under Section 501(c)(3) of the

Internal Revenue Code. File Form 1023 if you

are seeking recognition of exemption under

section:

•

Introduction

orders, or associations;

• 501(c)(9) Voluntary employees’ beneficiary

Forms Required

Application,

Approval, and

Appeal

Procedures

• 501(c)(8) Fraternal beneficiary societies,

erated exclusively for religious, charitable,

scientific, testing for public safety, literary,

or educational purposes, or to foster national or international amateur sports, or

prevention of cruelty for children or animals, including the following types of organizations to which the specified subsections are applicable;

501(e) Cooperative hospital service organization;

501(f) Cooperative service organization of

operating educational organizations;

501(k) Certain organizations providing

child care;

501(n) Charitable risk pools;

501(q) Credit counseling organizations,

and

501(r) Hospital organizations.

Applications for exempt status on a Form

1023 must be electronically submitted through

Pay.gov.

Form 1023-EZ, Streamlined Application for

Recognition of Exemption Under Section

501(c)(3) of the Internal Revenue Code. You

may be eligible to file Form 1023-EZ if you are a

smaller organization (assets of $250,000 or less

and annual gross receipts of $50,000 or less)

seeking recognition of exemption under section

501(c)(3).

Applications for exempt status on a Form

1023-EZ must be electronically submitted

through Pay.gov.

Form 1024, Application for Recognition of

Exemptions Under Section 501(a) or Section 521 of the Internal Revenue Code. File

Form 1024 if you are seeking recognition of exemption under section:

• 501(c)(2) Title holding corporations;

• 501(c)(5) Labor, agricultural, or horticultural organizations;

• 501(c)(6) Business leagues, chambers of

commerce, etc.;

• 501(c)(7) Social clubs;

Chapter 1

•

ciations, mutual ditch or irrigation companies, mutual or cooperative telephone

companies;

501(c)(13) Cemetery companies;

501(c)(14) State-Chartered Credit Unions,

Mutual Reserve Funds;

501(c)(15) Mutual insurance companies or

associations;

501(c)(16) Cooperative Organizations to

Finance Crop Operations;

501(c)(17) Trusts providing for the payment

of supplemental unemployment compensation benefits;

501(c)(18) Employee Funded Pension

Trust (created before June 25, 1959);

501(c)(19) A post, organization, auxiliary

unit, etc. of past or present members of the

Armed Forces of the United States;

501(c)(21) Black Lung Benefit Trusts;

501(c)(22) Withdrawal Liability Payment

Fund;

501(c)(23) Veterans’ Organization (created

before 1880);

501(c)(25) Title holding corporations or

trusts;

501(c)(26) State-Sponsored Organization

Providing Health Coverage for High-Risk

Individuals;

501(c)(27) State-Sponsored Workers’

Compensation Reinsurance Organization;

501(c)(28) National Railroad Retirement

Investment Trust;

501(c)(29) CO-OP health insurance issuers, and

501(d) Religious and Apostolic Associations.

Also, organizations requesting determinations

under Section 521 are now able to use the electronic Form 1024 instead of Form 1028, Application for Recognition of Exemption Under Section 521 of the Internal Revenue Code

As of January 3, 2022, applications for exempt status on a Form 1024 must be electronically submitted through Pay.gov.

Form 1024-A, Application for Recognition of

Exemption Under Section 501(c)(4) of the

Internal Revenue Code. File Form 1024-A if

you are seeking recognition of exemption under

section 501(c)(4).

Submitting Form 1024-A does not satisfy an

organization’s requirement to notify the Commissioner that it is operating under section

501(c)(4), as required by section 506. See

IRS.gov for information on satisfying the notification requirement using Form 8976, Notice of

Intent to Operate Under Section 501(c)(4).

Form 1024-A, Application for Recognition of

Exemption Under Section 501(c)(4), must be

filed electronically on Pay.gov.

Application, Approval, and Appeal Procedures

Publication 557 (1-2025)

Form 1028, Application for Recognition of

Exemption Under Section 521 of the Internal Revenue Code. Use Form 1028, Application for Recognition of Exemption Under Section 521 of the Internal Revenue Code, if your

organization is a farmers’ cooperative seeking

recognition of exemption under section 521.

You must also submit Form 8718.

Alternatively, organizations requesting determinations under Section 521 are now able to

use the electronic Form 1024 instead of Form

1028.

Form 8871, Political Organization Notice of

Section 527 Status. Use Form 8871, Political

Organization Notice of Section 527 Status, if

you are a political organization seeking to be

treated as tax-exempt under section 527 unless

an exception applies. See Political Organization

Income Tax Return, later.

Some organizations don’t have to use specific application forms. The application your organization must use is specified in the chapter

in this publication dealing with your kind of organization. It is also shown in the Organization

Reference Chart, later.

Form 8871 must be filed at the IRS Political

Organizations Filing and Disclosure site.

Power of attorney. If your organization expects to be represented by an individual such

as an attorney, CPA, officer or other person authorized to practice before the IRS, whether in

person or by correspondence, you must file a

Form 2848, Power of Attorney and Declaration

of Representative, with your exemption application. The power of attorney must specifically authorize an individual to represent your organization. You can't name an organization, firm, etc.

as your representative. Form 2848 can be used

for this purpose. The categories of individuals

who can represent you before the IRS are listed

on the form.

Form 8940, Request for Miscellaneous Determination. You can request miscellaneous

determinations under sections 507, 509(a),

4940, 4942, 4945, and 6033 using Form 8940.

Nonexempt charitable trusts also file Form 8940

for an initial determination of section 509(a)(3)

status or change to their type. See Form 8940

and instructions for more information.

Requests other than applications.

Requests other than applications for

recognition of exemption or Form 8940

(for example, requests for letter rulings involving

feeder organizations, application of excise taxes

to activities of private foundations, taxation of

unrelated business income, etc.) should be sent

to the appropriate address listed in the current

year revenue procedures.

These requests, similar to applications for

recognition of exemption previously discussed,

must be accompanied by the appropriate user

fee. The schedule for user fees, including those

for requests other than applications, can be

found in the current year revenue procedures.

Exempt Organization (EO) Determinations

can request technical advice from the Office of

Associate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment Taxes)

on any question that can't be resolved on the

Publication 557 (1-2025)

basis of law, regulations, or a clearly applicable

revenue ruling or other published precedent.

Reminder. The law requires payment of a user

fee for determination letter requests. See the

current year issued revenue procedures to find

the required payment. Payment must accompany each request.

Non-exemption for terrorist organizations.

An organization that is identified or designated

as a terrorist organization within the meaning of

section 501(p)(2) isn't eligible to apply for recognition of exemption.

User fee. The law requires the payment of a

user fee for determination letter requests such

as your application for recognition of tax-exempt

status. User fees are listed in the current year

issued revenue procedures. If you are filing

Form 1023, Form 1023-EZ, Form 1024 or

1024-A, the user fee must be submitted through

Pay.gov.

For the current user fee amount and

TIP other information about applying for

complete and was filed and approved by the

state, including the date filed.

If you are formed as a limited liability company and have adopted an operating agreement, submit the operating agreement along

with your state-approved articles of organization.

If your organization's name has been officially changed by an amendment to your organizing instruments, you should also attach a conformed copy of that amendment to your

application.

Conformed copy. A conformed copy is a

copy that agrees with the original and all

amendments to it. If the original document required a signature, the copy should either be

signed by a principal officer or, if not signed, be

accompanied by a written declaration signed by

an authorized officer of the organization. With

either option, the officer must certify that the

document is a complete and accurate copy of

the original. A certificate of incorporation should

be approved and dated by an appropriate state

official.

tax-exempt status, go to IRS.gov and

select “Charities and Non-Profits” from the buttons near the top. Next, select “Applying for

Tax-Exempt Status” for more information. You

can also call 1-877-829-5500.

Bylaws. Bylaws alone aren't organizing

documents. However, if your organization has

adopted bylaws, include a current copy. The bylaws need not be signed if submitted as an attachment.

Required Information and

Documents

TIP ing document only if they are properly

Employer identification number (EIN). Every exempt organization must have its own EIN,

whether or not it has any employees. An EIN is

required before an exemption application is

submitted. Information on how to apply for an

EIN can be found online at Employer ID

Numbers (EIN). The EIN is issued immediately

once the application information is validated.

If you previously applied for an EIN and

haven't yet received it, or you are unsure

whether you have an EIN, please call our

toll-free customer account services number,

1-877-829-5500, for assistance.

Organizing documents. If you are submitting

an application other than Form 1023-EZ, your

application should include a copy of the organizing or enabling document that is signed by a

principal officer or is accompanied by a written

declaration signed by an authorized individual

certifying that the document is a complete and

accurate copy of the original or meets the requirements of a conformed copy in Rev. Proc.

2011-9, section 3.08(5). If you are submitting a

Form 1023-EZ, you don’t need to include a

copy of your organizing documents with the application. However, you may be asked to provide it during the application review process.

If your organizing or enabling document are

articles of incorporation, include evidence that it

was filed and approved by a state official. (For

example, a stamped “Filed” copy dated by the

Secretary of State is prima facie evidence that it

was filed and approved by a state official.) A

copy of the articles of incorporation can also be

submitted with a written declaration signed by

an authorized individual indicating the copy is

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Bylaws may be considered an organiz-

structured (includes name, purpose,

signatures, and intent to form an organization).

Attachments. When submitting attachments,

every attachment should show your organization's name and EIN. It should also state that it

is an attachment to your application form and

identify the part and line item number to which it

applies.

Original documents. Don't submit original

documents because they become part of the

IRS file and can't be returned.

Description of activities. Your application

must include a full description of the proposed

activities of your organization, including each of

the fundraising activities of a section 501(c)(3)

organization and a narrative description of anticipated receipts and contemplated expenditures. When describing the activities in which

your organization expects to engage, you must

include the standards, criteria, procedures, or

other means that your organization adopted or

planned for carrying out those activities.

To determine the information you need to

provide, you should study the part of this publication that applies to your organization. The appropriate chapter will describe the purposes

and activities that your organization must pursue, engage in, and include in your application

in order to achieve exempt status.

Often, your organization's articles of organization (or other organizing instruments) contain

descriptions of your organization's purposes

and activities.

Your application should describe completely

and in detail your past, present, and planned

activities.

If you are filing Form 1023-EZ, also review

the Instructions for Form 1023-EZ for more

Application, Approval, and Appeal Procedures

information about what to include in your description.

Financial data. Unless you are filing Form

1023-EZ, you must include in your application a

statement of revenues and expenses for the

number of years specified in the applicable form

instructions. For each accounting period, you

must describe the sources of your receipts and

the nature of your expenditures. You must also

include a balance sheet for your most recently

completed tax year or if you haven’t completed

a full tax year, the most current information

available.

If you haven't yet begun operations, or have

operated for less than 1 year, a proposed

budget for 2 full accounting periods and a current statement of assets and liabilities will be

acceptable.

Exempt status established in application. If

your application and its supporting documents

show that your organization meets the requirements for tax-exempt status under the Code

section you applied, the IRS will issue a favorable determination letter.

Miscellaneous Procedures

To help in processing your application, be sure

to attach all schedules, statements, and other

documents required by the application form. If

you don’t attach them, you may have to resubmit your application or you may otherwise encounter a delay in processing your application.

Incomplete application. If an application isn't

complete and doesn't contain all the required

attachments found under Required Inclusions,

the IRS will return it to you for completion. The

IRS will no longer request the missing information if the application is incomplete. However,

the IRS may, but is not required to, request additional information to validate information presented or to clarify an inconsistency on a Form

1023-EZ.

If the IRS returns the application or requests

additional information from you, that application

will be considered filed on the date the substantially completed application is postmarked, or if

no postmark, received at the IRS.

For applications that are returned to the applicant because they aren't complete, the user

fee will be returned or refunded.

Additional information may be requested if

necessary to clarify the nature of your organization.

IRS responses. Organizations that successfully submit Form 1023, Form 1023-EZ, Form

1024, or Form 1024-A on Pay.gov will receive

an email from Pay.gov confirming payment of

the user fee. Organizations that submit a complete Form 1024 application will receive an acknowledgment from the IRS. In addition, any

applicant may receive a letter requesting additional information the IRS needs to make its determination. These letters will be sent out as

soon as possible after receipt of the organization's application.

Withdrawal of application. An organization

may withdraw an application at any time before

the issuance of a determination letter upon the

written request of a principal officer or authorized representative of your organization. However, the withdrawal won't prevent the information contained in the application from being

used by the IRS in any subsequent examination

of your organization's returns. The information

forwarded with an application won't be returned

to your organization and, generally, when an application is withdrawn, the user fee paid won't

be refunded.

Requests for withholding of information

from the public. The law requires many exempt organizations and private foundations to

make their application forms and annual information returns available for public inspection.

The law also requires the IRS to make available

for public inspection, in accordance with section

6104 and the related regulations, your approved

application for recognition of exemption (including any papers submitted in support of the application) and the determination letter (discussed later, under Determination Letters).

Any information submitted in the application

or in support of it that relates to any trade secret, patent, process, style of work, or apparatus, upon request, can be withheld from public

inspection if the IRS determines that the disclosure of such information would adversely affect

the organization. Your request must:

1. Identify the material to be withheld (the

document, page, paragraph, and line) by

clearly marking it “Not Subject to Public

Inspection.”

2. Explain why the information is of the type

that can be withheld from public inspection.

3. Be filed with the office where your organization files the documents in which the

material to be withheld is contained.

Where to file. Submit Form 1023, 1023-EZ,

1024, or 1024-A through Pay.gov.

EO Determinations will consider your complete application and will issue you a favorable

determination letter, an adverse letter denying

the exempt status requested in your application

or, if you are asked to provide supplemental information and fail to respond, may close your

case without making a determination if you

don't respond to a request for additional information. EO Determinations will also close your

case without a determination if you withdraw

your request.

Determination Letters

Public charity status. A new section 501(c)

(3) organization will be classified as a publicly

supported organization and not a private foundation if it can show when it applies for tax-exempt status that it reasonably can be expected

to be publicly supported.

An organization must describe fully the activities in which it expects to engage. This includes standards, procedures, or other means

adopted or planned by the organization for carrying out its activities, expected sources of

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funds, and the nature of its contemplated expenses.

Adverse determination. A proposed adverse

determination letter will be issued to an organization that has not provided sufficiently detailed

information to establish that it qualifies for exemption or if the information provided establishes that it doesn't qualify for exemption. An

organization can appeal a proposed adverse

determination letter. See Appeal Procedures,

later.

Expedited handling. Exempt organization determination letter requests may be eligible for

expedited handling under section 4.09 of Rev.

Proc. 2024-5.

Effective Date of Exemption

A determination letter recognizing exemption is

usually effective as of the date of formation

of an organization if, the organization submitted the application for recognition of exemption

within 27 months from the end of the month in

which it was organized and during the period

before the date of the determination letter, its

purposes and activities are consistent with the

requirements for exempt status under the applicable section of 501(c). Upon obtaining recognition of exemption, the organization can file a

claim for a refund of income taxes paid for the

period for which its exempt status is recognized.

An organization that does not submit its application for exemption within that 27-month period but otherwise meets the requirements for

tax-exempt status will be recognized as exempt

from the postmark date of application or the

submission date of its Form 1023, Form 1024,

Form 1023-EZ, or Form 1024-A, if applicable.

If an organization is required to alter its activities or substantially amend its charter to qualify,

the determination letter recognizing exemption

will be effective as of the date specified in

the letter. If a nonsubstantive amendment is

made, such as correction of a clerical error in

the enabling instrument or the addition of a dissolution clause, exemption will ordinarily be recognized as of the date of formation if the activities of the organization before the determination

are consistent with the exemption requirements.

A determination letter recognizing exemption can't be relied on if there is a material

change, inconsistent with exemption, in the

character, the purpose, or the method of operation of the organization. Also, a determination

letter can't be relied on if it is based on any

omission or inaccurate material information

submitted by the organization.

For more information about the effective

date of exemption, see the current year issued

revenue procedures.

Revocation of Exemption

A determination letter recognizing exemption

may be revoked by:

1. A notice to the organization to which the

determination letter originally was issued,

2. Enactment of legislation or ratification of a

tax treaty,

Application, Approval, and Appeal Procedures

Publication 557 (1-2025)

3. A decision of the United States Supreme

Court,

4. Issuance of temporary or final regulations,

5. Issuance of a revenue ruling, a revenue

procedue, or other statement published in

the Internal Revenue Bulletin or Cumulative Bulletin.

6. Section 6033(j), for failure to file a required

annual return or notice, for 3 consecutive

years, automatically.

When revocation takes effect. If the organization omitted or misstated material information, operated in a manner materially different

from that originally represented, or, with regard

to organizations to which section 503 applies,

engaged in a prohibited transaction (such as diverting corpus or income from its exempt purpose), or if there has been a change in the applicable law, the revocation or modification may

be retroactive.

Material change in organization. If there is a

material change, inconsistent with exemption, in

the character, purpose, or method of operation

of the organization, revocation or modification

will ordinarily take effect as of the date of that

material change. An organization may seek relief from retroactive revocation or modification of

a determination letter under section 7805(b).

For more information on requesting section

7805(b) relief, see the current year issued revenue procedures.

Relief from retroactivity. If a determination letter was issued in error or the IRS

changed its position after issuing a letter, and if

section 7805(b) relief is granted, retroactivity of

the revocation ordinarily will be limited to a date

not earlier than that on which the original determination letter was revoked.

Foundations. The determination of the effective date is the same for the revocation or

modification of foundation status or operating

foundation status unless the effective date is expressly covered by statute or regulations.

Written notice. If the IRS concludes, as a result of examining an information return or considering information from any other source, that

a determination letter should be revoked or

modified, the organization will be advised in

writing of the proposed action and the reasons

for it.

The organization will also be advised of its

right to protest the proposed action by requesting Independent Office of Appeals consideration. The appeal procedures are discussed

next.

Appeal Procedures

If your organization applies for recognition of

tax-exempt status and Rulings and Agreements

determines your organization doesn't qualify for

exemption, your organization will be advised of

its rights to protest the determination by requesting Independent Office of Appeals consideration. Your organization must submit a statement of its views fully explaining its reasoning.

Publication 557 (1-2025)

The statement must be submitted within 30

days from the date of the proposed adverse determination letter and must state whether your

organization wishes Independent Office of Appeals consideration.

Representation. A principal officer or trustee

can represent an organization at any level of appeal within the IRS. Also, an attorney, CPA, or

individual enrolled to practice before the IRS

can represent the organization.

If the organization's representative attends a

conference without a principal officer or trustee,

the representative must file a proper power of

attorney or a tax information authorization before receiving or inspecting confidential information. Form 2848 or Form 8821, Tax Information

Authorization, as appropriate (or any other

properly written power of attorney or authorization), can be used for this purpose. These forms

are available on IRS.gov from the Forms and Instructions page. For more information, see Publication 947, Practice Before the IRS and Power

of Attorney, which is also available on IRS.gov

from the Forms and Instructions page.

Independent Office of

Appeals Consideration

Before forwarding a case to the Independent

Office of Appeals, Rulings and Agreements will

consider the applicant’s statement protesting

and appealing (hereinafter appealing) the proposed adverse determination. If the organization does not submit the information that provides a basis for Rulings and Agreements to

reconsider its adverse determination, it will forward the appeal and case file to the Independent Office of Appeals. For more information

about the role of the Independent Office of Appeals, see Publication 892, How to Appeal an

IRS Decision on Tax-Exempt Status. The appeal should include the following information.

1. The organization's name, address, daytime telephone number, and employer

identification number.

2. A statement that the organization wants to

protest the determination.

3. A copy of the letter showing the determination you disagree with, or the date and

IRS office symbols on the determination

letter.

4. A statement of facts supporting the organization's position in any contested factual

issue.

5. A statement outlining the law or other authority the organization is relying on.

6. A statement as to whether a conference at

the Independent Office of Appeals is desired.

The statement of facts in item 4 must be declared true under penalties of perjury. This may

be done by adding to the protest the following

signed declaration:

Chapter 1

“Under penalties of perjury, I declare that I

have examined the statement of facts

presented in this protest and in any

accompanying schedules and statements and,

to the best of my knowledge and belief, it is

true, correct, and complete.”

Signature.

If the organization's representative submits the

appeal, a substitute declaration must be included, stating:

1. That the representative prepared the appeal and accompanying documents, and

2. Whether the representative knows personally that the statements of fact contained in

the appeal and accompanying documents

are true and correct.

Be sure the appeal contains all of the information requested. Incomplete appeals will be

returned for completion.

The Independent Office of Appeals, after

any requested conference and upon consideration of the organization's appeal, as well as information presented in any conference held, will

generally notify the organization of its decision

and issue an appropriate determination letter.

An adverse decision can be appealed to the

courts (discussed later). If new information is

submitted during Independent Office of Appeals

consideration, the matter may be returned to

Rulings and Agreements for further consideration.

The Independent Office of Appeals must request technical advice on any exempt organization issue concerning qualification for exemption or foundation status for which there is no

published precedent or for which there is reason to believe that nonuniformity exists. If an organization believes that its case involves such

an issue, it should ask the Independent Office

of Appeals to request technical advice.

Any determination letter issued on the basis

of technical advice can't be appealed to the Independent Office of Appeals for those issues

that were the subject of the technical advice.

Administrative Remedies

In the case of an application under section

501(c) or 501(d) and exempt from tax under

501(a), all of the following actions, called administrative remedies, must be completed by

your organization before an unfavorable determination letter from the IRS can be appealed to

the courts.

1. The filing of the correct completed application or group exemption request under

section 501(c), or 501(d) and exempt from

tax under 501(a) (described earlier in this

chapter) or the filing of a request for a determination of foundation status (see Private Foundations and Public Charities in

chapter 3).

2. In the case of a late-filed application, requesting relief under Regulations section

301.9100 regarding applications for extensions of time for making an election or application for relief from tax (see Application

for Recognition of Exemption in chapter 3).

Application, Approval, and Appeal Procedures

3. The timely submission of all additional information requested to perfect an exemption application or request for determination of private foundation status.

4. Exhaustion of all administrative appeals

available within the IRS.

The actions just described won't be considered completed until the IRS has had a reasonable time to act upon the appeal or protest, as

the case may be.

An organization won't be considered to have

exhausted its administrative remedies before

the earlier of:

1. The completion of the steps just listed and

the sending by certified or registered mail

of a notice of final determination, or

2. The expiration of the 270-day period in

which the IRS has not issued a notice of final determination and the organization has

taken, in a timely manner, all reasonable

steps to secure a ruling or determination.

270-day period. The 270-day period will be

considered by the IRS to begin on the date a

completed application, or group exemption request is sent or submitted to the IRS. See Application Procedures, earlier, for information needed to complete the application form.

If the application doesn't contain all of the required items, it won't be further processed and

may be returned to the applicant for completion.

The 270-day period, in this event, won't be considered as starting until the date the application

is remailed to the IRS with the requested information, or, if a postmark isn't evident, on the

date the IRS receives a completed application.

Appeal to Courts

If the IRS issues an unfavorable determination

letter to your organization and you have exhausted all the administrative remedies just discussed, your organization can seek judicial

remedies.

For example, if your organization has paid

the tax resulting from the adverse determination

and met all other statutory prerequisites, it can

file suit for a refund in a U.S. District Court or the

U.S. Court of Federal Claims. Or, if your organization elected not to pay the tax deficiency resulting from the adverse determination and met

all other statutory prerequisites, it can file suit

for a redetermination of the tax deficiencies in

the United States Tax Court. For more information on these types of suits, get Publication 556,

Examination of Returns, Appeal Rights, and

Claims for Refund.

In certain situations, your organization can

file suit for a declaratory judgment in the U.S.

District Court for the District of Columbia, the

U.S. Court of Federal Claims, or the U.S. Tax

Court. This remedy is available if your organization received an adverse notice of final determination, or if the IRS failed to make a timely determination on your initial or continuing

qualification or classification as an exempt organization. However, your exempt status claim

must be as:

• An organization qualifying under section

501(c) or 501(d) and exempt from tax under 501(a),

• An organization to which a deduction for a

contribution is allowed under section

170(c)(2),

• An organization that is a private foundation

under section 509(a),

• A private operating foundation under section 4942(j)(3), or

• A cooperative organization that is exempt

from tax under section 521.

Adverse notice of final determination. The

adverse notice of final determination referred to

above is a determination letter sent by certified

or registered mail holding that your organization:

• Isn't described in section 501(c) or 501(d)

and exempt from tax under 501(a), or section 170(c)(2);

• Is a private foundation and not a public

charity described in a part of section 509 or

section 170(b)(1)(A);

• Is not a private operating foundation, as

defined in section 4942(j)(3); or

• Is a public charity described in a part of

section 509(a) or section 170(b)(1)(A)

other than the part under which your organization requested classification.

Favorable court rulings - IRS procedure. If a

suit results in a final determination that your organization is exempt from tax, the IRS will issue

a favorable determination letter, provided your

organization has filed an application for exemption and submitted a statement that the underlying facts and applicable law are the same as in

the period considered by the court.

Group Exemption Letter

A group exemption letter is a determination letter issued to a central organization recognizing

on a group basis the exemption under section

501(c) of subordinate organizations on whose

behalf the central organization has applied for

recognition of exemption.

A central organization is an organization that

has one or more subordinates under its general

supervision or control. A subordinate organization is a chapter, local, post, or unit of a central

organization.

A subordinate organization may or may not

be incorporated, but it must have an organizing

document and it must have its own taxpayer

identification number (EIN). A subordinate that

is organized and operated in a foreign country

can't be included in a group exemption letter. A

subordinate described in section 501(c)(3) can't

be included in a group exemption letter if it is a

private foundation described in section 509(a).

If your organization is a subordinate controlled by a central organization (for example, a

church, a veterans' organization, or a fraternal

organization), you should check with the central

organization to see if it has been issued a group

exemption letter that covers your organization. If

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it has, you don’t have to file a separate application unless your organization no longer wants to

be included in the group exemption letter.

If the group exemption letter doesn't cover

your organization, ask your central organization

about being included in the next annual group

ruling update that it submits to the IRS.

See Publication 4573, Group Exemptions,

for additional general information about group

exemption. Go to the Charities & Nonprofits

page on IRS.gov for Group Exemption Resources for the most current information and updates.

Central Organization

Application Procedure

Note: The content about the Central Organization Application Procedure is included here

for informational purposes. However, as stated

in Notice 2020-36, IRB 2020-21, 840 and the

current year issued revenue procedures, the

IRS is not accepting any requests for group exemption letters until publication of the final revenue procedure described in the Notice or other

guidance in the Internal Revenue Bulletin.

If your organization is a central organization

with affiliated subordinates under its control, it

can apply for a group exemption letter for its

subordinates, provided it has obtained recognition of its own exemption. A central organization

obtains recognition of its own exemption by

submitting Form 1023 or 1023-EZ, 1024, or

1024-A, as described in their instructions, with

the appropriate user fee. You request the group

exemption letter for the central organization’s

subordinates by letter rather than a specific application form. The issuance of the group exemption letter relieves each of the covered subordinates from filing its own application.

A central organization that has previously

obtained recognition of its own exemption must

indicate its employer identification number and

the date of the letter recognizing its exemption,

but need not forward documents already submitted. However, if it has not already done so,

the central organization must submit a copy of

any amendment to its governing instruments or

internal regulations as well as any information

about changes in its character, purposes, or

method of operation.

Employer identification number. Each subordinate must have its own EIN, even if it has no

employees. When submitting its group exemption application, the central organization must

provide an EIN for each subordinate organization.

Information required for subordinate organizations. The exempt central organization requests the group ruling letter. The central organization must submit information for

subordinates it will include in the group exemption letter. The information should be forwarded

in a letter signed by a principal officer of the

central organization setting forth or including as

attachments the following.

1. Information verifying that the subordinates:

Application, Approval, and Appeal Procedures

Publication 557 (1-2025)

a. Are affiliated with the central organization at the close of its annual accounting period;

b. Are subject to its general supervision

or control;

c. Are all eligible to qualify for exemption

under the same paragraph of section

501(c), though not necessarily the

paragraph under which the central organization itself is exempt;

d. If described in section 501(c)(3),

aren’t private foundations;

e. Are all on the same accounting period

as the central organization if they are

to be included in group returns (described later); and

f. If described in section 501(c)(3), are

organizations that have been formed

within the 15-month period preceding

the date of submission of the group

exemption application if they are subject to the requirements of section

508(a) and wish to be recognized as

exempt from their dates of creation . If

one or more of the subordinates

haven't been organized within the

15-month period, a group ruling may

be issued if all subordinates are willing to be recognized as exempt only

from the date of application.

2. A detailed description of the purposes and

activities of the subordinates, including the

sources of receipts and the nature of expenditures.

3. A sample copy of a uniform governing instrument (such as articles of incorporation or articles of association) adopted by

the subordinates, or, in its absence, copies

of representative instruments.

4. An affirmation to the effect that, to the best

of the officer's knowledge, the purposes

and activities of the subordinates are as

stated in (2) and (3), above.

5. A statement that each of the subordinates

has provided a written authorization to the

central organization, signed by an authorized officer of the subordinate, agreeing to

be included in the group exemption (see

also New 501(c)(3) organizations that

want to be included, later in this section).

6. A list of subordinates to be included in the

group exemption letter, to which the IRS

has issued an outstanding determination

letter.

7. An affirmation to the effect that, to the best

of the officer's knowledge and belief, no

subordinate described in section 501(c)(3)

is a private foundation, as defined in section 509(a).

8. For each subordinate that is a school

claiming exemption under section 501(c)

(3), the information required by Revenue

Ruling 75-50, 1975-2 C.B. 587 (as modified by Rev. Proc. 71-447, 1971-2 C.B. 230

and Rev. Proc. 2019–22, 2019–2 I.R.B.

1260) these requirements are described in

chapter 3, under Private Schools.

Publication 557 (1-2025)

9. For any school affiliated with a church, the

information to show that the provisions of

Revenue Ruling 75-231, 1975-1 C.B. 158,

have been met.

10. A list of the names, mailing addresses, actual addresses if different, and EINs of

subordinates to be included in the group

exemption letter. A current directory of

subordinates may be furnished instead of

the list if it includes the required information and if the subordinates not to be included in the group exemption letter are identified.

of the subordinates included in the group

exemption letter.

2. A separate list (that includes the names,

mailing addresses, actual addresses if different, and EINs of the affected subordinates) for each of the three following categories.

a. Subordinates that have changed their

names or addresses during the year.

b. Subordinates no longer to be included

in the group exemption letter because

they no longer exist or have disaffiliated from or withdrawn their authorization to the central organization.

New 501(c)(3) organizations that want to be

included. A new organization, described in

section 501(c)(3), that wants to be included in a

group exemption letter must submit its authorization (as explained in item number 5, earlier,

under Information required for subordinate organizations) to the central organization before

the end of the 15th month after it was formed in

order to satisfy the requirement of section

508(a). The central organization must also include this subordinate in its next annual submission of information, as discussed later, under Information Required Annually.

Keeping the Group

Exemption Letter in Force

Continued effectiveness of a group exemption

letter is based on the following conditions.

1. The continued existence of the central organization.

2. The continued qualification of the central

organization for exemption under section

501(c).

c. Subordinates to be added to the

group exemption letter because they

are newly organized or affiliated or because they have recently authorized

the central organization to include

them.

An annotated directory of subordinates

won't be accepted for this purpose. If there

were none of the above changes, the central organization must submit a statement

to that effect.

3. The same information about new subordinates that was required in the initial application for group exemption. (This information is listed in items 1 through 10, under

Information required for subordinate organizations, earlier.) If a new subordinate

doesn't differ in any material respects from

the subordinates included in the application for group exemption, however, a statement to this effect may be submitted in lieu

of detailed information.

The organization should send this information to:

3. The submission by the central organization of the information regarding its subordinate organizations that is required annually (described under Information Required

Annually).

4. The annual filing of an information return

(Form 990, for example) by the central organization, if required.

In addition, a group exemption letter will not be

effective as to a particular subordinate if the

subordinate ceases to conform to the requirements for inclusion in a group exemption letter

and authorization for inclusion (see items 1 and

5 in Information required for subordinate organizations, earlier), and the annual filing of any required information return for the subordinate. A

central organization may file a group return for

some or all of its subordinates. If it does so, the

group return must be filed on Form 990 under a

separate EIN obtained exclusively for the purpose of filing the group return. Form 990-EZ

cannot be used for a group return.

Information Required Annually

To maintain a group exemption letter, the central

organization must submit annually, at least 90

days before the close of its annual accounting

period, all of the following information.

1. Information about all changes in the purposes, character, or method of operation

Chapter 1

Internal Revenue Service Center

Ogden, UT 84201–0027

Submitting the required information annually doesn't relieve the central organCAUTION ization or any of its subordinates of the

duty to submit any other information that may be

required by an EO area manager to determine

whether the conditions for continued exemption

are being met.

As of 2019, the IRS will no longer send

TIP the List of Parent and Subsidiary Accounts to the central organizations.

Events Causing

Loss of Group Exemption

A group exemption letter no longer has effect,

for either a particular subordinate or the group

as a whole, when:

1. The central organization notifies the IRS

that it is going out of existence;

2. The central organization notifies the IRS,

by its annual submission or otherwise, that

any of its subordinates will no longer fulfill

Application, Approval, and Appeal Procedures

the conditions for continued effectiveness,

explained earlier, or

3. The IRS notifies the central organization or

the affected subordinate that the group exemption letter will no longer have effect for

some or all of the group because the conditions for continued effectiveness of a

group exemption letter haven't been fulfilled.

When notice is given under any of these three

conditions, the IRS will no longer recognize the

exempt status of the affected subordinates until

they file separate applications on their own behalf or the central organization files complete

supporting information for their inclusion in the

group exemption at the time of its annual submission. However, when the notice is given by

the IRS and the withdrawal of recognition is

based on the failure of the organization to comply with the requirements for recognition of

tax-exempt status under the particular subsection of section 501(c), the revocation will ordinarily take effect as of the date of that failure. The

notice, however, will be given only after the appeal procedures described earlier in this chapter are completed.

Topics

Schedule M (Form 990) Noncash

Contributions

Schedule M (Form 990)

This chapter discusses:

•

Annual information returns

Unrelated business income tax return

Employment tax returns

Political organization income tax return

Reporting requirements for a political

organization

Donee information return

Information provided to donors

Report of cash received

Public inspection of exemption

applications, annual returns, and political

organizations reporting forms

Required disclosures

Miscellaneous rules

Useful Items

You may want to see:

Circular E, Employer's Tax Guide

15-A Employer's Supplemental Tax Guide

15-A

15-B Employer's Tax Guide to Fringe

Benefits

15-B

In addition, the IRS will cease to recognize

the subordinates under a group exemption as

tax-exempt if the central organization is automatically revoked for failure to file required returns or notices for 3 consecutive years. See

Automatic Revocation, later. Subordinates under a group exemption are also subject to automatic revocation for failure to file required returns (or appear on a group return if the

subordinate does not file its own) or notices for

3 consecutive years. A subordinate organization

that is automatically revoked must apply to the

IRS for reinstatement of its exempt status.

Thereafter, it may retain independent exempt

status or it may seek to resume its status as a

subordinate of the central organization. See

Group Exemption Resources .

Schedule N (Form 990)

Schedule O (Form 990) Supplemental

Information to Form 990

Schedule O (Form 990)

940 Employer's Annual Federal

Unemployment (FUTA) Tax Return

940

Schedule R (Form 990) Related

Organizations and Unrelated

Partnerships

Schedule R (Form 990)

990-PF Return of Private Foundation or

Section 4947(a)(1) Nonexempt

Charitable Trust Treated as a Private

Foundation

990-PF

990-N Electronic Notice (e-Postcard) for

Tax-Exempt Organizations Not

Required to File Form 990 or Form

990-EZ

990-N

Publication

Schedule N (Form 990) Liquidation,

Termination, Dissolution, or

Significant Disposition of Assets

598 Tax on Unrelated Business Income of

Exempt Organizations

990-T Exempt Organization Business

Income Tax Return

990-T

Schedule A (Form 990-T) Unrelated

Business Taxable Income from an

Unrelated Trade or Business

Schedule A (Form 990-T)

598

990-W Estimated Tax on Unrelated

Business Taxable Income for

Tax-Exempt Organizations

990-W

Form (and Instructions)

941 Employer's Quarterly Federal Tax

Return

1120-POL U.S. Income Tax Return for

Certain Political Organizations

990 Return of Organization Exempt From

Income Tax

4720 Return of Certain Excise Taxes

Under Chapters 41 and 42 of the

Internal Revenue Code

941

990

990-EZ Short Form Return of

Organization Exempt From Income

Tax

Schedule A (Form 990) Public Charity

Status and Public Support

Schedule A (Form 990)

Schedule B (Form 990)

Schedule C (Form 990) Political

Campaign and Lobbying Activities

Schedule C (Form 990)

Schedule D (Form 990) Supplemental

Financial Statements

Schedule D (Form 990)

Schedule E (Form 990) Schools

Filing

Requirements

and Required

Disclosures

4720

990-EZ

Schedule B (Form 990) Schedule of

Contributors

1120-POL

5768 Election/Revocation of Election by

an Eligible Section 501(c)(3)

Organization To Make Expenditures

To Influence Legislation

5768

6069 Return of Certain Excise Taxes on

Mine Operators, Black Lung Trusts,

and Other Persons Under Sections

4951, 4952, and 4953

6069

7004 Application for Automatic Extension

of Time to File Certain Business

Income Tax, Information, and Other

Returns

7004

Schedule E (Form 990)

Schedule F (Form 990) Statement of

Activities Outside the United States

Schedule F (Form 990)

Schedule G (Form 990) Supplemental

Information Regarding Fundraising or

Gaming Activities

Schedule G (Form 990)

8274 Certification by Churches and

Qualified Church-Controlled

Organizations Electing Exemption

from Employer Social Security and

Medicare Taxes

8274

8282 Donee Information Return

8282

Schedule H (Form 990) Hospitals

Schedule H (Form 990)

8300 Report of Cash Payments Over

$10,000 Received in a Trade or

Business

8300

Schedule I (Form 990) Grants and Other

Assistance to Organizations,

Governments, and Individuals in the

United States

Schedule I (Form 990)

Introduction

Most exempt organizations (including private

foundations) must file various returns and reports at some time during (or following the close

of) their accounting period.

Schedule J (Form 990) Compensation

Information

Schedule J (Form 990)

8453-X Political Organization Declaration

for Electronic Filing of Notice of

Section 527 Status

8453-X

8822-B Change of Address or

Responsible Party—Business

8822-B

Schedule K (Form 990) Supplemental

Information on Tax-Exempt Bonds

Schedule K (Form 990)

8868 Application for Automatic Extension

of Time to File an Exempt

Organization Return

8868

Schedule L (Form 990) Transactions

With Interested Persons

Schedule L (Form 990)

Chapter 2

Filing Requirements and Required Disclosures

Publication 557 (1-2025)

8870 Information Return for Transfers

Associated with Certain Personal

Benefits Contracts

committee of a state or local candidate, a

caucus or association of state or local officials, or required to report under the Federal Election Campaign Act of 1971 as a

political committee;

8870

8871 Political Organization Notice of

Section 527 Status

8871

8872 Political Organization Report of

Contributions and Expenditures

8872

8886-T Disclosure by Tax-Exempt Entity

Regarding Prohibited Tax Shelter

Transaction

8886-T

8899 Notice of Income from Donated

Intellectual Property

8899

8976 Notice of Intent to Operate Under

Section 501(c)(4)

14. An exempt organization (other than a private foundation or a supporting organization described in Supporting Organization

Annual Information Return, later) that normally has annual gross receipts of

$50,000 or less (required to file Form

990-N, Electronic Notice (e-Postcard) for

Tax-Exempt Organizations Not Required

to File Form 990 or Form 990-EZ); or

8976

See chapter 6 for information about getting

these publications and forms.

Annual Information

Returns

1. A church, an interchurch organization of

local units of a church, a convention or association of churches;

2. An integrated auxiliary of a church;

3. A church-affiliated organization that is exclusively engaged in managing funds or

maintaining retirement programs;

4. A school below college level affiliated with

a church or operated by a religious order;

5. Church-affiliated mission societies if more

than half of their activities are conducted

in, or are directed at persons in, foreign

countries;

6. An exclusively religious activity of any religious order;

7. A state institution, the income of which is

excluded from gross income under section

115;

8. A corporation described in section 501(c)

(1) that is organized under an Act of Congress, an instrumentality of the United

States, and is exempt from federal income

taxes;

9. A stock bonus, pension, or profit-sharing

trust that qualifies under section 401 (required to file Form 5500, Annual Return/

Report of Employee Benefit Plan);

10. A religious or apostolic organization described in section 501(d) (required to file

Form 1065, U.S. Return of Partnership Income);

11. A governmental unit or an affiliate of a governmental unit that meets the requirements of Rev. Proc. 95-48, 1995-2 C.B.

418, IRS.gov/pub/irs-tege/rp1995-48.pdf ;

12. A private foundation described in section

501(c)(3) and exempt under section

501(a) (required to file Form 990-PF, Return of Private Foundation);

13. A political organization that is a state or local committee of a political party, a political

cer;

• Organization's annual tax period;

• Verification that the organization's annual

gross receipts are normally $50,000 or

less; and

• Notification if the organization has terminated.

Form 990-N is due by the 15th day of the

fifth month after the close of the tax year. For tax

years beginning after December 31, 2006, any

organization that fails to meet its annual reporting requirement for 3 consecutive years will automatically lose its tax-exempt status. To regain

its exempt status an organization will have to reapply for recognition as a tax-exempt organization.

1. An integrated auxiliary of a church;

Exceptions. This filing requirement doesn't

apply to:

• Churches, their integrated auxiliaries, and

conventions or associations of churches;

• Organizations that are included in a group

return;

• Private foundations required to file Form

990-PF; and

• Section 509(a)(3) supporting organizations

required to file Form 990 or Form 990-EZ.

2. The exclusively religious activities of a religious order; or

Forms 990 and 990-EZ

Supporting Organization

Annual Information Return

Every organization exempt from federal income

tax under section 501(a) must file an Annual

Exempt Organization Return except:

Publication 557 (1-2025)

15. A foreign organization, or an organization

located in a U.S. territory, that normally

has annual gross receipts from sources

within the United States of $50,000 or

less.

• Its Internet website address (if any);

• Its taxpayer identification number;

• The name and address of a principal offi-

Each section 509(a)(3) supporting organization

is required to file Form 990 or 990-EZ with the

IRS regardless of the organization's gross receipts, unless it qualifies as one of the following:

3. An organization, the gross receipts of

which are normally not more than $5,000,

that supports a section 509(a)(3) religious

order.

If the organization is described in item (3)

above, then it must submit Form 990-N (e-Postcard) unless it voluntarily files Form 990 or

990-EZ.

On its annual information return, in Part I,

Schedule A (Form 990) a supporting organization must:

• List the organizations to which it provides

support;

• Indicate whether it is a Type I, Type II, or

Type III supporting organization; and

• Certify that the organization isn't controlled

directly or indirectly by disqualified persons

(other than by foundation managers and

other than one or more publicly supported

organizations).

Annual Electronic Notice Filing

Requirement for Small Tax-Exempt

Organizations

Small tax-exempt organizations with annual

gross receipts normally $50,000 or less that are

not otherwise required to file an annual information return and are not otherwise exempted entirely from a filing requirement must submit

Form 990-N, Electronic Notice (e-Postcard) for

Tax-Exempt Organizations Not Required to File

Form 990 or 990-EZ, with the IRS each year, if

they choose not to file a Form 990 or 990-EZ.

Form 990-N requires the following information:

• The organization's legal name, and mailing

address;

• Any name under which it operates and

does business;

Chapter 2

Exempt organizations, other than private foundations, must file their annual information returns on Form 990 or 990-EZ, unless excepted

from filing or allowed to submit Form 990-N, described earlier.

Generally, political organizations with gross

receipts of $25,000 ($100,000 for a qualified

state or local political organization (QSLPO)) or

more for the tax year are required to file Form

990 or 990-EZ unless specifically excepted

from filing the annual return. The following political organizations aren't required to file Form

990 or Form 990-EZ.

• A state or local committee of a political

party.

• A political committee of a state or local

candidate.

• A caucus or association of state or local officials.

• A political organization that is required to

report as a political committee under the

Federal Election Campaign Act.

• A 501(c) organization that has expenditures for influencing or attempting to influence the selection, nomination, election, or

appointment of any individual for a federal,

state, or local public office.

Form 990-EZ. This is a shortened version of

Form 990. Form 990-EZ is designed for use by

small exempt organizations and nonexempt

charitable trusts.

An organization can file either Form 990 or

990-EZ if it satisfies both of the following:

1. Its gross receipts during the year are less

than $200,000.

Filing Requirements and Required Disclosures

2. Its total assets (line 25, column (B) of

Form 990-EZ) at the end of the year are

less than $500,000.

If your organization doesn't satisfy both of these

conditions, it can't file Form 990-EZ. Instead,

the organization must file Form 990.

Group return. A group return on Form 990

may be filed by a central, parent, or like organization for two or more local organizations, none

of which is a private foundation. This return is in

addition to the central organization's separate

annual return if it must file a return. The central

organization can't be included in the group return. See the Instructions for Form 990 for the

conditions under which this procedure may be

used.

In any year that an organization is prop-

TIP erly included as a subordinate organi-

zation on a group return, it shouldn't file

its own Form 990.

Schedule A (Form 990). Organizations, other

than private foundations, that are described in

section 501(c)(3) and that are otherwise required to file Form 990 or 990-EZ must also

complete Schedule A of that form.

Schedule B (Form 990). Organizations that

file Form 990, 990-EZ or 990-PF use this

schedule to provide required information regarding certain contributors.

Schedule O (Form 990). Organizations that

file Form 990 or 990-EZ, must use this schedule

to provide required additional information or if

additional space is needed.

Other schedules may be required to be filed

with Form 990 or 990-EZ. See the Instructions

for Form 990 or the Instructions for Form

990-EZ for more information.

Report significant new or changed program

services and changes to organizational

documents. An organization should report

new significant program services or significant

changes in how it conducts program services,

and significant changes to its organizational

documents, on its Form 990 rather than in a letter to EO Determinations. EO Determinations

no longer issues letters confirming the tax-exempt status of organizations that report new

services or significant changes, or changes to

organizational documents. See Miscellaneous

Rules, Organization Changes and Exempt Status, later.

Form 990-PF

All private foundations exempt under section

501(c)(3) must file Form 990-PF. These organizations are discussed in chapter 3.

electronically, including Form 990, 990-EZ,

990-PF, 8872, and 990-T. The e-filing requirement is generally effective for tax years beginning after July 1, 2019. The Taxpayer First Act

allows transitional relief for certain small organizations or other organizations for which the IRS

determines that application of the e-filing requirement would constitute an undue hardship

in the absence of additional transitional time.

If an organization is required to file a return

electronically but doesn't, it isn't considered to

have filed its return. See Regulations section

301.6033-4 for more information.

Form 990. For tax years beginning on or

before July 1, 2019, an organization is required

to file Form 990 electronically if it files at least

250 returns during the calendar year and has

total assets of $10 million or more at the end of

the tax year. For tax years beginning after July

1, 2019, an organization is required to file Form

990 electronically unless exceptions described

in the form instructions apply. As of the 2020

Form 990, the instructions no longer describe

any exceptions to the e-filing requirement.

Form 990-EZ. For small exempt organizations, the legislation specifically allowed a postponement (“transitional relief”). For tax years

ending before July 31, 2021, the IRS will accept

either paper or electronic filing of Form 990-EZ,

Short Form Return of Organization Exempt from

Income Tax. For tax years ending July 31, 2021,

and later, Forms 990-EZ must be filed electronically. Generally, Form 990-EZ is for organizations with annual gross receipts less than

$200,000 and total assets at tax year-end less

than $500,000.

Form 990-PF. For tax years beginning on or

before July 1, 2019, an organization is required

to file Form 990-PF electronically if it files at

least 250 returns during the calendar year. For

tax years beginning after July 1, 2019, an organization is required to file Form 990-PF electronically unless exceptions described in the

form instructions apply. As of the 2020 Form

990-PF, the instructions no longer describe any

exceptions to the e-filing requirement.

Form 990-N. An organization that is eligible

and elects to submit Form 990-N must submit it

electronically.

Form 990-T. The IRS continued to accept

paper forms Form 990-T into 2021 pending its

conversion into electronic format. In March

2020, the IRS announced the availability of the

electronic filing of Form 990-T. Any 2020, and

any future year Form 990-T with a due date on

or after April 15, 2021, must be filed electronically and not on paper.

Form 8872. Form 8872 must be filed electronically if reporting on periods after 2019.

Electronic Filing

Due Date

For tax years beginning on or before July 1,

2019, your organization may be required to file

Form 990, Form 990-EZ, or Form 990-PF, and

related forms, schedules, and attachments

electronically. For tax years beginning after July

1, 2019, under the Taxpayer First Act, organizations are required to file certain returns

Forms 990, 990-EZ, or 990-PF must be filed by

the 15th day of the fifth month after the end of

your organization's accounting period. Thus, for

a calendar year taxpayer, Forms 990, 990-EZ,

or 990-PF are due May 15 of the following year.

If any due date falls on a Saturday, Sunday, or

Chapter 2

legal holiday, the return will be due the next

business day.

Extension of time to file. Use Form 8868 to

request an automatic six month extension of

time to file Forms 990, 990-EZ, or 990-PF.

When filing Form 8868 for an automatic extension, neither a signature, nor an explanation

is required.

Application for exemption pending. An organization that claims to be exempt under section 501(a) but has not established its exempt

status by the due date for filing an information

return must complete and file Form 990,

990-EZ, 990-N, or 990-PF (if it considers itself a

private foundation), unless the organization is

exempt from Form 990-series filing requirements. If the organization's application is pending with the IRS, it must so indicate on Forms

990, 990-EZ, or 990-PF (whichever applies) by

checking the application pending block at the

top of page 1 of the return. For more information

on the filing requirements, see the Instructions

for Forms 990, 990-EZ, and 990-PF.

State reporting requirements. Copies of

Forms 990, 990-EZ, or 990-PF may be used to

satisfy state reporting requirements. See the instructions for those forms.

Form 8870. Organizations that filed a Form

990, 990-EZ, or 990-PF, and paid premiums or

received transfers on certain life insurance, annuity, and endowment contracts (personal benefit contracts), must file Form 8870. For more information, see Form 8870 and the instructions

for that form.

Form 8822-B. If you moved during the year, fill

out Form 8822-B, Change of Address or Responsible Party-Business. Also, if your “Responsible Party” changed this year, you must

also fill out Form 8822-B. The “Responsible

Party” is the tax-exempt organization’s “Principal Officer,”as defined in the Form 990 instructions, in the Glossary section.

Automatic Revocation

If the organization fails to file a Form 990,

990-EZ, or 990-PF, or fails to submit a Form

990-N, as required, for 3 consecutive years, it

will automatically lose its tax-exempt status by

operation of law effective as of the due date for

the third missed return or notice. The list of organizations whose tax-exempt status has been

automatically revoked is available on IRS.gov.

This list (Auto-Revocation List) may be viewed

and searched on Tax-Exempt Organization

Search. The Auto-Revocation List includes

each organization's name, employer identification number (EIN), and last known address. It

also includes the effective date of the automatic

revocation and the date it was posted to the list.

For auto-revoked organizations that applied for

and received reinstatement, the list gives the

date of reinstatement. The IRS updates the list

monthly to include additional organizations that

lose their tax-exempt status.

Filing Requirements and Required Disclosures

Publication 557 (1-2025)

Tax Effect of Loss of Tax-Exempt

Status

If your organization’s tax-exempt status is automatically revoked, you may be required to file

one of the following federal income tax returns

and pay any applicable income taxes:

• Form 1120, U.S. Corporation Income Tax

Return, due by the 15th day of the 3rd

month after the end of your organization’s

tax year, or

• Form 1041, U.S. Income Tax Return for Estates and Trusts, due by the 15th day of the

4th month after the end of your organization’s tax year.

In addition, a section 501(c)(3) organization

that loses its tax-exempt status can't receive

tax-deductible contributions and won't be identified in the IRS Business Master File extract as

eligible to receive tax-deductible contributions,

or be included in Tax-Exempt Organization

Search (Pub. 78 database).

An organization whose exemption was automatically revoked must apply for tax exemption

in order to regain its tax exemption (even if it

wasn't originally required to apply). In some situations, an organization may be able to obtain

exemption retroactive to its date of revocation.

Similarly, if the central organization with a Group

Exemption Number is automatically revoked, all

its covered subsidiaries may need to apply for

exemption as independent organizations.

For more information about automatic revocation, go to IRS.gov and select Charities &

Non-Profits and then select Reinstated? Learn

more with Reinstate Tax-Exempt Status.

Penalties

Penalties for failure to file. Generally, an exempt organization that fails to file a required return must pay a penalty of $20 a day for each

day the failure continues. The same penalty will

apply if the organization doesn't give all the information required on the return or doesn't give

the correct information.

Maximum penalty. The maximum penalty

for any one return is the smaller of $10,000 or

5% of the organization's gross receipts for the

year.

Organization with gross receipts over $1

million. For an organization that has gross receipts of over $1 million for the year, the penalty

is $100 a day up to a maximum of $50,000.

Managers. If the organization is subject to

this penalty, the IRS may specify a date by

which the return or correct information must be

supplied by the organization. Failure to comply

with this demand will result in a penalty imposed upon the manager of the organization, or

upon any other person responsible for filing a

correct return. The penalty is $10 a day for each

day that a return isn't filed after the period given

for filing. The maximum penalty imposed on all

persons with respect to any one return is

$5,000.

Penalties indexed for inflation. These

penalty provisions are indexed for inflation for

Publication 557 (1-2025)

returns required to be filed after December 31,

2014.

for more details. See also Small Business

Health Care Tax Credit.

Exception for reasonable cause. No penalty will be imposed if reasonable cause for failure to file timely can be shown.

Trust fund recovery penalty. If any person required to collect, truthfully account for, and pay

over any of these taxes willfully fails to satisfy

any of these requirements or willfully tries in any

way to evade or defeat any of them, that person

will be subject to a penalty. The penalty is equal

to the tax evaded, not collected, or not accounted for and paid over. The term person includes:

• An officer or employee of a corporation, or

• A member or employee of a partnership.

Unrelated Business

Income Tax Return

Even though your organization is recognized as

tax exempt, it still may be liable for tax on its unrelated business income. Unrelated business

income is income from a trade or business, regularly carried on, that isn't substantially related

to the charitable, educational, or other purpose

that is the basis for the organization's exemption.

If your organization has gross income of

$1,000 or more from a regularly conducted unrelated trade or business, you must file Form

990-T in addition to your required annual information return or notice. The form instructions

and IRS.gov should be consulted for electronic

filing guidance. For tax years beginning after

December 31, 2017, an organization with more

than one unrelated trade or business must compute its UBTI (unrelated business taxable income), including for purposes of determining

any net operating loss deduction, separately

with respect to each such trade or business. Organizations complete a separate Schedule A

(Form 990-T) to calculate UBTI for each of its

trades or businesses.

Estimated tax. An organization that expects to owe $500 or more in tax (including tax

on unrelated business income) is required to

make quarterly estimated tax payments. Use

Form 990-W to figure your organization's estimated tax payments. Failure to make appropriate quarterly estimated tax payments may result

in an underpayment penalty.

See Publication 598, Tax on Unrelated Business Income of Exempt Organizations for more

information on UBTI.

Employment

Tax Returns

Every employer, including an organization exempt from federal income tax that pays wages

to employees is responsible for withholding, depositing, paying, and reporting federal income

tax, social security and Medicare (FICA) taxes,

and federal unemployment tax (FUTA), unless

that employer is specifically excepted by law

from those requirements, or if the taxes clearly

don't apply.

For more information, obtain a copy of Publication 15, which summarizes the responsibilities of an employer, Publication 15-A, Publication 15-B, and Form 941.

Small Business Health Care Tax Credit. If

your small tax-exempt organization provides

health care coverage for your workers you may

qualify for the small business health care tax

credit. Go to Affordable Care Act Tax Provisions

Chapter 2

Exception. The penalty isn't imposed on

any unpaid volunteer director or member of a

board of trustees of an exempt organization if

the unpaid volunteer serves solely in an honorary capacity, doesn't participate in the

day-to-day or financial operations of the organization, and doesn't have actual knowledge of

the failure on which the penalty is imposed.

This exception doesn't apply if it results in no

one being liable for the penalty.

Certification Program for Professional Employer Organizations (CPEOs). The Tax Increase Prevention Act of 2014, enacted Dec.

19, 2014, requires the IRS to establish a voluntary certification program for professional employer organizations (PEOs). PEOs handle various payroll administration and tax reporting

responsibilities for their business clients and are

typically paid a fee based on payroll costs. For

further information, go to: IRS.gov/for-tax-pros/

basic-tools/certified-professional-employerorganization.

FICA and FUTA tax exceptions. Payments for

services performed by a minister of a church in

the exercise of the ministry, or a member of a religious order performing duties required by the

order, are generally not subject to FICA or FUTA

taxes.

FUTA tax exception. Payments for services performed by an employee of a religious,

charitable, educational, or other organization

described in section 501(c)(3) that are generally

subject to FICA taxes if the payments are $100

or more for the year, aren't subject to FUTA

taxes. However, a section 501(c)(3) organization is liable for FUTA tax when paying wages

for employees on behalf of others, examples include but are not limited to related non-section

501(c)(3) organizations, fiscal agents such as

IRC 3504, common paymaster, etc.

FICA tax exemption election. Churches

and qualified church-controlled organizations

can elect exemption from employer FICA taxes

by filing Form 8274.

To elect the exemption, Form 8274 must be

filed before the first date on which a quarterly

employment tax return would otherwise be due

from the electing organization. The organization

can make the election only if it is opposed for

religious reasons to the payment of FICA taxes.

The election applies to payments for services of current and future employees other than

services performed in an unrelated trade or

business.

Revoking the election. The election can

be revoked by the IRS if the organization fails to

file Form W-2, Wage and Tax Statement, for 2

Filing Requirements and Required Disclosures

years and fails to furnish certain information

upon request by the IRS. Such revocation will

apply retroactively to the beginning of the 2-year

period.

Definitions. For purposes of this election,

the term church means a church, a convention

or association of churches, or an elementary or

secondary school that is controlled, operated,

or principally supported by a church or by a

convention or association of churches.

The term qualified church-controlled organization means any church-controlled section

501(c)(3) tax-exempt organization, other than

an organization that both:

1. Offers goods, services, or facilities for

sale, other than on an incidental basis, to

the general public at other than a nominal

charge that is substantially less than the

cost of providing such goods, services, or

facilities; and

2. Normally receives more than 25% of its

support from the sum of governmental

sources and receipts from admissions,

sales of merchandise, performance of

services, or furnishing of facilities, in activities that aren't unrelated trades or businesses.

Effect on employees. If a church or qualified church-controlled organization has made

an election, payment for services performed for

that church or organization, other than in an unrelated trade or business, won't be subject to

FICA taxes. However, the employee, unless otherwise exempt, will be subject to self-employment tax on the income. The tax applies to income of $108.28 or more for the tax year from

that church or organization, and no deductions

for trade or business expenses are allowed

against this self-employment income.

Schedule SE (Form 1040), Self-Employment

Tax, should be attached to the employee's income tax return.

Political Organization

Income Tax Return

political

organization

that

has

TIP $25,000 ($100,000 for a qualified state

or local political organization) or more

in gross receipts for the tax year must file Form

990 or Form 990-EZ (and Schedule B of the

form), unless excepted. See Forms 990 and

990-EZ, earlier.

Political organization. A political organization

is a party, committee, association, fund, or other

organization (whether or not incorporated) organized and operated primarily for the purpose

of directly or indirectly accepting contributions

or making expenditures, or both, for an exempt

function.

Certain political organizations are required to notify the IRS that they are

CAUTION section 527 organizations. These organizations must use Form 8871. Some of

these section 527 organizations must use Form

8872 to file periodic reports with the IRS disclosing their contributions and expenditures. For

a discussion on these forms, see Reporting Requirements for a Political Organization, later.

Political organization taxable income.

Political organization taxable income is the excess of:

1. Gross income for the tax year (excluding

exempt function income) minus

2. Deductions directly connected with the

earning of gross income.

To figure taxable income, allow for a $100 specific deduction, but don't allow for the net operating loss deduction, the dividends-received deduction, and other special deductions for

corporations.

Exempt organization not a political organization. An organization exempt under section

501(c) that spends any amount for an exempt

function must file Form 1120-POL for any year

in which it has political taxable income. These

organizations must include in gross income the

lesser of:

1. The total amount of its exempt function expenditures, or

2. The organization's net investment income.

Generally, a political organization is treated as

an organization exempt from tax. Certain political organizations, however, must file an annual

income tax return, Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations, for any year they have political organization taxable income in excess of the $100

specific deduction allowed under section 527.

Exempt function. An exempt function

means influencing or attempting to influence the

selection, nomination, election, or appointment

of any individual to any federal, state, local public office or office in a political organization, or

the election of the Presidential or Vice Presidential electors, whether or not such individual

or electors are selected, nominated, elected, or

appointed. It also includes certain office expenses of a holder of public office or an office in a

political organization.

Separate fund. A section 501(c) organization can set up a separate segregated fund that

will be treated as an independent political organization. The earnings and expenditures

made by the separate fund won't be attributed

to the section 501(c) organization.

Section 501(c)(3) organizations are

precluded from, and may suffer loss of

CAUTION exemption for, engaging in any political

campaign on behalf of, or in opposition to, any

candidate for public office.

Due date. Form 1120-POL is due by the 15th

day of the 4th month after the end of the tax

year. Thus, for a calendar year taxpayer, Form

1120-POL is due on April 15 of the following

year. If any due date falls on a Saturday, Sunday, or legal holiday, the organization can file

the return on the next business day.

Form 1120-POL is not required of an

TIP exempt organization that makes expen-

ditures for political purposes if its gross

income doesn't exceed its directly connected

deductions by more than $100 for the tax year.

Chapter 2

Extension of time to file. Use Form 7004 to

request an automatic extension of time to file

Form 1120-POL. The extension will be granted

if you complete Form 7004 properly, make a

proper estimate of the tax (if applicable), file

Form 1120-POL by the due date, and pay any

tax due.

Failure to file. A political organization that

fails to file Form 1120-POL is subject to a penalty equal to 5% of the tax due for each month

(or partial month) the return is late up to a maximum of 25% of the tax due, unless the organization shows the failure was due to reasonable

cause.

For more information about filing Form

1120-POL, refer to the instructions accompanying the form.

Failure to pay on time. An organization

that doesn't pay the tax when due generally

may have to pay a penalty of 1/2 of 1% of the

unpaid tax for each month or part of a month

the tax isn't paid, up to a maximum of 25% of

the unpaid tax. The penalty won't be imposed if

the organization can show that the failure to pay

on time was due to reasonable cause.

Reporting Requirements

for a Political

Organization

Certain political organizations are required to

notify the IRS that the organization is to be treated as a section 527 political organization. The

organization is also required to periodically report certain contributions received and expenditures made by the organization. To notify the

IRS of section 527 treatment, an organization

must file Form 8871. To report contributions and

expenditures, certain tax-exempt political organizations must file Form 8872.

Form 8871

A political organization must electronically file

Form 8871 to notify the IRS that it is to be treated as a section 527 organization. However, an

organization isn't required to file Form 8871 if:

• It reasonably expects its annual gross receipts to always be less than $25,000.

• It is a political committee required to report

under the Federal Election Campaign Act

of 1971 (FECA) (52 U.S.C. section 30101

et seq.).

• It is a state or local candidate committee.

• It is a state or local committee of a political

party.

All other political organizations are required to

file Form 8871.

An organization must provide on Form 8871:

1. Its name and address (including any business address, if different) and its electronic mailing address;

2. Its purpose;

3. The names and addresses of its officers,

highly compensated employees, contact

person, custodian of records, and

members of its board of directors;

Filing Requirements and Required Disclosures

Publication 557 (1-2025)

4. The name and address of, and relationship to, any related entities (within the

meaning of section 168(h)(4)); and

$10,000 ($50,000 in the case of a corporation)

or imprisoned for not more than 1 year or both.

5. Whether it intends to claim an exemption

from filing Form 8872, Form 990, or Form

990-EZ.

Employer identification number. If your

organization needs an EIN, you can apply for

one online. Click on the Employer ID Numbers

(EINs) link at IRS.gov/businesses/small.

If you previously applied for an EIN and

haven't yet received it, or you are unsure

whether you have an EIN, please call our

toll-free customer account services number,

1-877-829-5500, for assistance.

Due dates. The initial Form 8871 must be filed

within 24 hours of the date on which the organization was established. If there is a material

change, an amended Form 8871 must be filed

within 30 days of the material change. When the

organization terminates its existence, it must file

a final Form 8871 within 30 days of termination.

If the due date falls on a Saturday, Sunday,

or legal holiday, the organization can file on the

next business day.

How to file. An organization must file Form

8871 electronically via the IRS Internet website

at IRS.gov/polorgs.

Form 8453-X, Political Organization Declaration for Electronic Filing of Notice of Section 527 Status. After electronically submitting

the initial Form 8871, the political organization

must print, sign, and mail Form 8453-X to the

IRS. Upon receipt of the Form 8453-X, the IRS

will send the organization a username and

password that must be used to file an amended

or final Form 8871 or to electronically file Form

8872.

Penalties

Failure to file. An organization that is required to file Form 8871, but fails to do so on a

timely basis, won't be treated as a tax-exempt

section 527 organization for any period before

the date Form 8871 is filed. Also, the taxable income of the organization for that period will include its exempt function income (including

contributions received, membership dues, and

political fundraising receipts) minus any deductions directly connected with the production of

that income.

Failure to file an amended Form 8871 will

cause the organization to not be treated as a

tax-exempt section 527 organization. If an organization is treated as not being a tax-exempt

section 527 organization, the taxable income of

the organization will be determined by considering any exempt function income and deductions

during the period beginning on the date of the

material change and ending on the date that the

amended Form 8871 is filed.

The tax is computed by multiplying the organization's taxable income by the highest corporate tax rate.

Fraudulent returns. Any individual or corporation that willfully delivers or discloses to the

IRS any list, return, account, statement or other

document known to be fraudulent or false as to

any material matter will be fined not more than

Publication 557 (1-2025)

Waiver of penalties. The IRS may waive

any additional tax assessed on an organization

for failure to file Form 8871 if the failure was due

to reasonable cause and not willful neglect.

Additional information. For more information

on Form 8871, see the form and its instructions.

For a discussion on the public inspection requirements for the form, see Public Inspection

of Exemption Applications, Annual Returns, and

Political Organization Reporting Forms, later.

Form 8872

Every tax-exempt section 527 political organization that accepts a contribution or makes an expenditure, for an exempt function during the calendar year, must file Form 8872 except:

• A political organization that isn't required to

file Form 8871 (discussed earlier).

• A political organization that is subject to tax

on its income because it didn't file or

amend Form 8871.

• A qualified state or local political organization (QSLPO), discussed below.

All other tax-exempt section 527 organizations

that accept contributions or make expenditures

for an exempt function are required to file Form

8872.

Qualified state or local political organization. A state or local political organization

may be a QSLPO if:

1. All of its political activities relate solely to

state or local public office (or office in a

state or local political organization).

2. It is subject to a state law that requires it to

report (and it does report) to a state

agency information about contributions

and expenditures that is similar to the information that the organization would otherwise be required to report to the IRS.

Due dates. The due dates for filing Form 8872

vary depending on whether the form is due for a

reporting period that occurs during a calendar

year in which a regularly scheduled election is

held, or any other calendar year (a nonelection

year).

If the due date falls on a Saturday, Sunday,

or legal holiday, the organization can file on the

next business day.

Election year filing. In election years, Form

8872 must be filed on either a quarterly or a

monthly basis. Both a pre-election report and a

post-election report are also required to be filed

in an election year. An election year is any year

in which a regularly scheduled general election

for federal office is held (an even-numbered

year).

Nonelection year filing. In nonelection years,

the form must be filed on a semiannual or

monthly basis. A complete listing of these filing

periods are in the Form 8872 instructions. A

nonelection year is any odd-numbered year.

How to file. An organization must file Form

8872 electronically if reporting on periods after

2019. For reporting on periods before 2020,

Form 8872 can be filed either electronically or

by mail, but organizations that have, or expect

to have, contributions or expenditures of

$50,000 or more for the year are required to file

electronically.

Electronic filing. File electronically via the

IRS internet website at IRS.gov/polorgs. You will

need a user ID and password to electronically

file Form 8872. Organizations that have completed the electronic filing of Form 8871 and submitted a completed and signed Form 8453-X

will receive a username and password in the

mail.

Organizations that have completed the electronic filing of Form 8871, but haven't received

their user ID and password can request one by

writing to the following address:

Internal Revenue Service

Attn: Request for 8872 Password

Mail Stop 6273

Ogden, UT 84201

3. The state agency and the organization

make the reports publicly available.

4. No federal candidate or office holder:

a. Controls or materially participates in

the direction of the organization,

b. Solicits contributions for the organization, or

c. Directs the disbursements of the organization.

Information required on Form 8872. If an organization pays an individual $500 or more for

the calendar year, the organization is required

to disclose the individual's name, address, occupation, employer, amount of the expense, the

date the expense was paid, and the purpose of

the expense on Form 8872.

If an organization receives contributions of

$200 or more from one contributor for the calendar year, the organization must disclose the donor's name, address, occupation, employer,

and the date the contributions were made.

For additional information that is required,

see Form 8872.

Chapter 2

Lost username and password. If you

have forgotten or misplaced the username and

password issued to your organization after you

filed your initial Form 8871, send a letter requesting a new username and password to the

address under Electronic filing. You can also fax

your request to (801) 620-3249. It may take 3-6

weeks for your new username and password to

arrive, as they will be mailed to the organization.

Penalty

A penalty will be imposed if the organization is

required to file Form 8872 and it:

• Fails to file the form by the due date, or

• Files the form but fails to report all of the information required or reports incorrect information.

The penalty is 21% for tax years beginning

after December 31, 2017 (35% for tax years beginning before December 31 2017), of the total

Filing Requirements and Required Disclosures

amount of contributions and expenditures to

which a failure relates.

Fraudulent returns. Any individual or corporation that willfully delivers or discloses any

list, return, account, statement, or other document known to be fraudulent or false as to any

material matter will be fined not more than

$10,000 ($50,000 in the case of a corporation),

or imprisoned for not more than 1 year, or both.

Waiver of penalties. The IRS may waive

any additional tax assessed on an organization

for failure to file Form 8872 if the failure was due

to reasonable cause and not willful neglect.

Donee Information

Return

Dispositions of donated property. If an organization receives charitable deduction property and within 3 years sells, exchanges, or otherwise disposes of the property, the

organization must file Form 8282, Donee

Information Return. However, an organization

isn't required to file Form 8282 if:

• The property is valued at $500 or less, or

• The property is consumed or distributed for

charitable purposes.

Form 8282 must be filed with the IRS within

125 days after the disposition. Additionally, a

copy of Form 8282 must be given to the donor.

If the organization fails to file the required information return, penalties may apply.

Charitable deduction property. This is

any property (other than money or publicly traded securities) for which the donee organization

signed an appraisal summary or Form 8283,

Noncash Charitable Contributions.

Publicly traded securities. These are securities for which market quotations are readily

available on an established securities market as

of the date of the contribution.

Appraisal summary. If the value of the donated property exceeds $5,000, the donor must

get a qualified appraisal for contributions of

property, see Exceptions, below.

Exceptions. A written appraisal isn't needed if the property is:

• Nonpublicly traded stock of $10,000 or

less;

• A vehicle (including a car, boat, or airplane), if your deduction for the vehicle is

limited to the gross proceeds from its sale;

• Intellectual property;

• Certain securities considered to have market quotations readily available (see Regulations section 1.170A-13(c)(7)(xi)(B));

• Inventory and other property donated by a

corporation that are qualified contributions

for the care of the ill, the needy, or infants,

within the meaning of section 170(e)(3)(A),

• Any donation of stock in trade, inventory, or

property held primarily for sale to customers in the ordinary course of your trade or

business.

The donee organization isn't a qualified appraiser for the purpose of valuing the donated

property. For more information, get Publication

561, Determining the Value of Donated Property.

Form 8283. For noncash donations over

$5,000, the donor must attach Form 8283 to the

tax return to support the charitable deduction.

The donee must sign Part IV of Section B, Form

8283 unless publicly traded securities are donated. The person who signs for the donee must

be an official authorized to sign the donee's tax

or information returns, or a person specifically

authorized to sign by that official. The signature

doesn't represent concurrence in the appraised

value of the contributed property. A signed acknowledgment represents receipt of the property described on Form 8283 on the date specified on the form. The signature also indicates

knowledge of the information reporting requirements on dispositions, as previously discussed.

A copy of Form 8283 must be given to the donee.

Information Provided to

Donors

In some situations, a donor must obtain certain

information from a donee organization to obtain

a deduction for a charitable contribution. In

other situations, the donee organization is required to provide information to the donor.

A charitable organization must give a donor

a disclosure statement for a quid pro quo contribution over $75. (See Disclosure statement.,

later) This is a payment a donor makes to a

charity partly as a contribution and partly for

goods or services. See Quid pro quo contribution below for an example.

Failure to make the required disclosure may

result in a penalty to the organization. A donor

can't deduct a charitable contribution of $250 or

more unless the donor has a written acknowledgment from the charitable organization.

In certain circumstances, an organization

may be able to meet both of these requirements

with the same written document.

Disclosure of

Quid Pro Quo Contributions

A charitable organization must provide a written

disclosure statement to donors of a quid pro

quo contribution over $75.

payment isn't more than $75, a written statement must be filed because the total payment is

more than $75. If your organization fails to disclose quid pro quo contributions, the organization may be subject to a penalty.

Disclosure statement. The required written

disclosure statement must:

1. Inform the donor that the amount of the

contribution that is deductible for federal

income tax purposes is limited to the excess of any money (and the value of any

property other than money) contributed by

the donor over the fair market value of

goods or services provided by the charity,

and

2. Provide the donor with a good faith estimate of the fair market value of the goods

or services that the donor received.

The charity must furnish the statement in connection with either the solicitation or the receipt

of the quid pro quo contribution. If the disclosure statement is furnished in connection with a

particular solicitation, it isn't necessary for the

organization to provide another statement when

it actually receives the contribution.

No disclosure statement is required if any of

the following are true.

1. The goods or services given to a donor

have insubstantial value, as described in

Rev. Proc. 90-12, 1990-1 C.B. 471, Rev.

Proc. 90-12, and Rev. Proc. 92-49, 1992-1

C.B. 507 (as adjusted for inflation), Rev.

Proc. 92-49.

2. There is no donative element involved in a

particular transaction with a charity (for example, there is generally no donative element involved in a visitor's purchase from

a museum gift shop).

3. There is only an intangible religious benefit

provided to the donor. The intangible religious benefit must be provided to the donor by an organization organized exclusively for religious purposes, and must be

of a type that generally isn't sold in a commercial transaction outside the donative

context. For example, a donor who, for a

payment, is granted admission to a religious ceremony for which there is no admission charge is provided an intangible

religious benefit. A donor isn't provided intangible religious benefits for payments

made for tuition for education leading to a

recognized degree, travel services, or consumer goods.

Quid pro quo contribution. A contribution

made by a donor in exchange for goods or services is known as a quid pro quo contribution.

Your charitable organization must provide the

donor a written statement informing the donor of

the fair market value of the items or services it

provided in exchange for the contribution. Generally, a written statement is required for each

payment, whenever the contribution portion is

over $75.

4. The donor makes a payment of $75 or less

per year and receives only annual membership benefits that consist of:

Example. If a donor gives your charity $100

and receives a concert ticket valued at $40, the

donor has made a quid pro quo contribution. In

this example, the charitable part of the payment

is $60. Even though the deductible part of the

b. Admission to events that are open

only to members and the cost per person of which is within the limits for

low-cost articles described in Rev.

Chapter 2

Filing Requirements and Required Disclosures

a. Any rights or privileges (other than the

right to purchase tickets for college

athletic events) that the taxpayer can

exercise often during the membership

period, such as free or discounted admissions or parking or preferred access to goods or services; or

Publication 557 (1-2025)

Proc. 90-12 (as adjusted for inflation),

Rev. Proc. 90-12.

Good faith estimate of fair market value

(FMV). An organization can use any reasonable method to estimate the FMV of goods or

services it provided to a donor, as long as it applies the method in good faith.

The organization can estimate the FMV of

goods or services that generally aren't commercially available by using the FMV of similar or

comparable goods or services. Goods or services may be similar or comparable even if they

don't have the unique qualities of the goods or

services being valued.

Example 1. A charity provides a 1-hour tennis lesson with a tennis professional for the first

$500 payment it receives. The tennis professional provides 1-hour lessons on a commercial

basis for $100. A good faith estimate of the lesson's FMV is $100.

Example 2. For a payment of $50,000, a

museum allows a donor to hold a private event

in a room of the museum. A good faith estimate

of the FMV of the right to hold the event in the

museum can be made by using the cost of renting a hotel ballroom with a capacity, amenities,

and atmosphere comparable to the museum

room, even though the hotel ballroom lacks the

unique art displayed in the museum room. If the

hotel ballroom rents for $2,500, a good faith estimate of the FMV of the right to hold the event

in the museum is $2,500.

Example 3. For a payment of $1,000, a

charity provides an evening tour of a museum

conducted by a well-known artist. The artist

doesn't provide tours on a commercial basis.

Tours of the museum normally are free to the

public. A good faith estimate of the FMV of the

evening museum tour is $0 even though it is

conducted by the artist.

Penalty for failure to disclose. A penalty is

imposed on a charity that doesn't make the required disclosure of a quid pro quo contribution

of more than $75. The penalty is $10 per contribution, not to exceed $5,000 per fundraising

event or mailing. The charity can avoid the penalty if it can show that the failure was due to reasonable cause.

Acknowledgment of

Charitable Contributions of

$250 or More

A donor can deduct a charitable contribution of

$250 or more only if the donor has a written acknowledgment from the charitable organization.

The donor must get the acknowledgment by the

earlier of:

1. The date the donor files the original return

for the year the contribution is made, or

2. The due date, including extensions, for filing the return.

The donor is responsible for requesting and obtaining the written acknowledgment from the

donee. A charitable organization that receives a

payment made as a contribution is treated as

the donee organization for this purpose even if

Publication 557 (1-2025)

the organization (according to the donor's instructions or otherwise) distributes the amount

received to one or more charities.

Quid pro quo contribution. If the donee provides goods or services to the donor in exchange for the contribution (a quid pro quo contribution), the acknowledgment must include a

good faith estimate of the value of the goods or

services. See Disclosure of Quid Pro Quo Contributions, earlier.

Form of acknowledgment. Although there is

no prescribed format for the written acknowledgment, it must provide enough information to

substantiate the amount of the contribution. For

more information, see Publication 1771, Charitable Contributions – Substantiation and Disclosure Requirements.

Cash contributions. To deduct a contribution of cash, a check, or other monetary gift (regardless of the amount), a donor must maintain

a bank record or a written communication from

the donee organization showing the donee's

name, date, and amount of the contribution. In

the case of a lump-sum contribution (rather than

a contribution by payroll deduction) made

through the Combined Federal Campaign or a

similar program such as a United Way Campaign, the written communication must include

the name of the donee organization that is the

ultimate recipient of the charitable contribution.

Contributions by payroll deduction. An

organization may substantiate an employee's

contribution by deduction from its payroll by:

• A pay stub, Form W-2, or other document

showing a contribution to a donee organization, together with

• A pledge card or other document from the

donee organization that shows its name.

For contributions of $250 or more, the document must state that the donee organization

provides no goods or services for any payroll

contributions. The amount withheld from each

payment of wages to a taxpayer is treated as a

separate contribution.

Acknowledgment of Vehicle

Contribution

If an exempt organization receives a contribution of a qualified vehicle with a claimed value of

more than $500, the donee organization is required to provide a contemporaneous written

acknowledgment to the donor. The donee organization can use a completed Form 1098-C,

Contributions of Motor Vehicles, Boats, and Airplanes, for the contemporaneous written acknowledgment. See section 3.03 of Notice

2005-44, 2005-25 I.R.B. 1287 for guidance on

the information that must be included in a contemporaneous written acknowledgment and the

deadline for furnishing the acknowledgment to

the donor.

Any donee organization that provides a contemporaneous written acknowledgment to a donor is required to report to the IRS the information contained in the acknowledgment. The

report is due by February 28 (March 31 if filing

electronically) of the year following the year in

which the donee organization provides the

Chapter 2

acknowledgment to the donor. The organization

must file the report on Copy A of Form 1098-C.

An organization that files Form 1098-C on

paper should send it with Form 1096, Annual

Summary and Transmittal of U.S. Information

Returns. See the Instructions for Form 1096 for

the correct filing location.

An organization that is required to file 250 or

more Forms 1098-C during the calendar year

must file the forms electronically or magnetically. Specifications for filing Form 1098-C electronically or magnetically can be found in Publication 1220, Specifications for Filing Forms

1097, 1098, 1099, 3921, 3922, 5498, 8935, and

W-2G Electronically at Pub. 1220.

Acknowledgment

For a contribution of a qualified vehicle

with a claimed value of $500 or less,

CAUTION don't file Form 1098-C. However, you

can use it as the contemporaneous written acknowledgment under section 170(f)(8) by providing the donor with Copy C only. See the Instructions for Form 1098-C.

Generally, the organization should complete

Form 1098-C as the written acknowledgment to

the donor and the IRS. The contents of the acknowledgment depend upon whether the organization:

• Sells a qualified vehicle without any significant intervening use or material improvement,

• Intends to make a significant intervening

use of or material improvement to a qualified vehicle prior to sale, or

• Sells a qualified vehicle to a needy individual at a price significantly below fair market

value, or a gratuitous transfer to a needy

individual in direct furtherance of a charitable purpose of the organization of relieving

the poor and distressed or the underprivileged who are in need of a means of transportation.

For more information on the acknowledgment, see Notice 2005-44.

Material improvements or significant intervening use. To constitute significant intervening use, the organization must actually use the

vehicle to substantially further the organization's

regularly conducted activities, and the use must

be significant, not incidental. Factors in determining whether a use is a significant intervening

use depend on the nature, extent, frequency,

and duration. For this purpose, use includes

providing transportation on a regular basis for a

significant period of time or significant use directly related to training in vehicle repair. Use

doesn't include the use of a vehicle to provide

training in business skills, such as marketing or

sales. Examples of significant use include:

• Driving a vehicle every day for 1 year to deliver meals to needy individuals, if delivering meals is an activity regularly conducted

by the organization.

• Driving a vehicle for 10,000 miles over a

1-year period to deliver meals to needy individuals, if delivering meals is an activity

regularly conducted by the organization.

Filing Requirements and Required Disclosures

Material improvements include major repairs

and additions that improve the condition of the

vehicle in a manner that significantly increases

the value. To be a material improvement, the improvement can't be funded by an additional payment to the organization from the donor of the

vehicle. Material improvements don't include

cleaning, minor repairs, routine maintenance,

painting, removal of dents or scratches, cleaning or repair of upholstery, and installation of

theft deterrent devices.

the time of the contribution that the donor intends to treat the contribution as qualified intellectual property contribution for purposes of

sections 170(m) and 6050L.

Penalties. If your charitable organization receives contributions of used motor vehicles,

boats, and airplanes valued over $500, it may

be subject to a penalty if it knowingly:

• Fails to furnish an acknowledgement in a

timely manner, showing the required information; or

• Furnishes a false or fraudulent acknowledgement of the contribution.

Form 8899. Form 8899, Notice of Income from

Donated Intellectual Property, is used by a donee to report net income from qualified intellectual property to the donor of the property and to

the IRS and is due by the last day of the first full

month following the close of the donee’s tax

year. This form must be filed for each tax year of

the donee in which the donated property produces net income, but only if all or part of that tax

year occurs during the 10-year period beginning

on the date of the contribution and that tax year

doesn't begin after the expiration of the legal life

of the donated property.

CAUTION

Other penalties may apply. See Part O

in the current General Instructions for

Certain Information Returns.

An acknowledgment containing a certification will be presumed to be false or fraudulent if

the qualified vehicle is sold to a buyer other

than a needy individual without a significant intervening use or material improvement within 6

months of the date of the contribution.

If a charity sells a donated vehicle at auction, the IRS won't accept as substantiation an

acknowledgment from the charity stating that

the vehicle is to be transferred to a needy individual for significantly below fair market value.

Vehicles sold at auction aren't sold at prices significantly below fair market value, and the IRS

won't treat vehicles sold at auction as qualifying

for this exception.

The penalty for a false or fraudulent acknowledgment where the donee certifies that

the vehicle won't be transferred for money, other

property, or services before completion of material improvements or significant intervening use

or the donee certifies that the vehicle is to be

transferred to a needy individual for significantly

below fair market value in furtherance of the donee's charitable purpose is the larger of $5,000

or the claimed value of the vehicle multiplied by

39.6%.

The penalty for an acknowledgment relating

to a qualified vehicle being sold in an arm's

length transaction to an unrelated party is the

larger of the gross proceeds from the sale or the

sales price stated in the acknowledgment multiplied by 39.6%.

Qualified donee income. Qualified donee income is any net income received by or accrued

to the donee that is properly allocable to the

qualified intellectual property for the tax year of

the donee which ends within or with the tax year

of the donor. Income isn't treated as allocated to

qualified intellectual property if it is received or

accrued after the earlier of the expiration of the

legal life of the qualified intellectual property, or

the 10-year period beginning with the date of

the contribution.

Qualified intellectual property. Qualified intellectual property is generally any patent, copyright, trademark, trade name, trade secret,

know-how, software or similar property, or applications or registrations of such property (other

than property contributed to or for the use of a

private foundation, as defined in section 509(a)

that isn't described in section

170(b)(1)(F)). See Exceptions below.

Exceptions. The following property isn't

considered qualified intellectual property for

purposes of the additional charitable deduction:

1. Computer software that is readily available

for purchase by the general public, is subject to a nonexclusive license, and has not

been substantially modified.

2. A copyright held by a taxpayer:

• Whose personal efforts created the property, or

Qualified Intellectual

Property

• In whose hands the basis of the property is

A taxpayer who contributes qualified intellectual

property to a charity may be entitled to a charitable deduction, in addition to any initial deduction allowed in the year of contribution. The additional deduction is based on a specified

percentage of the qualified donee income with

respect to the qualified intellectual property. To

qualify for the additional charitable deduction,

the donor must provide notice to the donee at

Every donee organization described in section 170(c) (except a private foundation, as defined in section 509(a), that isn't described in

section 170(b)(1)(F)) that receives or accrues

net income from a charitable gift of qualified intellectual property must file Form 8899.

determined, for purposes of determining

gain from a sale or exchange, in whole or

in part by reference to the basis of the

property in the hands of a taxpayer whose

personal efforts created the property.

Report of Cash Received

An exempt organization that receives, in the

course of its activities, more than $10,000 cash

in one transaction (or two or more related transactions) that isn't a charitable contribution must

report the transaction to the IRS on Form 8300,

Chapter 2

Report of Cash Payments Over $10,000 Received in a Trade or Business.

Public Inspection

of Exemption

Applications, Annual

Returns, and Political

Organization Reporting

Forms

The general rule under section 6103 is that returns and return information of all taxpayers are

confidential except as authorized under the

Code. Section 6104 provides exceptions to the

general rule of confidentiality for disclosure of

certain information about exempt organizations.

In addition, included in this section is a discussion on the public inspection requirements

for political organizations filing Forms 8871 and

8872.

Annual Information Return

An exempt organization must make available for

public inspection, upon request and without

charge, a copy of its original and amended annual information returns. Each information return must be made available from the date it is

required to be filed (determined with regard to

any extensions), or is actually filed, whichever is

later. An original return doesn't have to be made

available if more than 3 years have passed from

the date the return was required to be filed (including any extensions) or was filed, whichever

is later. An amended return doesn't have to be

made available if more than 3 years have

passed from the date it was filed.

An annual information return includes an exact copy of the return (Forms 990, 990-EZ,

990-BL, 990-PF, 990-T, or 1065), and amended

return, if any, and all schedules, attachments,

and supporting documents filed with the IRS.

An annual information return doesn't include:

• Schedule A of Form 990-BL,

• Schedule K-1 of Form 1065, or

• Form 1120-POL.

In the case of a tax-exempt organization

other than a private foundation, an annual information return doesn't include the names and

addresses of contributors to the organization.

Form 990-T. All section 501(c)(3) organizations that file Form 990-T must

CAUTION make the return public, regardless of

whether the organization is otherwise subject to

the disclosure requirements of section 6104.

For example, although churches aren't required

to file Form 1023 or Form 990 with the IRS, they

must file the Form 990-T with the IRS to report

unrelated business taxable income. Thus,

churches must disclose Form 990-T to the public.

State colleges and universities that have

been recognized by the IRS as exempt under

section 501(a) as organizations described in

Filing Requirements and Required Disclosures

Publication 557 (1-2025)

section 501(c)(3) must disclose Form 990-T to

the public. However, state colleges and universities that are subject to tax under section

511(a) solely by virtue of section 511(a)(2)(B)

and that haven't been recognized by the IRS as

exempt under section 501(a) as organizations

described in section 501(c)(3) aren't required to

make their Forms 990-T public.

Public Inspection of

Exemption Application

An exempt organization must also make available for public inspection, without charge, its application for tax-exempt status. An application

for tax exemption includes the application form

(such as Forms 1023 or 1024), all documents

and statements the IRS requires the organization to file with the form, any statement or other

supporting document submitted by an organization in support of its application, and any letter

or other document issued by the IRS concerning the application.

The application for exemption doesn't include:

• Any application from an organization that

isn't yet recognized as exempt;

• Any material that is required to be withheld

from public inspection, see Material required to be withheld from public inspection, next;

• In the case of a tax-exempt organization

other than a private foundation, the names

and addresses of contributors to the organization; or

• Any applications filed before July 15, 1987,

if the organization didn't have a copy of the

application on July 15, 1987.

If there is no prescribed application form,

see Regulations section 301.6104(d)-1(b)(3)(ii)

for a list of the documents that must be made

available.

Material required to be withheld from

public inspection. Material that is required to

be withheld from public inspection includes:

• Trade secrets, patents, processes, styles

of work, or apparatus for which withholding

was requested and granted;

• National defense material;

• Unfavorable rulings or determination letters

issued in response to applications for tax

exemption;

• Rulings or determination letters revoking or

modifying a favorable determination letter;

• Technical advice memoranda relating to a

disapproved application for tax exemption

or the revocation or modification of a favorable determination letter;

• Any letter or document filed with or issued

by the IRS relating to whether a proposed

or accomplished transaction is a prohibited

transaction under section 503; and

• Any other letter or document filed with or

issued by the IRS which, although it relates

to an organization's tax-exempt status as

an organization described in section 501(c)

or 501(d), doesn't relate to that organization's application for tax exemption.

Time, place, and manner restrictions. The

annual returns and exemption application must

be made available for inspection, without

Publication 557 (1-2025)

charge, at the organization's principal, regional,

and district offices during regular business

hours. The organization can have an employee

present during inspection, but must allow the individual to take notes freely and to photocopy at

no charge if the individual provides the photocopying equipment. Generally, regional and district offices are those that have paid employees

who together are normally paid for at least 120

hours a week.

If the organization doesn't maintain a permanent office, it must make its application for tax

exemption and its annual information returns

available for inspection at a reasonable location

of its choice. It must permit public inspection

within a reasonable amount of time after receiving a request for inspection (normally not more

than 2 weeks) and at a reasonable time of day.

At its option, it can mail, within 2 weeks of receiving the request, a copy of its application for

tax exemption and annual information returns to

the requester in lieu of allowing an inspection.

The organization can charge the requester for

copying and actual postage costs only if the requester consents to the charge.

An organization that has a permanent office,

but has no office hours or very limited hours

during certain times of the year, must make its

documents available during those periods when

office hours are limited or not available as

though it were an organization without a permanent office.

Furnishing copies. An exempt organization

must also provide a copy of all, or any specific

part or schedule, of its three most recent annual

information returns and/or exemption application to anyone who requests a copy either in

person or in writing at its principal, regional, or

district office during regular business hours. If

the individual made the request in person, the

copy must be provided on the same business

day the request is made unless there are unusual circumstances. Unusual circumstances

are

defined

Regulations

section

301.6104(d)-1(d)(1)(ii).

The organization must honor a written request for a copy of documents or specific parts

or schedules of documents that are required to

be disclosed. However, this rule only applies if

the request:

• Is addressed to the exempt organization's

principal, regional, or district office;

• Is sent to that address by mail, electronic

mail (e-mail), facsimile (fax), or a private

delivery service approved by the IRS; and

• Gives the address to where the copy of the

document should be sent.

The organization must mail the copy within

30 days from the date it receives the request.

The organization can request payment in advance and must then provide the copies within

30 days from the date it receives payment.

Fees for copies. The organization can

charge a reasonable fee for providing copies. It

can charge no more for the copies than the per

page rate the IRS charges for providing copies.

The IRS can't charge more for copies than the

fees listed in the Freedom of Information Act

(FOIA) fee schedule. Although the IRS charges

no fee for the first 100 pages, the organization

can charge a fee for all copies. For noncommercial requesters, the FOIA schedule currently

Chapter 2

provides a rate of $0.10 per page for black and

white pages, and $0.20 per page for color pages. The organization can also charge the actual postage costs it pays to provide the copies.

Regional and district offices. Generally, the

same rules regarding public inspection and providing copies of applications and annual information returns that apply to a principal office of

an exempt organization also apply to its regional and district offices. However, a regional

or district office isn't required to make its annual

information return available for inspection or to

provide copies until 30 days after the date the

return is required to be filed (including any extensions) or is actually filed, whichever is later.

Local and subordinate organizations. A local or subordinate organization is an exempt organization that didn't file its own application for

tax exemption because it is covered by a group

exemption letter. Generally, a local or subordinate organization of an exempt organization

must, upon request, make available for public

inspection, or provide copies of:

1. The application submitted to the IRS by

the central or parent organization to obtain

the group exemption letter, and

2. Those documents which were submitted

by the central or parent organization to include the local or subordinate organization

in the group exemption letter.

However, if the central or parent organization

submits to the IRS a list or directory of local or

subordinate organizations covered by the group

exemption letter, the local or subordinate organization is required to provide only the application for the group exemption ruling and the pages of the list or directory that specifically refer

to it.

The local or subordinate organization must

permit public inspection or comply with a request for copies made in person, within a reasonable amount of time (normally not more than

2 weeks) after receiving a request made in person for public inspection or copies and at a reasonable time of day. In lieu of allowing an inspection, the local or subordinate organization

can mail a copy of the applicable documents to

the person requesting inspection within the

same time period. In that case, the organization

can charge the requester for copying and actual

postage costs only if the requester consents to

the charge. If the local or subordinate organization receives a written request for a copy of its

application for exemption, it must fulfill the request in the time and manner specified earlier.

The requester has the option of requesting

from the central or parent organization, at its

principal office, inspection or copies of the application for group exemption and the material

submitted by the central or parent organization

to include a local or subordinate organization in

the group ruling. If the central or parent organization submits to the IRS a list or directory of local or subordinate organizations covered by the

group exemption letter, it must make the list or

directory available for public inspection, but it is

required to provide copies only of those pages

of the list or directory that refer to particular local or subordinate organizations specified by

the requester. The central or parent

Filing Requirements and Required Disclosures

organization must fulfill such requests in the

time and manner specified earlier.

A local or subordinate organization that

doesn't file its own annual information return

(because it is affiliated with a central or parent

organization that files a group return) must, on

request, make available for public inspection, or

provide copies of, the group returns filed by the

central or parent organization. However, if the

group return includes separate schedules for

each local or subordinate organization included

in the group return, the local or subordinate organization receiving the request can omit any

schedules relating only to other organizations

included in the group return. The local or subordinate organization must permit public inspection, or comply with a request for copies made

in person, within a reasonable amount of time

(normally not more than 2 weeks) after receiving a request made in person for public inspection or copies and at a reasonable time of day.

In lieu of allowing an inspection, the local or

subordinate organization can mail a copy of the

applicable documents to the person requesting

inspection within the same time period. In this

case, the organization can charge the requester

for copying and actual postage costs only if the

requester consents to the charge. If the local or

subordinate organization receives a written request for a copy of its annual information return,

it must fulfill the request by providing a copy of

the group return in the time and manner specified earlier. The requester has the option of requesting from the central or parent organization,

at its principal office, inspection or copies of

group returns filed by the central or parent organization. The central or parent organization

must fulfill such requests in the time and manner specified earlier.

If an organization fails to comply, it may be liable for a penalty. See Penalties, later.

Making applications and annual information returns widely available. An exempt organization doesn't have to comply with requests

for copies of its annual information returns or

exemption application if it makes them widely

available. However, making these documents

widely available doesn't relieve the organization

from making its documents available for public

inspection.

The organization can make its application

and annual information returns widely available

by posting the application and annual information returns on the Internet. For the rules to follow so that the Internet posting will be considered widely available, see Regulations section

301.6104(d)-2(b).

If the organization has made its application

for tax exemption and/or annual information returns widely available, it must inform any individual requesting a copy where the documents are

available, including the website address on the

Internet, if applicable. If the request is made in

person, the notice must be provided immediately. If the request is made in writing, the notice

must be provided within 7 days.

Harassment campaign. If the tax-exempt organization is the subject of a harassment campaign, the organization may not have to fulfill requests for information. For more information,

see Regulations section 301.6104(d)-3.

Political Organization

Reporting Forms

Forms 8871 and 8872 (discussed earlier under

Reporting Requirements for a Political Organization) are open to public inspection.

Form 8871. Form 8871 (including any supporting papers), and any letter or other document the IRS issues with regard to Form 8871,

are open to public inspection online at IRS.gov/

polorgs.

Form 8872. Form 8872 (including Schedules A and B) are open to public inspection online at IRS.gov/polorgs.

Electronically filed Forms 8871 and 8872 are

available online 48 hours after the form has

been filed. Forms 8872 that are filed by mail are

available online after being imaged by the IRS.

These forms are considered widely available if

you provide the online address to the requester.

In addition, your organization must make a copy

of these materials available for public inspection

during regular business hours at the organization’s principal office and at each of its regional

or district offices having at least three paid employees.

Penalties

The penalty for failure to allow public inspection

of annual returns is $20 for each day the failure

continues. The maximum penalty on all persons

for failures involving any one return is $10,000.

The penalty for failure to allow public inspection of exemption applications is $20 for each

day the failure continues.

The penalty for willful failure to allow public

inspection of a return or exemption application

is $5,000 for each return or application. The

penalty also applies to a willful failure to provide

copies.

The penalty for failure to allow public inspection of a political organization's section 527 notice (Form 8871) is $20 for each day the failure

continues.

The penalty for failure to allow public inspection of a section 527 organization's contributions and expenditures report (Form 8872) is

$20 for each day the failure continues. The

maximum penalty on all persons for failures involving any one report is $10,000.

Required Disclosures

Certain exempt organizations must disclose to

the IRS or the public certain information about

their activities. Generally, an organization discloses this information by entering it on the appropriate lines of its annual return. In addition,

there are disclosure requirements for:

• Solicitation of nondeductible contributions,

• Sales of information or services that are

available free from the government,

• Dues paid to the organization that aren't

deductible because they are used for lobbying or political activities, and

Chapter 2

• Prohibited tax shelter transactions.

Solicitation of Nondeductible

Contributions

Solicitations for contributions or other payments

by certain exempt organizations (including lobbying groups and political action committees)

must include a statement that payments to

those organizations aren't deductible as charitable contributions for federal income tax purposes. The statement must be included in the

fundraising solicitation and be conspicuous and

easily recognizable.

Organizations subject to requirements. An

organization must follow these disclosure requirements if it is exempt under section 501(c),

other than section 501(c)(1), or under section

501(d), unless the organization is eligible to receive tax deductible charitable contributions under section 170(c). These requirements must

be followed by, among others:

1. Social welfare organizations (section

501(c)(4));

2. Labor unions (section 501(c)(5));

3. Trade associations (section 501(c)(6));

4. Social clubs (section 501(c)(7));

5. Fraternal organizations (section 501(c)(8)

and 501(c)(10)) (however, fraternal organizations described in section 170(c)(4)

must follow these requirements only for

solicitations for funds that are to be used

for noncharitable purposes not described

in section 170(c)(4));

6. Any political organization described in

section 527(e), including political campaign committees and political action

committees; and

7. Any organization not eligible to receive

tax-deductible contributions if the organization or a predecessor organization was,

at any time during the 5-year period ending on the date of the fundraising solicitation, an organization of the type to which

this disclosure requirement applies.

Fundraising solicitation. This disclosure requirement applies to a fundraising solicitation if

all of the following are true.

1. The organization soliciting the funds normally has gross receipts over $100,000

per year.

2. The solicitation is part of a coordinated

fundraising campaign that is soliciting

more than 10 persons during the year.

3. The solicitation is made in written or printed form, by television or radio, or by telephone.

Penalties. Failure by an organization to make

the required statement will result in a penalty of

$1,000 for each day the failure occurred, up to a

maximum penalty of $10,000 for a calendar

year. No penalty will be imposed if it is shown

that the failure was due to reasonable cause. If

the failure was due to intentional disregard of

the requirements, the penalty may be higher

and isn't subject to a maximum amount.

Filing Requirements and Required Disclosures

Publication 557 (1-2025)

Sales of Information or

Services Available Free from

Government

Certain organizations that offer to sell to individuals (or solicit money for) information or routine

services that could be readily obtained free (or

for a nominal fee) from the federal government

must include a statement that the information or

service can be so obtained. The statement

must be made in a conspicuous and easily recognized format when the organization makes an

offer or solicitation to sell the information or

service. Organizations affected are those exempt under section 501(c) or 501(d) and political organizations defined in section 527(e).

Penalty. A penalty is provided for failure to

comply with this requirement if the failure is due

to intentional disregard of the requirement. The

penalty is the greater of $1,000 for each day the

failure occurred, or 50% of the total cost of all

offers and solicitations that were made by the

organization the same day that it fails to meet

the requirement.

Dues Used for Lobbying

or Political Activities

Certain exempt organizations must notify anyone paying dues to the organization whether

any part of the dues isn't deductible because it

is related to lobbying or political activities.

An organization must provide the notice if it

is exempt from tax under section 501(a) and is

one of the following.

1. A social welfare organization described in

section 501(c)(4) that isn't a veterans' organization.

2. An agricultural or horticultural organization

described in section 501(c)(5).

3. A business league, chamber of commerce, real estate board, or other organization described in section 501(c)(6).

However, an organization described in (1), (2),

or (3) doesn't have to provide the notice if it establishes that substantially all the dues paid to it

aren't deductible anyway or if certain other conditions are met. For more information, see Rev.

Proc. 98-19, 1998-1 C.B. 547 (or later update).

If the organization doesn't provide the required notice, it may have to pay a tax that is reported on Form 990-T. But the tax doesn't apply

to any amount on which the section 527 tax has

been paid on Form 1120-POL. See Political Organization Income Tax Return, earlier.

For more information about nondeductible

dues, see Deduction not allowed for dues used

for political or legislative activities. under Section 501(c)(6) organizations, later.

shelter transaction is required to disclose to the

IRS the following information:

• Whether such organization is a party to the

prohibited tax shelter transaction (as defined in section 4965(e)); and

• The identity of any other party to the transaction that is known to the exempt organization.

Party to a prohibited tax shelter transaction. An exempt organization is a party to a

prohibited tax shelter transaction if the organization:

1. Facilitates a prohibited tax shelter transaction by reason of its tax-exempt, tax-indifferent, or tax-favored status; or

2. Is identified in published guidance by type,

class, or role as a party to a prohibited tax

shelter transaction.

See Prohibited Tax Shelter Transactions,

later, for further information.

Disclosure. A single disclosure is made by the

organization for each prohibited tax shelter

transaction. The disclosure is made on Form

8886-T, Disclosure by Tax-Exempt Entity Regarding Prohibited Tax Shelter Transaction.

Due date. Generally, for exempt organizations described in 1 above, the disclosure is due

on or before May 15 of the calendar year following the close of the calendar year that the exempt organization entered into the prohibited

tax shelter transaction. If any date falls on a Saturday, Sunday, or legal holiday, substitute the

next business day. However, the disclosure for

subsequently listed transactions (as defined in

section 4965(e)(2)) is due on or before May 15

of the calendar year following the close of the

calendar year that the transaction was identified

by the Secretary as a listed transaction.

The disclosure for exempt organizations described in 2 above is due on or before the date

the first tax return (whether original or amended

return) is filed that reflects a reduction or elimination of the exempt organization's liability for

applicable federal employment, excise, or unrelated business income taxes that is derived directly or indirectly from tax consequences or tax

strategy described in the published guidance

that lists the transaction.

Penalty. Exempt organizations that fail to file

the required disclosure are subject to a nondisclosure penalty of $100 for each day the failure

continues with a maximum penalty for any one

disclosure of $50,000.

Also, if the IRS makes a written demand on

any exempt organization subject to this penalty,

giving the organization a reasonable date to

make the disclosure, and the organization fails

to make the disclosure by that date, the organization is subject to a penalty of $100 for each

day after the date specified by the IRS until disclosure is made (with a maximum penalty for

any one disclosure of $10,000).

Prohibited Tax Shelter

Transactions

Every exempt organization (as defined in section 4965(c)) that is a party to a prohibited tax

Publication 557

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