These synopses are intended only as aids to the reader in

Agency decision

Ask Donna

What actually matters in this document.

Text

HIGHLIGHTS

OF THIS ISSUE

Bulletin No. 2026–4

January 20, 2026

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

EXCISE TAX

Announcement 2026-1, page 402.

Announcement 2026-1 provides important information

for interested taxpayers and potential claimants regarding

claims under § 6435 of the Internal Revenue Code for tax

paid on dyed fuel.

EXEMPT ORGANIZATIONS

Notice 2026-8, page 368.

This notice discusses the comments received in response to

the proposed revenue procedure regarding the group exemption letter program set forth in Notice 2020-36, 2020-21

I.R.B. 840, along with the modifications made in response to

those comments and other significant revisions made to the

proposed revenue procedure.

Rev. Proc. 2026-8, page 380.

This revenue procedure modifies and supersedes Rev. Proc.

80-27, 1980-1 C.B. 677 (as modified by Rev. Proc. 96-40,

1996-2 C.B. 301) by setting forth updated procedures to

obtain recognition of exemption from federal income tax

on a group basis for organizations described in § 501(c) of

the Internal Revenue Code that are affiliated with and under

the general supervision or control of a central organization.

The revenue procedure relieves each subordinate organization included in a group exemption letter from filing its own

application for recognition of exemption. It also sets forth

updated procedures a central organization must follow to

maintain a group exemption letter.

INCOME TAX

Notice 2026-1, page 365.

This notice provides interim guidance, pending the issuance

of forthcoming proposed regulations, relating to the credit

Finding Lists begin on page ii.

for carbon oxide sequestration under section 45Q (§ 45Q

credit) of the Internal Revenue Code to reflect the Environmental Protection Agency’s (EPA) proposed regulations to

amend the Greenhouse Gas Reporting Program to remove

reporting obligations imposed under subpart RR of 40 CFR

part 98 (subpart RR). See 90 FR 44591 (Sept. 16, 2025).

Specifically, this notice provides a safe harbor for determining eligibility for the § 45Q credit for qualified carbon oxide

that is captured and disposed of in secure geological storage (and carbon oxide described in § 1.45Q-2(h)(5)) and not

used as a tertiary injectant in a qualified enhanced oil or natural gas recovery project during calendar year 2025 in the

event the EPA does not launch the electronic Greenhouse

Gas Reporting Tool for filers to prepare and submit information required under subpart RR for reporting year 2025 by

June 10, 2026.

Notice 2026-10, page 378.

This notice provides the optional 2026 standard mileage

rates for taxpayers to use in computing the deductible costs

of operating an automobile for business, charitable, medical,

or moving expense purposes. This notice also provides the

amount taxpayers must use in calculating reductions to basis

for depreciation taken under the business standard mileage

rate, and the maximum standard automobile cost that may

be used in computing the allowance under a fixed and variable rate plan. Additionally, this notice provides the maximum

fair market value of employer-provided automobiles first

made available to employees for personal use in calendar

year 2026 for which employers may use the fleet-average

valuation rule in § 1.61-21(d)(5)(v) or the vehicle cents-permile valuation rule in § 1.61-21(e).

Rev. Proc. 2026-9, page 393.

This revenue procedure publishes the amounts of unused

housing credit carryovers allocated to qualified states under

§ 42(h)(3)(D) of the Internal Revenue Code for calendar year

2025.

Rev. Proc. 2026-10, page 394.

This is a revenue procedure that provides additional guidance on the process for requesting PLRs from the IRS, as

generally set forth in Rev. Proc. 2025-1, for consent to make

retroactive qualified electing fund (QEF) elections under section 1295(b) of the Internal Revenue Code and Treas. Reg. §

1.1295-3(f).

T.D. 10041, page 360.

This document contains final regulations regarding the base

erosion and anti-abuse tax imposed on certain large corporate taxpayers with respect to certain payments made to

foreign related parties. The final regulations relate to how

qualified derivative payments with respect to securities lending transactions are determined and reported. The final regulations affect corporations with substantial gross receipts

that make payments to foreign related parties.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and

enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

January 20, 2026

Bulletin No. 2026–4

Part I

26 CFR 1.59A-3 and 26 CFR 1.59A-6

TD 10041

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 1

Base Erosion and AntiAbuse Tax Rules for

Qualified Derivative

Payments on Securities

Lending Transactions

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final rule.

SUMMARY: This document contains

final regulations regarding the base erosion and anti-abuse tax imposed on certain

large corporate taxpayers with respect to

certain payments made to foreign related

parties. The final regulations relate to how

qualified derivative payments with respect

to securities lending transactions are

determined and reported. The final regulations affect corporations with substantial

gross receipts that make payments to foreign related parties.

DATES: Effective date: The final regulations are effective December 17, 2025.

Applicability dates: For dates of applicability, see §§ 1.59A-10 and 1.6038A-2(g).

FOR FURTHER INFORMATION

CONTACT: Sheila Ramaswamy at (202)

317-6938 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Authority

This document contains additions and

amendments to 26 CFR part 1 (Income

Tax Regulations) under sections 59A

and 6038A of the Internal Revenue Code

(Code) (“the final regulations”). The addi-

January 20, 2026

tions and amendments are issued pursuant

to the express delegations of authority to

the Secretary of the Treasury (or his delegate) provided under sections 59A(i) and

6038A(b)(2). The final regulations are

also issued under the express delegation

of authority under section 7805(a) of the

Code.

Background

This document contains final regulations under sections 59A and 6038A. The

base erosion and anti-abuse tax (“BEAT”)

of section 59A imposes on each applicable

taxpayer a tax equal to the base erosion

minimum tax amount for the taxable year,

which is the excess of a specified percentage of the modified taxable income of the

applicable taxpayer minus the applicable

taxpayer’s regular tax liability under section 26(b) of the Code reduced (but not

below zero) by certain credits. See section

59A(b)(1) and (2).

The applicable taxpayer determines

its modified taxable income by computing its taxable income without regard to

any base erosion tax benefit with respect

to any base erosion payment or the base

erosion percentage of any net operating

loss deduction allowed under section 172

of the Code for the taxable year. See section 59A(c)(1). Generally, a base erosion

payment is any deductible amount paid

or accrued by an applicable taxpayer to

a foreign person (as defined in section

6038A(c)(3)) that is a related party of the

applicable taxpayer and the base erosion

tax benefit is the deduction allowed under

Chapter 1 of the Code for the taxable year

for the base erosion payment. See section

59A(d)(1), (c)(2) and (f). Qualified derivative payments (“QDPs”), as defined in

section 59A(h)(2)(A), are not treated as

base erosion payments if they are properly

reported to the IRS. See section 59A(h)(1)

and (h)(2)(B).

On January 10, 2025, the Treasury

Department and the IRS published proposed regulations under sections 59A and

6038A (REG-107895-24) in the Federal

regulations would address how taxpayers

determine and report qualified derivative

payment amounts with respect to securi-

360

ties lending transactions. Two comments

were submitted in response to the proposed regulations, but only one of those

comments addressed the proposed regulations. The Summary of Comments and

Explanation of Revisions section of this

preamble discusses this comment. All

written comments received in response

to the proposed regulations are available

at https://www.regulations.gov or upon

request. A public hearing on the proposed

regulations was not held because there

were no requests to speak.

Summary of Comments and

Explanation of Revisions

Proposed § 1.59A-6(b)(3)(iii)(A)

would provide that mark-to-market gains

and losses from the securities leg of an

intercompany securities lending transaction are not treated as QDPs. As proposed, taxpayers would not be required

to include those amounts in their QDP

reporting. A conforming amendment in

proposed § 1.59A-3(b)(2)(iv) would provide that mark-to-market gains and losses

from the securities leg of a securities lending transaction are not taken into account

when determining the amount of a taxpayer’s base erosion payment.

Proposed § 1.59A-6(b)(3)(iv) would

provide rules for determining whether a

taxpayer made a substitute payment or

other payment pursuant to a securities lending transaction to a foreign related party.

Specifically, the rule would provide that a

taxpayer may determine the amount of a

substitute payment or other payment that it

has paid to a foreign related party by using

the amount actually paid by the taxpayer to

the foreign related party if the taxpayer can

specifically identify each recipient of the

substitute payment or other payment. If the

taxpayer cannot determine the recipient of

those payments, the rule would provide a

method that treats the substitute payments

or other payments that a taxpayer pays with

respect to borrowed securities as having

been paid first to foreign related parties

(but not in excess of the total amount of the

payments received by the foreign related

parties from all payors).

The comment recommended that the

final regulations provide definitions for

Bulletin No. 2026–4

terms used in the regulations such as

“qualified derivative payment,” “substitute payment,” “other amounts that relate

to the securities lending transaction,”

“mark-to-market gains and losses,” “securities leg of a securities lending transaction,” and “cash collateral” to reduce

ambiguity. The comment asserted that the

ambiguity could potentially lead to substitute payments being misclassified as

QDPs rather than base erosion payments.

The comment also requested additional

examples illustrating the classification of

substitute payments.

In response to this comment, the final

regulations include cross-references to

§§ 1.861-2(a)(7) and 1.861-3(a)(6) to

clarify the meaning of the term “substitute

payment.”

Although proposed § 1.59A-3(b)(2)

(iv)(B) indicates by exclusion that “other

amounts that relate to the securities lending transaction” refers to payments relating to the transaction other than mark-tomarket gains or losses and the delivery of

securities to or receipt of securities from

the lender, greater clarity that substitute

payments and borrow fees are included

in this term may be helpful. Therefore,

for consistency purposes, §§ 1.59A-3(b)

(2)(iv)(B) and 1.59A-6(b)(3)(iii) of the

final regulations have been modified to

use the term “items of income, gain, loss,

or deduction during the taxable year” and

explain that this term refers to amounts

such as substitute payments and borrow

fees that relate to the securities lending

transaction and does not include the delivery or receipt of securities. The final regulations also clarify that the term “markto-market gains and losses” with respect

to a securities lending transaction refers

to the recognition of gain or loss on the

transaction as if the taxpayer’s position in

the securities lending position were sold

for its fair market value on the last business day of the taxable year, as described

in § 1.59A-6(b)(1)(i).

Proposed § 1.59A-6(b)(3)(iii) would

provide cross-references to §§ 1.861-2(a)

(7) and 1.861-3(a)(6) for the definition of a

“securities lending transaction.” Sections

1.861-2(a)(7) and 1.861-3(a)(6) define

the term “securities lending transaction”

as “a transfer of one or more securities

that is described in section 1058(a) or a

substantially similar transaction.” These

Bulletin No. 2026–4

cross-references were intended to indicate

that “securities leg of a securities lending

transaction” refers to the components of

the transaction that relate to the transfer of

a security. The final regulations have been

modified to clarify that the securities leg

of a securities lending transaction refers

to the rights, obligations, and transfers of

securities and payments under the transaction other than the obligation to provide or

right to receive cash collateral and interest

(sometimes referred to as rebate) thereon.

Some of the terms cited by the comment

are already defined in other parts of the

regulations or are commonly understood

industry terms. For example, the term

“qualified derivative payment” is defined

in section 59A(h)(2)(A) and § 1.59A6(b); therefore, no additional definition is

required. Additionally, “cash collateral”

is a commonly understood industry term

that does not require a definition and is

already used in the existing regulations at

§ 1.59A-6(d)(2)(iii)(B).

The final regulations do not adopt the

comment to include examples illustrating

the classification of substitute payments.

The Treasury Department and IRS are of

the view that additional examples would

not add clarity because the final regulations now cross-reference regulations

illustrating the meaning of a substitute

payment, and the examples in proposed

§ 1.59A-6(b)(3)(iii)(B) clearly indicate

the types of payments that are referenced

by the term “substitute payment.”

The final regulations also make clarifying edits to the specific identification

method in proposed § 1.59A-6(b)(3)(iv)

(B). As noted previously, the proposed

regulations would have provided that a

taxpayer may determine the amount of

substitute payments or other payments

with respect to the securities leg of a securities lending transaction that it has paid

to a foreign related party by using the

amount actually paid by the taxpayer to

the foreign related party if the taxpayer can

specifically identify each recipient of the

substitute payment or other payment. This

proposed rule was intended to be available to a taxpayer only if the taxpayer is

able to identify all of the recipients of the

substitute payments and other payments

that taxpayer made with respect to the

securities leg of a securities lending transaction during the taxable year. The final

361

regulations clarify this rule and expand

the situations when a taxpayer may use

the specific identification method. Specifically, a taxpayer may use the specific

identification method of § 1.59A-6(b)(3)

(iv)(B) to determine the amount of the

substitute payments or other payments

with respect to the securities leg of a securities lending transaction that it has paid

to foreign related parties only if the taxpayer can specifically identify all recipients of the substitute payments or other

payments paid by the taxpayer or the taxpayer can specifically identify the payor

for all substitute payments or other payments with respect to the securities leg of

a securities lending transaction received

by foreign related parties. If a taxpayer

has paid any substitute payment or other

payment for which it cannot determine

the recipient and cannot specifically identify the payor for all substitute payments

received by foreign related parties, the

final regulations provide that the taxpayer

must use the alternative method provided

in § 1.59A-6(b)(3)(iv)(C).

The comment also recommended that

the final regulations provide additional

clarifying examples illustrating markto-market adjustments and the operation

of the allocation method of proposed

§ 1.59A-6(b)(3)(iv). The Treasury Department and the IRS consider the examples

that were provided in proposed § 1.59A6(b)(3)(iii)(B) to be sufficiently illustrative of the mechanics of mark-to-market adjustments; therefore, the clarity of

these rules will not be improved by adding additional examples in the final regulations. The Treasury Department and

the IRS agree, however, that an example

illustrating the allocation method would

be helpful. Therefore, the final regulations include an example of the allocation

method in § 1.59A-6(b)(3)(iv)(D).

Finally, the comment requested additional transition relief with respect to the

reporting requirements of § 1.6038A-2(b)

(7)(ix) such as a two-year phased implementation. The comment suggested that

in the first phase, the IRS could adopt

reduced reporting requirements or grant

safe harbor treatment for systems unable

to capture detailed data immediately to

allow time for internal systems upgrades

and process testing before requiring full

compliance. As an alternative, the com-

January 20, 2026

ment suggested permitting taxpayers to

submit evidence of system limitations

as the basis for temporary relief, while

establishing clear compliance milestones.

The final regulations do not adopt this

comment. Instead, the final regulations

retain the transition relief provided in the

proposed regulations, which delays the

applicability date of § 1.6038A-2(b)(7)

(ix). The rules relating to QDP reporting

apply to payments made in taxable years

beginning on or after January 1, 2027. It

is expected that this delayed applicability

date will give taxpayers sufficient time to

build and update the systems needed to

track QDPs.

Applicability Date

The preamble to the proposed regulation explained that proposed §§ 1.59A3(b)(2)(iv) (application of BEAT netting

rule to securities lending transactions) and

1.59A-6(b)(3)(ii) through (iv) (QDP rules

relating to securities lending transactions)

would apply to taxable years beginning

on or after the date that final regulations

are filed with the Federal Register. The

text of proposed § 1.59A-10(c), however, mistakenly provided that proposed

§§ 1.59A–3(b)(2)(iv) and 1.59A–6(b)(3)

(iii) and (iv) would apply to taxable years

beginning on or after January 10, 2025,

which was the date that the proposed regulations were filed with the Federal Register. Consistent with the preamble to the

proposed regulations, the final regulations

provide that §§ 1.59A-3(b)(2)(iv) and

1.59A-6(b)(3)(iii) and (iv) apply to taxable years beginning on or after December

17, 2025. However, taxpayers may choose

to apply these final rules to a taxable year

beginning on or after January 10, 2025,

and before December 17, 2025. Section

1.6038A-2(b)(7)(ix) (rules relating to

QDP reporting) applies to payments made

in taxable years beginning on or after January 1, 2027.

Special Analysis

I. Regulatory Planning and Review –

Economic Analysis

These final regulations are not subject

to review under section 6(b) of Executive

Order 12866 pursuant to the Memoran-

January 20, 2026

dum of Agreement (July 4, 2025) between

the Treasury Department and the Office

of Management and Budget regarding

review of tax regulations.

II. Paperwork Reduction Act

The Paperwork Reduction Act of 1995

(44 U.S.C. 3501-3520) (PRA) generally

requires that a Federal agency obtain the

approval of the Office of Management and

Budget (OMB) before collecting information from the public, whether such collection of information is mandatory, voluntary,

or required to obtain or retain a benefit. An

agency may not conduct or sponsor, and a

person is not required to respond to, a collection of information unless it displays a

valid control number assigned by the Office

of Management and Budget. These final

regulations do not create or impose any

additional information collection requirements in the form of reporting, recordkeeping requirements, or third-party disclosure

statements. The collection requirements

are within Form 8991 and its instructions

which are included in the OMB Control

Number 1545-0123.

III. Regulatory Flexibility Act

Generally, the final regulations affect

only aggregate groups of corporations

with average annual gross receipts of at

least $500 million and that make payments to foreign related parties. Generally, only large businesses have both

substantial gross receipts and make payments to foreign related parties. In accordance with the Regulatory Flexibility

Act (5 U.S.C. 601 et seq.) the Secretary

hereby certifies that these final regulations will not have a significant economic

impact on a substantial number of small

entities. Accordingly, a regulatory flexibility analysis under the Regulatory Flexibility Act is not required.

IV. Section 7805(f)

Pursuant to section 7805(f) of the

Code, the notice of proposed rulemaking

was submitted to the Chief Counsel for

Advocacy of the Small Business Administration for comment on their impact on

small business, and no comments were

received.

362

V. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates Reform Act of 1995 requires that

agencies assess anticipated costs and

benefits and take certain other actions

before issuing a final rule that includes

any Federal mandate that may result

in expenditures in any one year by a

State, local, or Tribal government, in

the aggregate, or by the private sector,

of $100 million in 1995 dollars, updated

annually for inflation. The final regulations do not include any Federal mandate that may result in expenditures by

State, local, or Tribal governments, or

by the private sector in excess of that

threshold.

VI. Executive Order 13132: Federalism

Executive Order 13132 (entitled

“Federalism”) prohibits an agency from

publishing any rule that has federalism

implications if the rule either imposes

substantial, direct compliance costs on

State and local governments, and is not

required by statute, or preempts State law,

unless the agency meets the consultation

and funding requirements of section 6 of

the Executive order. The final regulations

do not have federalism implications and

do not impose substantial direct compliance costs on State and local governments

or preempt State law within the meaning

of the Executive order.

Drafting Information

The principal authors of these final

regulations are D. Peter Merkel and Sheila

Ramaswamy of the Office of Associate

Chief Counsel (International). However,

other personnel from the Treasury Department and the IRS participated in their

development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the

Regulations

Accordingly, the Treasury Department

and IRS amend 26 CFR part 1 as follows:

Bulletin No. 2026–4

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 continues to read in part as follows:

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

§ 1.59A-2 [Amended]

Par. 2. Section 1.59A-2 is amended

by removing the language “§ 1.59A-3(b)

(2)(iii)” from the last sentence of paragraph (e)(3)(vi) and adding the language

“§ 1.59A-3(b)(2)(iv)” in its place.

Par. 3. Section 1.59A-3 is amended by

revising paragraph (b)(2)(iv) to read as

follows:

§1.59A-3 Base erosion payments and

base erosion tax benefits.

*****

(b) * * *

(2) * * *

(iv) Amounts paid or accrued with

respect to mark-to-market positions—

(A) In general. For any transaction with

respect to which the taxpayer applies the

mark-to-market method of accounting

for U.S. Federal income tax purposes, the

rules set forth in § 1.59A-2(e)(3)(vi) apply

to determine the amount of the base erosion payment.

(B) Application of the base erosion and

anti-abuse tax (“BEAT”) netting rule to

securities lending transactions. Notwithstanding paragraph (b)(2)(iv)(A) of this

section, mark-to-market gains and losses

from the securities leg of a securities lending transaction as defined in §§ 1.8612(a)(7) and 1.861-3(a)(6) are not taken

into account when applying § 1.59A-2(e)

(3)(vi) for purposes of determining the

amount of a taxpayer’s base erosion payment. Mark-to market gains and losses

from the securities leg of a securities

lending transaction are the ordinary gains

and losses that a taxpayer recognizes with

respect to the transaction by treating the

taxpayer’s position in the transaction as

having been sold for its fair market value

on the last business day of the taxable year

(and any additional times as required by

the Internal Revenue Code or the taxpayer’s method of accounting). See § 1.59A6(b)(1)(i). When determining the amount

of the taxpayer’s base erosion payment,

Bulletin No. 2026–4

items of income, gain, loss, or deduction

that relate to the securities leg of a securities lending transaction, such as substitute payments defined in §§ 1.861-2(a)(7)

and 1.861-3(a)(6) and borrow fees, must

be taken into account on a consistent basis

that does not result in the duplication or

omission of these amounts. For purposes

of the immediately preceding sentence,

the term items of income, gain, loss, or

deduction that relate to the securities leg

of a securities lending transaction does

not include delivery of the securities to,

or receipt of securities from, the lender.

This paragraph (b)(2)(iv)(B) applies to

a taxpayer that is either the borrower or

lender with respect to the securities lending transaction.

*****

Par. 4. Section 1.59A-6 is amended by

adding paragraphs (b)(3)(iii) and (iv) to

read as follows:

§1.59A-6 Qualified derivative payment.

*****

(b) * * *

(3) * * *

(iii) Special rule for mark-to-market

gains and losses on the securities leg of

a securities lending transaction—(A)

In general. The amount of any qualified

derivative payment with respect to the

securities leg of a securities lending transaction as defined in §§ 1.861-2(a)(7) and

1.861-3(a)(6) that is excluded from the

denominator of the base erosion percentage is determined under § 1.59A-3(b)(2)

(iv)(B). The securities leg of a securities

lending transaction refers to the rights,

obligations, and transfers of securities and

payments under the transaction other than

the obligation to provide or right to receive

cash collateral and interest thereon. Pursuant to § 1.59A-3(b)(2)(iv)(B), mark-tomarket gains and losses on a securities leg

of a securities lending transaction are not

included in determining the amount of the

qualified derivative payment with respect

to that security. Thus, the amount of the

qualified derivative payment with respect

to the securities leg of a securities lending

transaction is determined by taking into

account only other items of income, gain,

loss, or deduction during the taxable year

that relate to the securities leg, such as

substitute payments defined in §§ 1.861-

363

2(a)(7) and 1.861-3(a)(6) and borrow fees.

This paragraph (b)(3)(iii)(A) applies to

a taxpayer that is either the borrower or

lender with respect to the securities lending transaction.

(B) Examples. The following examples

illustrate the application of this paragraph

(b)(3)(iii).

(1) Example 1: Securities loan—(i) Facts. FP is

a foreign corporation that owns all of the shares of

DC, a domestic corporation. FP is a foreign related

party of DC under § 1.59A-1(b)(12). DC is a registered securities dealer. On September 1 of year 1,

DC enters into a securities lending transaction with

FP in which it borrows stock from FP. DC provides

cash collateral for the loan and receives a rebate on

that collateral from FP. On September 1, year 1, the

stock has a value of $100x. On November 1, year 1, a

dividend of $1x is paid by the issuer on the stock. DC

pays a substitute dividend of $1x to FP on November

1, year 1 under the terms of the securities loan. There

are no other payments made or received in year 1. On

December 31, year 1, the stock has a value of $106x.

DC is required to mark-to-market the securities leg

of the securities lending transaction for U.S. Federal

income tax purposes. DC is a calendar year taxpayer.

(ii) Analysis. DC has a deduction of $1x as a

result of the substitute dividend it pays to FP. Assuming that the securities lending transaction otherwise

meets the requirements of this section (including

reporting the information required by § 1.6038A2(b)(7)(ix)), the amount of DC’s qualified derivative payment with respect to the securities lending

transaction is $1x. Payments with respect to the

cash collateral are not treated as part of the securities lending transaction. See paragraph (d)(2)(iii)(B)

of this section. With respect to the securities leg of

the securities lending transaction, DC has a mark-tomarket loss of ($6x). Under paragraph (b)(3)(iii)(A)

of this section, the amount of this mark-to-market

loss is not included when determining the amount

of the qualified derivative payment. Under § 1.59A3(b)(2)(iv)(B), DC’s ($6x) mark-to-market loss on

the securities leg of the securities lending transaction also is not taken into account in determining

the base erosion tax benefit amount for purposes of

the numerator of the base erosion percentage. The

($6x) loss is taken into account in the denominator

of the base erosion percentage, while the $1x substitute dividend payment is not taken into account for

that purpose because it is a qualified derivative payment. See § 1.59A-2(e)(3)(ii)(C) and (e)(3)(vi). The

amount of the qualified derivative payment would be

the same if the lender paid a rebate on the cash collateral in year 1, without regard to whether the parties

agree to pay and receive a net payment reflecting the

difference between the amount of the rebate and the

amount of the substitute payment.

(2) Example 2: Securities loan. The facts are the

same as in paragraph (b)(3)(iii)(B)(1) of this section

(Example 1) except that on December 31, year 1, the

stock has a value of $94x. With respect to the securities leg of the securities lending transaction, DC has

a mark-to-market gain of $6x. Under paragraph (b)

(3)(iii)(A) of this section, the amount of this markto-market gain is not included when determining

the amount of the qualified derivative payment. DC

January 20, 2026

has a deduction of $1x as a result of the substitute

dividend payment it makes to FP. Assuming that the

securities lending transaction otherwise meets the

requirements of this section (including reporting the

information required by § 1.6038A-2(b)(7)(ix)), the

amount of DC’s qualified derivative payment with

respect to the securities lending transaction is $1x.

Neither the $6x gain nor the $1x substitute dividend

payment, which is a qualified derivative payment,

are taken into account in the denominator of the base

erosion percentage.

(iv) Rule for determining the amount of a substitute payment or other payment paid with respect to

a securities lending transaction to a foreign related

party—(A) In general. When a taxpayer makes a

substitute payment as defined in § 1.861-2(a)(7) or

§ 1.861-3(a)(6) or other payment with respect to the

securities leg of a securities lending transaction, the

taxpayer must determine whether the substitute payment or other payment is paid to a foreign related

party. The amount of the substitute payment or other

payment paid by the taxpayer to a foreign related

party is determined under either paragraph (b)(3)(iv)

(B) or (C) of this section.

(B) Specific identification method. The taxpayer

may determine the amount of the substitute payments

or other payments with respect to the securities leg of

a securities lending transaction that it has paid to foreign related parties by using the amount actually paid

by the taxpayer to the foreign related parties if the

taxpayer can specifically identify all recipients of the

substitute payments or other payments paid by the

taxpayer during the taxable year with respect to the

securities leg of a securities lending transaction or

the taxpayer can specifically identify the payor for all

substitute payments or other payments received by

foreign related parties during the taxable year with

respect to the securities leg of a securities lending

transaction.

paid any substitute payment or other payment with

respect to the securities leg of a securities lending

transaction to which the taxpayer cannot apply paragraph (b)(3)(iv)(B) of this section, the taxpayer must

use the methodology provided in this paragraph (b)

(3)(iv)(C).

(1) Step 1: Determining the total amount of

substitute payments and other payments received

by foreign related parties. The taxpayer must determine the total amount of substitute payments and

other payments with respect to the securities leg of

a securities lending transaction received by all foreign related parties of the taxpayer during the taxable

year.

(2) Step 2: Determining the total amount of substitute payments and other payments paid by taxpayer. The taxpayer must determine the total amount

of substitute payments and other payments with

respect to the securities leg of a securities lending

transaction paid by the taxpayer during the taxable

year.

(3) Step 3: Determining the amount of substitute

payments and other payments paid by the taxpayer

to foreign related parties. The amount of substitute

payments and other payments with respect to the

securities leg of a securities lending transaction paid

January 20, 2026

by the taxpayer is treated as being paid first to foreign

related parties of the taxpayer up to the total amount

of substitute payments and other payments with

respect to the securities leg of a securities lending

transaction received by foreign related parties. Any

amount of substitute payments and other payments

with respect to the securities leg of a securities lending transaction paid by the taxpayer that exceeds the

amount of substitute payments and other payments

received by foreign related parties is treated as paid

to unrelated parties for purposes of this paragraph (b)

(3)(iv)(C)(3).

(D) Example—(1) Facts. FP is a foreign corporation that owns all of the shares of DC, a domestic

corporation, and all of the shares of several foreign

subsidiaries. FP and its foreign subsidiaries are foreign related parties of DC under § 1.59A-1(b)(12).

DC is a registered securities dealer. DC enters into

securities lending transactions pursuant to which it

borrows securities both from foreign affiliates that

are members of the FP controlled group and from

unrelated customers. DC obtains the securities from

a common pool of available securities that includes

securities from DC’s U.S. customer accounts as well

as securities held by members of the FP controlled

group for their own account and for the account

of customers. DC is unable to determine from its

records either the identities of the counterparties

from which DC has borrowed securities or whether

it has entered into a securities lending transaction

with a foreign affiliate. In year 1, DC makes substitute payments of $500x in aggregate with respect

to the securities lending transactions. DC’s foreign

affiliates receive substitute payments in year 1 totaling $100x. Because DC cannot determine whether it

has entered into a securities lending transaction with

a foreign affiliate, DC does not know what portion

of the $100x received by DC’s foreign affiliates was

paid by DC.

(2) Analysis. Because DC is unable to determine

the actual amount of substitute payments it has paid

to DC’s foreign affiliates, DC cannot use the specific

identification method of paragraph (b)(3)(iv)(B) of

this section to determine the amount of substitute

payments it has paid to foreign related parties for

QDP reporting purposes. Instead, DC must use the

alternative method set forth in paragraph (b)(3)(iv)

party recipients. Under Step 1, DC determines that

its foreign affiliates have received substitute payments of $100x. Under Step 2, DC determines that it

has paid substitute payments totaling $500x. Under

Step 3, DC is treated as having paid substitute payments to its foreign affiliates of $100x, up to the total

amount of substitute payments they received in year

1. The remaining $400x of substitute payments paid

by DC is treated as having been paid to unrelated

parties for purposes of paragraph (b)(3)(iv)(C)(3) of

this section.

*****

Par. 5. Section 1.59A-10 is amended

by revising paragraph (a) and adding paragraph (c) to read as follows:

364

§1.59A-10 Applicability date.

(a) General applicability date. Sections 1.59A-1 through 1.59A-9, other

than the provisions described in the first

sentence of paragraph (b) of this section or in paragraph (c) of this section,

apply to taxable years ending on or after

December 17, 2018. However, taxpayers may apply the regulations in this

paragraph (a) in their entirety for taxable

years beginning after December 31, 2017,

and ending before December 17, 2018. In

lieu of applying the regulations referred

to in the first sentence of this paragraph

(a), taxpayers may apply the provisions

matching §§ 1.59A-1 through 1.59A-9

from the Internal Revenue Bulletin (IRB)

2019-02 (https://www.irs.gov/irb/201902_IRB) in their entirety for all taxable

years beginning after December 31,

2017, and ending on or before December

6, 2019.

*****

certain rules relating to securities lending transactions. Sections 1.59A-3(b)(2)

(iv) and 1.59A-6(b)(3)(iii) and (iv) apply

to taxable years beginning on or after

December 17, 2025.

Par. 6. Section 1.6038A-2 is amended

by revising the third sentence of paragraph

(g) to read as follows:

§1.6038A-2 Requirement of return.

*****

(g) * * * Paragraph (b)(7)(ix) of this

section applies to payments made in taxable years beginning on or after January

1, 2027. * * *

Frank J. Bisignano,

Chief Executive Officer.

Approved: October 30, 2025

Kenneth J. Kies,

Assistant Secretary of the Treasury (Tax

Policy).

(Filed by the Office of the Federal Register December 17, 2025, 8:45 a.m., and published in the issue

of the Federal Register for December 18, 2025, 90

FR 59046)

Bulletin No. 2026–4

Part III

Safe Harbor for the

Credit for Carbon Oxide

Sequestration under

Section 45Q for Qualified

Carbon Oxide Disposed

of in Secure Geological

Storage in Calendar Year

2025

ical storage after the 2025 calendar year.

Taxpayers may rely on the safe harbor and

guidance described in section 3 of this

notice to demonstrate compliance with

the subpart RR requirements of § 1.45Q3(b)(1)(ii) or 1.45Q-2(h)(5)(iii), as applicable, and § 1.45Q-3(d), for purposes of

determining the § 45Q credit with respect

to 2025 Calendar Year Secure Geological

Storage.

Notice 2026-1

SECTION 2. BACKGROUND

SECTION 1. PURPOSE

This notice provides interim guidance,

pending the issuance of forthcoming proposed regulations, relating to the credit for

carbon oxide sequestration under section

45Q (§ 45Q credit) of the Internal Revenue Code (Code)1 in light of the Environmental Protection Agency’s (EPA)

proposed regulations to remove reporting obligations regarding the geological

sequestration of carbon dioxide imposed

under subpart RR of 40 CFR part 98 (subpart RR). See 90 F.R. 44591 (Sept. 16,

2025). Specifically, this notice provides

a safe harbor for determining eligibility

for the § 45Q credit for qualified carbon

oxide that is captured and disposed of in

secure geological storage (and carbon

oxide described in § 1.45Q-2(h)(5)) and

not used as a tertiary injectant in a qualified enhanced oil or natural gas recovery

project during calendar year 2025 (Calendar Year 2025 Secure Geological Storage) in the event the EPA does not launch

the electronic Greenhouse Gas Reporting

Tool (e-GGRT) for filers to prepare and

submit information required under subpart RR for reporting year 2025 by June

10, 2026. The Department of the Treasury

(Treasury Department) and the Internal

Revenue Service (IRS) expect that the

forthcoming proposed regulations will

propose updated requirements for taxpayers claiming the credit for secure geolog-

.01 Section 45Q

(1) Section 45Q was added to the Code

by § 115 of Division B of the Energy

Improvement and Extension Act of 2008,

Pub. L. 110-343, 122 Stat. 3765, 3829

(Oct. 3, 2008). Section 45Q was amended

a number of times thereafter, including

most recently by § 70522 of Public Law

119-21, 139 Stat. 72, 279 (July 4, 2025),

commonly known as the One, Big, Beautiful Bill Act (OBBBA).2

(2) Section 45Q(a)(1) allows a credit

of $20 per metric ton of qualified carbon

oxide (i) captured by the taxpayer using

carbon capture equipment which is originally placed in service at a qualified facility before February 9, 2018; (ii) disposed

of by the taxpayer in secure geological

storage; and (iii) neither used by the taxpayer as a tertiary injectant in a qualified

enhanced oil or natural gas recovery project nor utilized in a manner described in

section 45Q(f)(5).

(3) Section 45Q(a)(2) allows a credit

of $10 per metric ton of qualified carbon oxide (i) captured by the taxpayer

using carbon capture equipment which

is originally placed in service at a qualified facility before February 9, 2018; and

(ii) either (A) used by the taxpayer as a

tertiary injectant in a qualified enhanced

oil or natural gas recovery project and

disposed of by the taxpayer in secure

geological storage; or (B) utilized by the

taxpayer in a manner described in section

45Q(f)(5).

(4) Section 45Q(a)(3) allows a credit

of the applicable dollar amount (as determined under section 45Q(b)(1)) per metric

ton of qualified carbon oxide captured by

the taxpayer using carbon capture equipment which is originally placed in service

at a qualified facility on or after February

9, 2018, during the 12-year period beginning on the date the equipment was originally placed in service, and (i) disposed of

by the taxpayer in secure geological storage, (ii) used by the taxpayer as a tertiary

injectant in a qualified enhanced oil or

natural gas recovery project and disposed

of by the taxpayer in secure geological

storage, or (iii) utilized by the taxpayer in

a manner described in section 45Q(f)(5).

(5) Section 45Q(f)(2) directs the Secretary of the Treasury or the Secretary’s

delegate (Secretary), in consultation with

the EPA, the Secretary of Energy, and

the Secretary of the Interior, to establish

regulations for determining adequate

security measures for the geological storage of qualified carbon oxide under section 45Q(a) such that the qualified carbon

oxide does not escape into the atmosphere.

Section 45Q(f)(2) further provides that

the term “geological storage of qualified

carbon oxide” includes storage at deep

saline formations, oil and gas reservoirs,

and unminable coal seams under such

conditions as the Secretary may determine

under such regulations.

(6) On June 2, 2020, the Treasury

Department and the IRS published a

notice of proposed rulemaking (REG112339-19) in the Federal Register (85

F.R. 34050) under section 45Q. After

consideration of all comments received in

response to the proposed regulations, on

January 15, 2021, the Treasury Department and the IRS, in consultation with

the EPA, Department of Energy, and the

Department of the Interior, published final

regulations in the Federal Register under

section 45Q. See T.D. 9944; 86 F.R. 4728,

as corrected in 86 F.R. 16530 (March 30,

2021).

Unless otherwise specified, all “section” or “§” references are to the Code or the Income Tax Regulations (26 CFR part 1).

Section 70522 of the OBBBA modified section 45Q to disallow the credit if the taxpayer is a specified foreign entity as defined in section 7701(a)(51)(B) of the Code or a foreign influenced

entity as defined in section 7701(a)(51)(D), determined without regard to clause (i)(II) thereof, for taxable years beginning after July 4, 2025. Section 70522 of the OBBBA also modified

section 45Q to establish parity between the credit amount for the different uses and utilization of qualified carbon oxide and the credit amount for disposal in secure geological storage for

facilities or equipment placed in service after July 4, 2025.

Bulletin No. 2026–4

365

January 20, 2026

(7) Section 1.45Q-3(a) provides that,

in general, to qualify for the § 45Q credit,

a taxpayer must either physically or contractually dispose of captured qualified

carbon oxide in secure geological storage

in the manner provided in § 1.45Q-3(b),

or utilize qualified carbon oxide in a manner conforming with section 45Q(f)(5)

and § 1.45Q-4. Secure geological storage

includes, but is not limited to, storage at

deep saline formations, oil and gas reservoirs, and unminable coal seams.

(8) Section 1.45Q-3(b) provides that

for purposes of the § 45Q credit, qualified

carbon oxide is considered disposed of

by the taxpayer in secure geological storage such that the qualified carbon oxide

does not escape into the atmosphere if

the qualified carbon oxide is (1) injected

into a well that (i) complies with applicable Underground Injection Control or

other regulations, located onshore or offshore under submerged lands within the

territorial jurisdiction of States or federal

waters, and (ii) is not used as a tertiary

injectant in a qualified enhanced oil or

natural gas recovery project, in compliance with applicable requirements under

subpart RR; or (2) injected into a well

that (i) complies with applicable Underground Injection Control or other regulations, is located onshore or offshore under

submerged lands within the territorial

jurisdiction of States or Federal waters,

and (ii) is used as a tertiary injectant in

a qualified enhanced oil or natural gas

recovery project and stored in compliance with applicable requirements under

subpart RR, or the International Organization for Standardization (ISO) standards

endorsed by the American National Standards Institute (ANSI) under CSA/ANSI

ISO 27916:2019, Carbon dioxide capture,

transportation and geological storage—

Carbon dioxide storage using enhanced

oil recovery (CO2-EOR) (CSA/ANSI ISO

27916:2019).

(9) Section 1.45Q-2(h)(5) provides

that, in general, carbon oxide that is

injected into an oil reservoir that is not

a qualified enhanced oil recovery project

under section 43(c)(2) of the Code due to

circumstances such as the first injection

of a tertiary injectant occurring before

1991, or because a petroleum engineer’s

certification was not timely filed, cannot

be treated as qualified carbon oxide, dis-

January 20, 2026

posed of in secure geological storage, or

utilized in a manner described in section

45Q(f)(5). Section 1.45Q-2(h)(5) does not

apply to an oil reservoir if: (i) the reservoir

has permanently ceased oil production;

(ii) the operator has obtained an Underground Injection Control Class VI permit;

and (iii) the operator complies with subpart RR.

(10) Section 1.45Q-3(d) provides that

for qualified enhanced oil or natural gas

recovery projects in which the taxpayer

reported volumes of carbon oxide to the

EPA pursuant to subpart RR, the taxpayer

may self-certify the volume of qualified

carbon oxide claimed for purposes of

section 45Q. For qualified enhanced oil

or natural gas recovery projects in which

the taxpayer determined volumes pursuant to CSA/ANSI ISO 27916:2019, a

taxpayer may prepare documentation as

outlined in CSA/ANSI ISO 27916:2019

internally, but all such documentation

must be provided to a qualified independent engineer or geologist, who then

must certify that the documentation provided, including the mass balance calculations as well as information regarding

monitoring and containment assurance,

is accurate and complete. The qualified

independent engineer or geologist certifying a project must be duly registered

or certified in any State. The certification

must contain an affidavit from the certifying engineer or geologist stating that he

or she is independent from the taxpayer

(and if an election under section 45Q(f)

(3)(B) has been made, the affidavit must

state that he or she is independent from

both the electing taxpayer and the credit

claimant). Certifications must be made

annually and under penalties of perjury.

For any leaked amount of qualified carbon oxide (as defined in § 1.45Q-5(c))

that is determined pursuant to CSA/ANSI

ISO 27916:2019, the certification must

also include a statement that the quantity

was determined in accordance with sound

engineering principles. Taxpayers that

capture and dispose of qualified carbon

oxide giving rise to the § 45Q credit must

file Form 8933, Carbon Oxide Sequestration Credit, with a timely filed Federal

income tax return or Form 1065, U.S.

Return of Partnership Income, including extensions or amendments to Federal

income tax returns, Forms 1065, or on

366

administrative adjustment requests under

section 6227 (AARs), as applicable.

.02 EPA Regulations

(1) Under the Safe Drinking Water

Act and regulations promulgated thereunder, injection of carbon dioxide into any

underground reservoir requires the operator to comply with Underground Injection

Control (UIC) program regulations and to

obtain the appropriate UIC well permits.

The UIC program is designed to protect

underground sources of drinking water

from underground injection. Under 40

CFR § 146.5 (Classification of injection

wells), Class VI is an appropriate UIC

well permit for wells that are not experimental in nature and that are used for

geologic sequestration of carbon dioxide

beneath the lowermost formation containing an underground source of drinking

water; for wells used for geologic sequestration of carbon dioxide that have been

granted a waiver of the injection depth

requirements pursuant to requirements at

40 CFR 146.95; or for wells used for geologic sequestration of carbon dioxide that

have received an expansion to the areal

extent of an existing Class II enhanced oil

recovery or enhanced gas recovery aquifer

exemption pursuant to 40 CFR §§ 146.4

and 144.7(d).

(2) Operators that inject carbon dioxide underground are also subject to the

EPA’s Greenhouse Gas Reporting Program (GHGRP) requirements set forth

at 40 CFR Part 98. Under 40 CFR Part

98, facilities that inject carbon dioxide

underground for long-term containment

of carbon dioxide in subsurface geologic

formations are specifically subject to subpart RR (Geologic Sequestration of Carbon Dioxide source category). Facilities

that are subject to subpart RR, including

UIC Class VI wells, are required to report

basic information on carbon dioxide

received for injection, develop and implement an EPA-approved site-specific Monitoring, Reporting, and Verification Plan,

and report the amount of carbon dioxide

geologically sequestered using a mass

balance approach and annual monitoring

activities. Such reports under subpart RR

must be prepared on a calendar year basis

(Annual Reports).

(3) Annual Reports generally must

be submitted no later than March 31 of

each calendar year for greenhouse gas

Bulletin No. 2026–4

emissions in the previous calendar year.

40 CFR § 98.3(b). Annual Reports are

required to be submitted electronically in

a format specified by the Administrator

of the EPA. 40 CFR § 98.5(a). The EPA

generally requires Annual Reports to be

submitted through the EPA’s electronic

reporting system, e-GGRT. Historically,

the EPA has launched the e-GGRT system

in mid-February for a given reporting year.

See EPA, “Extending the Reporting Deadline Under the Greenhouse Gas Reporting Rule for 2024 Data,” 90 F.R. 13085,

13087 (March 20, 2025). Annual Reports

undergo verification by the EPA, and

non-confidential data from these reports

are published on the EPA’s website.

(4) On September 16, 2025, the EPA

issued proposed regulations, Reconsideration of the Greenhouse Gas Reporting

Program, 90 F.R. 44591, proposing to

amend the GHGRP to remove program

obligations for most source categories,

including the obligations in subpart RR,

for reporting years after 2024. The proposed regulations would also revise 40

CFR Part 98 subpart A to extend the Part

98 (including subpart RR) reporting deadline for reporting year 2025 from March

31, 2026, to June 10, 2026. The EPA has

proposed that the amendments, if finalized, would become effective within sixty

days of publication in the Federal Register. Because the proposed amendments

would remove the reporting obligations

under subpart RR following reporting

year 2024, reporters would cease submitting Annual Reports within sixty days of

publication of the final rule in the Federal

SECTION 3. SAFE HARBOR FOR

CALENDAR YEAR 2025 SECURE

GEOLOGICAL STORAGE

.01 In General. This section describes a

safe harbor that taxpayers may use to satisfy the requirements of § 1.45Q-3(b)(1)

(ii) or § 1.45Q-2(h)(5)(iii), as applicable,

and § 1.45Q-3(d), for Calendar Year 2025

Secure Geological Storage in the event

the EPA does not launch the e-GGRT for

reporting year 2025 by June 10, 2026

(2025 Safe Harbor). The 2025 Safe Harbor does not apply to such storage in the

event the EPA launches the e-GGRT for

reporting year 2025 by June 10, 2026.

Bulletin No. 2026–4

.02 2025 Safe Harbor.

(1) In general. Taxpayers following

the guidance set forth in sections 3.02(2)

and 3.02(3) of this notice will be considered to have satisfied (i) the requirement

in §1.45Q-3(b)(1)(ii) or § 1.45Q-2(h)(5)

(iii), as applicable, related to subpart RR

(§ 45Q Subpart RR Requirement); and (ii)

the requirements of § 1.45Q-3(d) (Certification Requirements).

(2) Compliance with § 45Q Subpart RR

Requirement. In the event the EPA does

not launch the e-GGRT for reporting year

2025 by June 10, 2026, for Calendar Year

2025 Secure Geological Storage, such

storage will be considered to have satisfied the § 45Q Subpart RR Requirement if

(i) such storage is in compliance with the

applicable requirements of subpart RR as

in effect on December 31, 2025, and (ii)

instead of submitting the Annual Report

for reporting year 2025 with respect to

such storage through the e-GGRT pursuant

to 40 CFR §§ 98.3 and 98.5, the taxpayer

prepares and submits the Annual Report

to an independent engineer or geologist,

who certifies the Annual Report, in the

manner specified in section 3.02(3)(A)

and (B) of this notice. The Annual Report

for reporting year 2025 must contain all

of the information and documentation,

including mass balance accounting calculations and monitoring and containment

assurance, that would have been required

under subpart RR as in effect on December 31, 2025.

(3) Compliance with Certification

Requirements. Calendar Year 2025 Secure

Geological Storage will be considered to

have satisfied the Certification Requirements of § 1.45Q-3(d) if the taxpayer satisfies the requirements of section 3.02(3)

(A) and (B) of this notice with respect to

such storage.

(A) The taxpayer must submit the

Annual Report for reporting year 2025 to

a qualified independent engineer or geologist. The qualified independent engineer

or geologist certifying the information

must be duly registered or certified in any

State.

(B) The qualified independent engineer

or geologist must certify that (i) the capture and disposal described in § 1.45Q3(b)(1) or § 1.45Q-2(h)(5), as applicable,

is in compliance with subpart RR as in

effect on December 31, 2025, and (ii) the

367

information and documentation contained

in the Annual Report for reporting year

2025 is accurate and complete based upon

the requirements under subpart RR as in

effect on December 31, 2025. The certification must contain an affidavit from

the certifying engineer or geologist stating that he or she is independent from the

taxpayer (and if an election under section

45Q(f)(3)(B) has been made, the affidavit

must state that he or she is independent

from both the electing taxpayer and the

credit claimant). The certification must be

made under penalties of perjury.

.03 Timely reporting. Taxpayers that

capture and dispose of qualified carbon

oxide giving rise to the § 45Q credit must

file Form 8933 with a timely filed Federal

income tax return or Form 1065, including extensions, or amendments to Federal

income tax returns, Forms 1065, or on

AARs, as applicable. In order to rely upon

the 2025 Safe Harbor, a taxpayer must

complete all documentation and obtain the

certification described in section 3.02(2)

and (3) of this notice by the time it (or

if an election under § 45Q(f)(3)(B) has

been made, any credit claimant) timely

files its relevant tax return, as described in

the preceding sentence. Taxpayers should

retain the documentation and certification

described in section 3.02(2) and (3) of this

notice in their books and records pursuant to § 6001. See also T.D. 9944; 86 F.R.

4728, 4758-59.

SECTION 4. PAPERWORK

REDUCTION ACT

The collection of information contained in this notice has been submitted to

the Office of Management and Budget in

accordance with the Paperwork Reduction

Act (44 U.S.C. § 3507). The estimated

burden for individual filers is approved

under OMB control number 1545-0074;

for business filers, it is approved under

OMB control number 1545-0123; and for

trust filers, it is approved under OMB control number 1545-0092.

An agency may not conduct or sponsor,

and a person is not required to respond

to, a collection of information unless the

collection of information displays a valid

OMB control number.

The collections of information in this

notice are in section 3 of this notice. This

January 20, 2026

information is required to certify the volume of qualified carbon oxide disposed of

in secure geological storage for the purpose of claiming the § 45Q credit. This

information will be used by the IRS to

verify that the taxpayer is eligible for the

§ 45Q credit. The collection of information is required to obtain a benefit. The

likely respondents are businesses or other

for-profit institutions.

Books or records relating to a collection of information must be retained as

long as their contents may become material in the administration of any internal

revenue law. Generally, tax returns and

tax return information are confidential, as

required by § 6103.

SECTION 5. APPLICABILITY DATE

This notice applies with respect to Calendar Year 2025 Secure Geological Storage in the event the EPA does not launch

the e-GGRT for reporting year 2025 by

June 10, 2026. Taxpayers claiming the

§ 45Q credit for Calendar Year 2025

Secure Geological Storage may rely upon

this notice to satisfy the requirements of

§ 1.45Q-3(b)(1)(ii) or 1.45Q-2(h)(5)(iii),

as applicable, and § 1.45Q-3(d).

SECTION 6. DRAFTING

INFORMATION

The principal author of this notice is

the Office of Associate Chief Counsel

(Energy, Credits, and Excise Tax). For further information regarding this notice contact (202) 317-6853 (not a toll-free call).

Notice of Issuance of

Revenue Procedure

2026-8 Regarding Group

Exemption Letter Program

Notice 2026-8

SECTION I. PURPOSE

This notice discusses the comments

received in response to the proposed rev1

enue procedure set forth in Notice 202036, 2020-21 I.R.B. 840, along with the

modifications made in response to those

comments and other significant revisions

made by the Department of the Treasury

(Treasury Department) and the Internal

Revenue Service (IRS) to the proposed

revenue procedure, which is published

in final form as Rev. Proc. 2026-8, in this

Bulletin.

SECTION II. BACKGROUND

On May 18, 2020, the Treasury Department and the IRS published Notice 202036, which contained a proposed revenue

procedure to modify and supersede Rev.

Proc. 80-27, 1980-1 C.B. 677 (as modified

by Rev. Proc. 96-40, 1996-2 C.B. 301).

The proposed revenue procedure provided

updated procedures for a central organization described in § 501(c) of the Internal

Revenue Code (Code)1 to obtain recognition of exemption from federal income tax

on a group basis for subordinate organizations described in § 501(c) that are affiliated with and under the general supervision or control of the central organization.

The proposed revenue procedure also

set forth updated procedures that a central organization would need to follow to

maintain a group exemption letter. Under

Notice 2020-36, the IRS stopped accepting applications for group exemption letters (group applications) starting on June

17, 2020 (30 days after the notice was

published in the Internal Revenue Bulletin). As explained in section 2.08 of Rev.

Proc. 2026-8, the IRS resumed accepting

group applications after January 20, 2026,

the date of its publication in the Internal

Revenue Bulletin.

Notice 2020-36 requested comments

on all aspects of the proposed revenue

procedure because the Treasury Department and the IRS recognized that many

of the updated provisions substantially

differed from the procedures set forth in

Rev. Proc. 80-27. The Treasury Department and the IRS also recognized that the

new procedures might impose additional

administrative burdens on existing central

organizations and wanted to afford those

organizations an opportunity to comment

on the updated procedures. Notice 2020-

36 specifically requested comments on the

following:

• the administrative burden imposed

by the collections of information in

sections 3.02(3) (certain information

a central organization that exercises

general supervision over its subordinate organizations must annually

collect from its subordinate organizations and transmit to its subordinate

organizations), 3.05 (authorization

for initial inclusion in or subsequent

addition to a group exemption letter

as a subordinate organization), and 6

(Supplemental Group Ruling Information or SGRI) of the proposed revenue procedure;

• factors indicating that a subordinate

organization is affiliated with a central organization for purposes of section 3.02(2) of the proposed revenue

procedure (description of affiliation);

and

• whether central organizations with

more than one preexisting group

exemption letter would benefit from

procedures permitting the consolidation or transfer of one or more preexisting group exemption letters.

SECTION III. COMMENT

SUMMARY AND CHANGES

TO THE PROPOSED REVENUE

PROCEDURE

This section III summarizes the major

provisions of the proposed revenue procedure, the substantive comments submitted

in response to the proposed revenue procedure, and the material changes to the

proposed revenue procedure that are incorporated in Rev. Proc. 2026-8. The Treasury

Department and the IRS received 29 written comments in response to Notice 202036. The comments are available for public

inspection upon request. Feedback in those

comments informed the development of the

finalized procedures in Rev. Proc. 2026-8.

.01 Minimum Number of Subordinate

Organizations Requirement.

Section 3.01(2) of the proposed revenue procedure required a central organization to have at least five subordinate

organizations to obtain a group exemption

letter and at least one subordinate orga-

Unless otherwise specified, all “Section” or “§” references are to sections of the Code.

January 20, 2026

368

Bulletin No. 2026–4

nization to maintain a group exemption

letter thereafter. One commenter recommended eliminating the first requirement,

stating that it would discourage the use of

group exemptions by making it more difficult for a central organization to recruit

enough subordinate organizations to

obtain a group exemption letter.

The Treasury Department and the IRS

disagree with this comment. As explained

in Notice 2020-36, the requirement for a

central organization to have a minimum

number of subordinate organizations to

obtain a group exemption letter is due to

the administrative burden that processing

group applications imposes on the IRS.

Notice 2020-36 noted that the administrative burden of processing one group

application is comparable to the administrative burden of processing four individual exemption applications. Eliminating

the requirement that a central organization have five subordinate organizations

to obtain a group exemption letter would

render the group exemption letter program

inefficient in circumstances where a group

application includes fewer than five subordinate organizations. Accordingly, section 4.01(2) of Rev. Proc. 2026-8 retains

the requirement that a central organization

have five subordinate organizations to

obtain a group exemption letter because

it appropriately balances the burdens

the IRS faces in administering the group

exemption letter program and the burdens

central organizations face in complying

with the requirements to obtain the benefits of the group exemption letter program.

.02 Central Organizations Maintaining

More Than One Group Exemption Letter.

Section 3.01(3) of the proposed revenue procedure prohibited a central organization from maintaining more than one

group exemption letter. Several commenters objected to this provision, claiming

that it would decrease transparency and

place significant administrative burdens

on a central organization, particularly if

coupled with the proposed revenue procedure’s requirements involving matching,

foundation classification, and uniform

governing instruments.

As noted in Notice 2020-36, restricting

the number of group exemption letters a

central organization can maintain is necessary because traditionally, the IRS’s electronic databases have not systematically

Bulletin No. 2026–4

tracked more than one group exemption

letter per central organization. Moreover,

maintaining more than one group exemption letter may adversely affect a central

organization’s ability to exercise general

supervision or control over its subordinate organizations. Accordingly, section

4.01(3) of Rev. Proc. 2026-8 continues to

prohibit a central organization from maintaining more than one group exemption

letter. The commenters’ concerns about

the administrative burden of the prohibition on maintaining more than one group

exemption letter given the proposed revenue procedure’s requirements involving matching, foundation classification,

and uniform governing instruments are

addressed by the revisions to those provisions discussed in sections III.08, III.09,

and III.11 of this notice.

.03 Affiliation Requirement.

Section 3.02(1) and (2) of the proposed

revenue procedure required a central organization to establish that each subordinate

organization to be included in the group

exemption letter is affiliated with the central organization and stated that a subordinate organization’s affiliation with the

central organization is demonstrated by

the entirety of the information required

to be submitted in section 5.03 of the proposed revenue procedure. One commenter

requested more clarity regarding the

standard for determining whether a subordinate organization is affiliated with a

central organization. In response, section

4.02(2) of Rev. Proc. 2026-8 adds several examples illustrating how a central

organization may demonstrate affiliation

with its subordinate organizations, while

reforming the “entirety of the information” standard regarding affiliation that

is set forth in section 3.02(2) of the proposed revenue procedure into a standard

that reviews all “facts and circumstances

showing that [the subordinate organization] is a chapter, local, post, or unit of the

central organization.”

.04 General Supervision Standard.

Section 3.02(1) of the proposed revenue procedure required a central organization to have one or more subordinate organizations under its general supervision or

control. Section 3.02(3) of the proposed

revenue procedure stated that the general

supervision requirement is satisfied if the

central organization (1) annually obtains,

369

reviews, and retains information on the

subordinate organization’s finances, activities, and compliance with annual filing

requirements (in accordance with section

7 of the proposed revenue procedure), and

(2) transmits written information to (or

otherwise educates) the subordinate organization about the requirements to maintain tax-exempt status under the applicable

paragraph of § 501(c), including annual

filing requirements (in accordance with

section 7 of the proposed revenue procedure). Several commenters claimed that

the general supervision standard in the

proposed revenue procedure was ambiguous concerning the amount and type of

information a central organization must

obtain, review, and retain regarding its

subordinate organizations’ finances, activities, and compliance with filing requirements. One commenter requested more

specificity regarding the way a central

organization exercises general supervision

over subordinate organizations that file

Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not

Required to File Form 990, or Form 990EZ, Short Form Return of Organization

Exempt From Income Tax.

To provide additional clarity and specificity, section 4.02(3)(b) of Rev. Proc.

2026-8 provides that a central organization

satisfies the requirement to obtain, review,

and retain information about a subordinate

organization by acquiring a copy of the

Form 990, Return of Organization Exempt

From Income Tax, or Form 990-EZ that

the subordinate organization filed with the

IRS. However, section 4.02(3)(b) of Rev.

Proc. 2026-8 also provides that obtaining

a copy of a Form 990-N will not satisfy

the central organization’s requirement

to obtain, review, and retain information

regarding the subordinate organization.

Consequently, a central organization

must obtain information about subordinate organizations that file Form 990-N

in some other manner, such as by requiring additional annual written information

from those subordinate organizations.

Section 4.02(3)(c) of Rev. Proc. 2026-8

provides a separate rule for subordinate

organizations that are not required to file

an annual information return or notice.

This new provision was added in response

to different comments and is addressed in

section III.07 of this notice.

January 20, 2026

Commenters also asked about the information a central organization must transmit to subordinate organizations regarding

how to maintain tax-exempt status under

§ 501(c)(3). Section 4.02(3)(a)(ii) of Rev.

Proc. 2026-8, like section 3.02(3)(b) of the

proposed revenue procedure, is intentionally broad so as to afford a central organization flexibility in meeting the general

supervision standard; however, to provide

additional clarity, section 4.02(3)(a)(ii) of

Rev. Proc. 2026-8 specifies that electronic

delivery of such information is acceptable

and that the required information must be

transmitted to subordinate organizations

annually. Additionally, section 4.02(5) of

Rev. Proc. 2026-8 contains a new example that illustrates that one way a central

organization can meet the standard in section 4.02(3)(a)(ii) of Rev. Proc. 2026-8 is

to provide its subordinate organizations an

electronic link to the latest version of Publication 557, Tax-Exempt Status for Your

Organization.

Some commenters suggested that a

subordinate organization should only be

required to inform the central organization

that it has complied with its filing obligations once every three years because

§ 6033(j)(1)(B) provides for the automatic

revocation of tax-exempt status of certain

organizations upon the failure to file a

required information return or notice for

three consecutive years. This suggestion is

not adopted in Rev. Proc. 2026-8 because

the Treasury Department and the IRS

believe that the requirement that a central organization annually obtain, review,

and retain information on its subordinate

organizations helps ensure the subordinate

organizations are complying with their filing requirements.

.05 Control Standard.

Section 3.02(4) of the proposed revenue procedure provided that a subordinate

organization is subject to a central organization’s control if (1) the central organization appoints a majority of the subordinate organization’s officers, directors, or

trustees; or (2) a majority of the subordinate organization’s officers, directors, or

trustees are officers, directors, or trustees

of the central organization. Some commenters claimed that this control standard

was overly rigid and that compliance with

it would be burdensome, particularly for

a central organization with numerous subordinate organizations. One commenter

asked that the final revenue procedure

consider alternative governance structures

that also demonstrate control by the central organization, such as cases in which

the central organization must approve the

election of the subordinate organization’s

directors. Another commenter stated that

the proposed control standard was at odds

with principles of union democracy and

that it directly contradicts provisions of

the Labor-Management Reporting and

Disclosure Act2 that require officers of

covered unions to be elected by a secret

ballot of members.

The Treasury Department and IRS

agree that the control standard should

not be rigid to the point of being burdensome and should be generally compatible with principles of union democracy

and alternative governance structures.

To provide additional flexibility to the

control standard, section 4.02(4)(e) of

Rev. Proc. 2026-8 adds a third way for

a central organization to establish control over a subordinate organization. The

central organization can establish control

over the subordinate organization using

a written agreement evidencing its control over the subordinate organization’s

activities and operations. Rev. Proc.

2026-8 does not set forth a specific level

of control that must be established in the

written agreement. Whether the written

agreement sufficiently establishes control depends on the facts and circumstances. This expansion of the control

standard should alleviate the concerns

expressed by commenters regarding

alternative governance structures and

the Labor-Management Reporting and

Disclosure Act. Specifically, the expansion permits central organizations to use

a written agreement that describes an

alternative governance structure to establish control over subordinate organizations that use that alternative governance

structure. This expansion also permits a

central organization to establish control

over its subordinate organizations using a

written agreement addressing aspects of

the subordinate organization’s activities

and operations without interfering with

the election of union officers.

A commenter suggested that any reference in the control standard to “a majority of officers, directors, or trustees” must

be limited to those officers, directors, and

trustees that have voting power because,

in the commenter’s view, voting power

evinces control. The Treasury Department

and the IRS generally agree with this

comment. Accordingly, section 4.02(4)

(a)-(d) of Rev. Proc. 2026-8 provides that

a subordinate organization is subject to

a central organization’s control if (1) the

central organization appoints the subordinate organization’s directors or trustees who possess a majority of the voting

power with respect to the subordinate

organization’s governance, (2) the central

organization appoints a majority of the

subordinate organization’s officers, (3)

the subordinate organization’s directors or

trustees possessing a majority of the voting power with respect to the subordinate

organization’s governance are directors

or trustees of the central organization, or

(4) a majority of the subordinate organization’s officers are officers of the central

organization.

.06 Use of Intermediate Subordinate Organizations to Establish General

Supervision or Control.

Several commenters suggested that the

final revenue procedure allow a central

organization to exercise general supervision or control over subordinate organizations through intermediate subordinate

organizations. The Treasury Department

and the IRS do not agree with these comments. A central organization is directly

responsible for ensuring its subordinate organizations are entitled to federal

tax-exempt status, and allowing a central

organization to establish general supervision or control through intermediate subordinate organizations would run the risk

of undermining this fundamental aspect of

the group exemption letter program. Further, the use of intermediate subordinate

organizations would create administrative

complexities for the IRS in the event a

group exemption letter is the subject of an

examination.

Labor-Management Reporting and Disclosure Act of 1959, Public Law 86-257, 73 Stat. 519 (codified as amended in Title 29 of the United States Code).

January 20, 2026

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Bulletin No. 2026–4

.07 Concerns by Religious Organizations Regarding General Supervision or

Control.

Several

religious

organizations

objected to the general supervision or

control standards in section 3.02(3) and

(4) of the proposed revenue procedure,

claiming the standards would impermissibly interfere with their religious practices

because their religious beliefs require

self-governance and autonomy at the local

level. These commenters argued that the

proposed revenue procedure would prevent them from participating in the group

exemption letter program, in violation of

the First Amendment and the Religious

Freedom Restoration Act.3

In response to the comments from these

religious organizations, section 4.02(3)(c)

of Rev. Proc. 2026-8 provides that a central organization does not have to annually obtain, review, and retain information

on a subordinate organization’s finances,

activities, and compliance with annual filing requirements if that subordinate organization is not required to file an annual

information return or notice. Under these

circumstances, a central organization satisfies the general supervision standard in

section 4.02(3)(a) of Rev. Proc. 2026-8 by

annually transmitting written information

to, or otherwise educating, the subordinate organization about the requirements

to maintain tax-exempt status under the

applicable paragraph of section 501(c),

including, but not limited to, annual filing requirements, if applicable. Section

4.02(5)(c) of Rev. Proc. 2026-8 adds an

example to further clarify this point. The

Treasury Department and the IRS believe

these commenters’ concerns are alleviated

by the aforementioned revisions to the

general supervision standard of section

4.02(3) of Rev. Proc. 2026-8, because they

can participate in the group exemption

letter program by satisfying the general

supervision standard, rather than the more

onerous control standard.

Some religious organizations objected

to the use of the term “subordinate organization,” stating that the term does not

accurately reflect their organizational

structure. Rev. Proc. 2026-8 continues to

use the term “subordinate organization”

because the group exemption letter program has referred to organizations as subordinate organizations for many decades

and changing the term now would likely

cause confusion. The use of this nomenclature for purposes of the group exemption letter program does not have any

impact on the federal tax treatment of the

organizations that choose to participate in

the group exemption letter program.

.08 Matching Requirement for a Central Organization Described in § 501(c).

Section 3.03(2)(a)(i) of the proposed

revenue procedure retained the “matching

requirement” found in Rev. Proc. 80-27,

which required all subordinate organizations initially included in, or subsequently added to, a group exemption letter

to be described in the same paragraph of

§ 501(c). Section 3.03(2)(a)(ii) of the proposed revenue procedure added an additional matching requirement that required

all subordinate organizations initially

included in, or subsequently added to, a

group exemption letter to be described

in the same paragraph of § 501(c) as the

central organization, including a central

organization that is described in § 501(c)

and is an instrumentality or an agency of

a political subdivision. Section 3.03(2)(a)

(iii) of the proposed revenue procedure

provided that this additional matching

requirement would not apply if the central

organization is an instrumentality or an

agency of a political subdivision but is not

described in § 501(c). Several commenters expressed support for the additional

matching requirement, but others objected

to it.

Notice 2020-36 explained that requiring subordinate organizations to be

described in the same paragraph of

§ 501(c) as their central organization was

intended to improve the central organization’s ability to exercise general supervision or control over its subordinate organizations. Given the changes Rev. Proc.

2026-8 makes to other provisions of the

proposed revenue procedure, the Treasury

Department and the IRS have determined

that it is not necessary for subordinate

organizations to be described in the same

paragraph of § 501(c) as their central organization. Accordingly, section 4.03(2)(a)

of Rev. Proc. 2026-8 requires subordinate

organizations to be described in the same

paragraph of § 501(c) as one another, but

subordinate organizations are not required

to be described in the same paragraph of

§ 501(c) as their central organization.

.09 Foundation Classification Requirement.

Section 3.03(2)(b) of the proposed revenue procedure provided that all subordinate organizations described in § 501(c)

(3) that are initially included in, or subsequently added to, a group exemption

letter must be classified as public charities

under the same paragraph of § 509(a),

unless an exception applies. Several commenters stated that this “foundation classification requirement” accomplished little,

due to the exceptions, and that it would

increase administrative burdens in some

instances. The Treasury Department and

the IRS agree with this comment. Accordingly, Rev. Proc. 2026-8 does not include

a foundation classification requirement.

.10 Similar Purpose Requirement.

Section 3.03(2)(c) of the proposed

revenue procedure contained a “similar

purpose requirement” that required all

subordinate organizations under a group

exemption letter to have a primary purpose that is described by the same National

Taxonomy of Exempt Entities (NTEE)

code. One commenter contended that the

requirement would place unnecessary

burdens on organizations and potentially

limit participation in the group exemption

letter program.

The Treasury Department and the IRS

have determined that the similar purpose

requirement contained in the proposed

revenue procedure would not facilitate a

central organization’s exercise of general

supervision or control over its subordinate

organizations as was originally intended.

Subordinate organizations under many

group exemption letters have different purposes, and a central organization

would have a strong incentive to select

a NTEE code that describes a wide variety of purposes in order to comply with

a similar purpose requirement. Furthermore, a similar purpose requirement is

unnecessary because other provisions of

Rev. Proc. 2026-8 adequately facilitate

The Religious Freedom Restoration Act of 1993, Public Law 103-141, 107 Stat. 1488 (codified at 42 U.S.C. § 2000bb through 42 U.S.C. § 2000bb-4).

Bulletin No. 2026–4

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January 20, 2026

general supervision or control by a central organization. Accordingly, Rev. Proc.

2026-8 does not include a similar purpose

requirement.

.11 Uniform Governing Instrument

Requirement.

Section 3.03(2)(d) of the proposed revenue procedure provided that all subordinate organizations must adopt a uniform

governing instrument, such as, but not

limited to, a charter, trust indenture, articles of association, etc., and provided that

representative instruments are not acceptable for this purpose. For group exemption letters including subordinate organizations described in § 501(c)(3) with

different purposes, the proposed revenue

procedure required the governing instrument describing each distinct charitable,

educational, scientific, or other exempt

purpose to be a uniform governing instrument.

Many commenters said that this “uniform governing instrument requirement”

was untenable, claiming that complete

uniformity is impossible in many circumstances because state law requirements for

governing instruments vary from state to

state. The commenters also said that subordinate organizations often have substantially different functions in carrying out

the overarching purpose of a group, which

often requires governing instruments that

differ even though such differences do not

necessarily reflect differences in purpose.

Religious organizations raised concerns

that the uniform governing instrument

requirement would impermissibly interfere with church governance. One commenter noted that the uniform governing

instrument requirement would be at odds

with principles of union democracy and

local decision making that are codified

in the Labor-Management Reporting and

Disclosures Act.

The Treasury Department and the IRS

agree that the uniform governing instrument requirement in the proposed revenue procedure would impose burdens

that outweigh its effectiveness in the

administration of the group exemption

letter program. Accordingly, Rev. Proc.

2026-8 does not include a uniform governing instrument requirement. Instead,

section 4.03(2)(b) of Rev. Proc. 2026-8

sets forth a uniform purpose statement

requirement that requires subordinate

January 20, 2026

organizations that share the same purpose to have a uniform purpose statement in their governing instruments (for

example, a charter, trust indenture, articles of association, etc.). If one or more

subordinate organizations covered by a

group exemption letter have a purpose

that is different from the purpose of other

subordinate organizations covered by the

letter, the subordinate organizations that

share a purpose must include the same

uniform purpose statement in their governing instruments. The uniform purpose

statement must generally describe the

purpose of the subordinate organizations.

The Treasury Department and the IRS

believe that, unlike the uniform governing instrument requirement in the proposed revenue procedure, this uniform

purpose statement requirement addresses

commenters’ concerns about the varying

state laws regarding governing instruments. The uniform purpose statement

requirement also allows subordinate

organizations to retain appropriate autonomy from the central organization, as

may be necessary for non-tax purposes.

Moreover, requiring subordinate organizations to have a uniform purpose statement helps central organizations ensure

that all subordinate organizations under

their general supervision or control have

a valid exempt purpose. The uniform purpose statement requirement also reduces

the IRS’s administrative burden because

it enables more streamlined processing of

group applications.

.12 Annual Accounting Period Requirement.

Section 4.02(5) of Rev. Proc. 80-27

required subordinate organizations to be

on the same annual accounting period as

the central organization to be included in

a group return. While the proposed revenue procedure did not clearly provide

this requirement, section 5.03(j) of the

proposed revenue procedure required a

central organization that submits a group

application to include a statement that

any subordinate organizations that will be

included in a group return will be on the

same annual accounting period as the central organization. To make it clear that the

annual accounting period requirement in

Rev. Proc. 80-27 remains applicable, section 4.03(2)(c) of Rev. Proc. 2026-8 sets

forth an annual accounting period require-

372

ment equivalent to section 4.02(5) of Rev.

Proc. 80-27.

.13 Exclusion of Revoked Organizations.

Under section 3.04(5) of the proposed

revenue procedure, an organization that

had its exemption automatically revoked

and that has not yet had its exemption

reinstated after filing an application for

reinstatement was ineligible to be a subordinate organization under a group

exemption letter until the IRS reinstated

the organization’s exemption. One commenter opined that this requirement is

unnecessary and overly burdensome and

suggested that a simplified procedure,

such as filing a Form 990-series information return for the prior years, should be

sufficient for an automatically revoked

organization to join a group exemption

letter.

Allowing an organization that has

had its tax-exempt status automatically

revoked to regain tax-exempt status by

joining a group exemption letter would

violate § 6033(j)(2). That section requires

organizations that lose tax-exempt status

by automatic revocation to apply for reinstatement to become tax-exempt again.

Accordingly, section 4.04(5) of Rev. Proc.

2026-8 retains the requirement in the proposed revenue procedure that an organization that loses tax-exempt status by automatic revocation must be reinstated before

it is eligible to be a subordinate organization. Further, section 9.07 of Rev. Proc.

2026-8, which discusses automatic revocation, clarifies that an organization that

has its tax-exempt status automatically

revoked must file an application for reinstatement to qualify for tax-exempt status

even if the organization was not originally

required to apply for tax-exempt status.

.14 Authorization for Initial Inclusion

or Subsequent Addition as a Subordinate

Organization.

Section 3.05(1) of the proposed revenue procedure retained the requirement

from Rev. Proc. 80-27 that a subordinate

organization must authorize a central

organization in writing to include it in a

group application. Section 3.05(2) of the

proposed revenue procedure added that

this authorization must acknowledge that

the central organization may remove the

subordinate organization from the group

exemption letter if the subordinate orga-

Bulletin No. 2026–4

nization fails to comply with the requirements of the proposed revenue procedure.4

Some commenters were concerned that

this new authorization requirement would

not accommodate subordinate organizations that executed an authorization that

satisfies Rev. Proc. 80-27 while waiting

for the IRS to resume accepting group

applications upon the publication of Rev.

Proc. 2026-8. These commenters asked

for a one-year transition period before the

new authorization requirement goes into

effect. Several commenters also suggested

that, if a subordinate organization had

been included in a group exemption letter

for more than five years when Rev. Proc.

2026-8 is published, the IRS should presume that such subordinate organization

provided the required authorization to the

central organization even if a copy cannot

be located.

Rev. Proc 2026-8 does not provide the

transition period requested by the commenters and does not adopt the presumption for subordinate organizations that

have been included in a group exemption

letter for more than five years. If a subordinate organization executed an authorization that does not include a right of

removal during the period when the IRS

was not accepting group applications, the

central organization must obtain a new

authorization from the subordinate organization. Moreover, if a central organization

cannot locate the required authorization

for a subordinate organization, it must

obtain a new authorization. The Treasury Department and the IRS have determined that the small burden in obtaining

an authorization is justified because both

central organizations and subordinate

organizations must demonstrate compliance with Rev. Proc. 2026-8 to receive the

administrative conveniences it affords.

Although Rev. Proc. 2026-8 does not

include any of the revisions requested by

commenters regarding the authorization

for initial inclusion or subsequent addition

to a group exemption letter as a subordinate organization in section 3.05 of the

proposed revenue procedure, Rev. Proc.

2026-8 revises the authorization provision in the proposed revenue procedure

to require the authorization to permit the

central organization to remove the subordinate organization with or without cause,

in accordance with the provisions of section 8.02 of Rev. Proc. 2026-8. This revision to the authorization provision reflects

changes to the provisions of Rev. Proc.

2026-8 governing the removal of subordinate organizations by a central organization that are addressed in section III.17 of

this notice.

.15 Instructions for Submitting a Group

Application.5

No comments were received regarding

the instructions for submitting a group

application contained in section 5 of the

proposed revenue procedure. However,

the Treasury Department and the IRS

have revised the instructions in the proposed revenue procedure, which are contained in section 6 of Rev. Proc. 2026-8, to

reflect changes to other provisions of the

proposed revenue procedure. Specifically,

section 6.04(1)(o) of Rev. Proc. 2026-8

provides that the IRS can issue guidance

requiring central organizations to provide additional information in a group

application, and section 6.04(3) of Rev.

Proc. 2026-8 requires a central organization with a pending group application to

provide additional information to the IRS

correcting any inaccurate information or

representations in the pending group application, even if the inaccuracies arise after

the application is submitted to the IRS.

These two new provisions will increase

the efficiency of the group exemption letter program and improve the integrity of

data collected for purposes of oversight of

the group exemption letter program.

The Treasury Department and the IRS

also revised the instructions in the proposed revenue procedure regarding the

method for submitting a group application.

Under section 6.02 of Rev. Proc. 2026-8,

group applications must be submitted

electronically on Form 8940 at www.

pay.gov, along with all information, documentation, and other materials required

by Form 8940 and its instructions, including the appropriate user fee. The IRS may

change the procedures for the submission

of group applications through guidance

published in the Internal Revenue Bulletin

or in forms, instructions, publications, or

a posting on irs.gov issued with respect to

Rev. Proc. 2026-8.

.16 Information Required to Maintain

a Group Exemption Letter / Supplemental

Group Ruling Information.

Under section 6 of the proposed revenue procedure, when a central organization made a Supplemental Group Ruling

Information (SGRI) submission adding

a subordinate organization to its group

exemption letter, the central organization

was required to include certain information in the submission, including a statement that the information upon which

the group exemption letter is based is

applicable to the new subordinate organization in all material respects. The SGRI

submission was also required to include,

among other things, a detailed description

of changes in the purposes and activities

of subordinate organizations, as well as

the date of formation of any subordinate

organization that has changed its name

or address or is no longer included in the

group exemption letter.

One commenter stated that it might be

inappropriate to require a central organization to report that the original information

upon which a group exemption is based is

applicable to a new subordinate organization if the central organization reported

changes in the purposes or activities of the

group exemption in previous SGRI submissions. In response, section 7.02(3)(b)

of Rev. Proc. 2026-8 now provides that a

central organization making an SGRI submission that adds a subordinate organization to its group exemption letter must

include a statement that the information

upon which the group exemption letter is

based, as updated by the current or previous SGRI submissions, is applicable to the

new subordinate organization in all material respects.

One commenter asked that the final

revenue procedure provide a procedure

for a central organization to request

approval of any SGRI modifications the

central organization makes to the information upon which its group exemption

is based. This commenter stated that such

The proposed revenue procedure and Rev. Proc. 2026-8 except preexisting subordinate organizations from this new authorization requirement.

A central organization’s submission to obtain a group exemption letter is referred to a “request for a group exemption letter” or a “group exemption letter request” in the proposed revenue

procedure and as a “group application” in Rev. Proc. 2026-8. For purposes of consistency, this notice uses the term “group application.”

Bulletin No. 2026–4

373

January 20, 2026

an approval procedure will help the central organization ensure that its standards

for reviewing new subordinate organizations remain acceptable to the IRS. At

this time, the Treasury Department and

the IRS decline to create a procedure to

approve group exemption letter modifications because such a procedure would be

inconsistent with the IRS’s general position not to rule on modified activities of

tax-exempt organizations. See section

3.01(83) of Rev. Proc. 2026-3, 2026-1

I.R.B. 143 (the IRS will not issue letter

rulings or determination letters regarding

whether an organization is or continues to

be exempt from taxation under § 501(a)

as an organization described in §§ 501(c)

or 501(d), including whether changes in

an organization’s activities or operations

will affect or jeopardize the organization’s

tax-exempt status); section 3.02(7) of Rev.

Proc. 2026-5, 2026-1 I.R.B 258 (the IRS

will not issue a determination letter if an

organization recognized as tax-exempt

under § 501(c) requests a new determination letter confirming that the organization

continues to be recognized under the same

Code section). If the IRS’s position under

section 3.01(83) of Rev. Proc. 2026-3 (or

its successor), and section 3.02(7) of Rev.

Proc. 2026-5 (or its successor) changes,

the IRS may reconsider creating a procedure to approve group exemption letter

modifications.

Another commenter took exception

to the proposed revenue procedure’s

requirement that a central organization’s

SGRI submission include descriptions of

all changes in the purposes and activities

of subordinate organizations. This commenter stated that the proposed reporting

requirement was overly broad, burdensome, and unnecessary. The Treasury

Department and the IRS agree with the

commenter. Accordingly, section 7.02(1)

of Rev. Proc. 2026-8 contains the reporting requirements contained in Rev. Proc.

80-27, which only require information

regarding changes in the purposes, character, or method of operation of subordinate

organizations.

A final commenter suggested that

SGRI submissions should not be required

to include the date of formation of a subordinate organization if the purpose of

the SGRI submission is to report a name

or address change or that the subordinate

January 20, 2026

organization is no longer part of the group

exemption letter. In response, section

7.02(3)(a) of Rev. Proc. 2026-8 provides

that a central organization is required to

report the date of formation or incorporation of a subordinate organization in an

SGRI submission only when it is adding

the subordinate organization to its group

exemption letter.

Rev. Proc. 2026-8 makes four additional changes to the SGRI provisions.

First, section 7.01 of Rev. Proc. 2026-8

continues to require a central organization

to submit its annual SGRI at least 30 days

before the close of its annual accounting

period but adds that a central organization may not submit its annual SGRI

more than 90 days before the close of its

annual accounting period. Second, section

7.02(2)(a)(iii) of Rev. Proc. 2026-8 provides that SGRI submissions must include

a list of subordinate organizations whose

tax-exempt status has been automatically

revoked. Third, under section 7.02(4) of

Rev. Proc. 2026-8, the IRS may specify additional information to be included

in SGRI submissions through published

guidance or another form of guidance

issued after Rev. Proc. 2026-8 is published. Finally, under section 7.03, SGRI

submissions must be made electronically.

If the IRS has not published procedures

for the electronic submission of SGRI by

the publication date of Rev. Proc. 20268, SGRI must be mailed to the address set

forth in section 7.03 of Rev. Proc. 2026-8.

The IRS may change the address and the

procedures for the submission of SGRI

through guidance published in the Internal Revenue Bulletin or in forms, instructions, publications, or a posting on irs.gov

issued with respect to Rev. Proc. 202-8.

These new provisions will increase the

efficiency of the group exemption letter

program and improve the integrity of data

collected for purposes of oversight of the

group exemption letter program.

.17 Termination of, or Removal from,

the Group Exemption Letter.

Section 8.01 of the proposed revenue procedure provided that the IRS

may terminate a group exemption letter

with respect to all subordinate organizations for, among other reasons, noncompliance by the central organization

with the requirements of the proposed

revenue procedure, including lateness

374

in any SGRI submission and any failure to exercise general supervision or

control over one or more subordinate

organizations. One commenter claimed

that the proposed revenue procedure’s

provisions involving IRS termination of

a group exemption letter were too strict

and may result in “isolated errors” causing the termination of a group exemption

letter. The Treasury Department and the

IRS do not agree with this comment. The

termination provisions contained in the

proposed revenue procedure are necessary to ensure that central organizations

and subordinate organizations remain in

compliance with the requirements of the

group exemption letter program. Further,

several of the proposed revenue procedure’s requirements have been relaxed in

Rev. Proc. 2026-8, easing the burdens on

organizations participating in the group

exemption letter program and making it

less likely that errors resulting in an IRS

termination will occur. Additionally, IRS

termination under section 8.01(1) of Rev.

Proc. 2026-8 is discretionary and the IRS

can consider whether an error is isolated

when determining whether termination

is warranted. Accordingly, Rev. Proc.

2026-8 contains the termination provisions as proposed.

The proposed revenue procedure provided that the IRS can also terminate a

group exemption letter with respect to all

subordinate organizations if more than half

of the subordinate organizations have had

their exemptions automatically revoked. A

commenter expressed concern about this

provision, noting that it is common for

small subordinate organizations to rely on

volunteers who may not understand their

filing responsibilities and that if one or

more of the subordinate organizations has

their exemption automatically revoked,

it puts the group exemption letter at risk

of termination. The Treasury Department

and the IRS disagree with this comment.

If more than half of the subordinate organizations have had their exemptions automatically revoked, it is appropriate to terminate the group exemption letter because

the Treasury Department and the IRS

do not believe the administrative conveniences afforded by the group exemption

letter program should be available when

the majority of underlying subordinate

organizations fail to satisfy their statutory

Bulletin No. 2026–4

filing requirements. Accordingly, section

8.01(1)(g) of Rev. Proc. 2026-8 retains the

IRS’s ability to terminate a group exemption letter if the tax-exempt status of more

than half of the subordinate organizations

under that group exemption letter is automatically revoked for failure to satisfy

annual filing requirements.

Section 8.02 of the proposed revenue

procedure provided that a subordinate

organization will be removed from a group

exemption letter if (i) the central organization notifies the IRS that the subordinate

organization will no longer be included

in the group exemption letter, (ii) the IRS

determines that the subordinate organization is a type of entity disqualified from

being a subordinate organization, (iii) the

subordinate organization’s exemption is

automatically revoked, or (iv) the subordinate organization fails to satisfy certain

requirements of the proposed revenue procedure. While commenters did not submit

any comments regarding these provisions,

Rev. Proc. 2026-8 contains a number of

revisions regarding when subordinate

organizations may be removed from a

group exemption letter.

Section 8.02(1) of Rev. Proc. 2026-8

sets forth the circumstances when a subordinate organization may be removed

from a group exemption letter by the IRS.

This provision has been revised to remove

references to the foundation classification

and similar purpose requirements because

those requirements have been eliminated

and are not contained in Rev. Proc. 20268; however, a new provision contained in

section 8.02(1)(b) of Rev. Proc. 2026-8

permits the IRS to remove a subordinate

organization from a group exemption letter for any failure to meet the requirements

of Rev. Proc. 2026-8 or other published

guidance relating to Rev. Proc. 2026-8,

other than the bases for removal set forth

in section 8.02(1)(a) of Rev. Proc. 2026-8.

Unlike removal under section 8.02(1)(a)

of Rev. Proc. 2026-8, and the corresponding provisions of the proposed revenue

procedure, where removal is mandatory,

removal of a subordinate organization

from a group exemption letter under section 8.02(1)(b) of Rev. Proc. 2026-8 is

discretionary. The Treasury Department

and the IRS believe this new provision is

appropriate because it provides flexibility

in considering the severity of the subor-

Bulletin No. 2026–4

dinate organization’s failure to meet the

requirements under the group rulings program.

Section 8.02(2) of Rev. Proc. 2026-8

governs when a central organization can

remove a subordinate organization from

a group exemption letter. As is the case

under Rev. Proc. 80-27, Rev. Proc. 2026-8

permits a central organization to remove

a subordinate organization without action

by the IRS. The central organization

accomplishes this removal by sending

an SGRI submission to the IRS just as

required by Rev. Proc. 80-27. Specifically,

section 8.02(2) of Rev. Proc. 2026-8 states

a subordinate organization ceases to be

included in a group exemption letter on

the date the central organization notifies

the IRS of the removal.

Section 8.02(2) of Rev. Proc. 2026-8

also clarifies that a central organization

may remove a subordinate organization

from its group exemption letter with or

without cause. The proposed revenue procedure was not clear whether a subordinate organization can be removed without

cause. The Treasury Department and the

IRS believe that a central organization

should be able to remove a subordinate

organization from its group exemption

letter with or without cause, because that

ability affords the central organization

flexibility in overseeing the composition

of its group exemption letter.

Finally, section 8.02(3) of Rev. Proc.

2026-8 provides that a central organization must give a subordinate organization at least 30 days’ notice before the

subordinate organization can be removed

from a group exemption letter. The Treasury Department and the IRS believe this

notice requirement affords subordinate

organizations opportunity to prepare for

removal from a group exemption letter.

.18 Effect of Non-Acceptance, Non-Issuance, Termination, or Removal.

Section 9 of the proposed revenue procedure addressed ways that organizations

may obtain recognition of tax-exempt status if they are included as a subordinate

organization in a group application that is

not accepted or for which the IRS declines

to issue a group exemption letter. The proposed revenue procedure also addressed

ways that organizations may regain recognition of tax-exempt status if their group

exemption letter is terminated or if they

375

are removed from their group exemption

letter. Though commenters did not submit

any comments regarding these provisions

of the proposed revenue procedure, Rev.

Proc. 2026-8 reflects two clarifying revisions.

Sections 9.05(2)(b) and (c) of Rev.

Proc. 2026-8 clarify that a subordinate

organization included in a group application that is not accepted by the IRS,

included in a group application where the

IRS declines to issue a group exemption

letter, or included in a group exemption

letter that is terminated, may obtain recognition of its tax-exempt status by being

included in a group application by the

same central organization. If a subordinate organization is removed from a group

exemption letter, it may not be included

in a group application by the same central

organization because central organizations are only permitted to have one group

exemption letter.

Section 9.05(2)(e) of Rev. Proc. 2026-8,

which is a provision that was not included

in the proposed revenue procedure, clarifies that a subordinate organization may

obtain recognition of its exempt status

by being added back to a group exemption letter from which it was removed.

The proposed revenue procedure did not

provide for a subordinate organization to

obtain recognition of its tax-exempt status

in this manner.

.19 Effective Date of Exemption.

Under section 10 of the proposed revenue procedure, a subordinate organization added to a group exemption letter is

tax-exempt from the submission date of

the SGRI adding the organization to the

group exemption letter (unless the organization was already recognized as tax-exempt or included in another group exemption letter, in which case the organization

retains its earlier effective date of exemption). The proposed revenue procedure

provided that a subordinate organization

included in a group application is tax-exempt from the date of its formation if all

the subordinate organizations included in

the group application were formed within

27 months of the postmark date of the

group application. If any of the subordinate organizations included in the group

application were formed more than 27

months before the postmark date of the

group application and were not previously

January 20, 2026

recognized as tax-exempt or included in

another group exemption letter, then each

subordinate organization would be recognized as tax-exempt from the postmark

date of the group application.

Commenters recommended revising

the rule regarding subordinate organizations added to a group exemption letter to

provide that a newly formed subordinate

organization is treated as tax-exempt from

its date of formation if the SGRI adding

the organization to the group exemption

letter was submitted within 27 months

of the organization’s date of formation.

According to these commenters, the rule

in the proposed revenue procedure is

unduly burdensome because it requires a

central organization to make an SGRI submission immediately upon the formation

of each new subordinate organization to

avoid any period during which the subordinate organization is not tax-exempt.

The Treasury Department and the IRS

agree with this comment. Accordingly,

section 10.02 of Rev. Proc. 2026-8 provides that the effective date of exemption

for a subordinate organization that was

not previously recognized as tax-exempt

or included in another group exemption

letter and that is added to a group exemption letter within 27 months of its date of

formation is the organization’s date of formation. The effective date of exemption

for a subordinate organization that was

not previously recognized as tax-exempt

or included in another group exemption

letter and that is added to a group exemption letter more than 27 months after its

date of formation will be the submission

date of the SGRI adding it to the group

exemption letter.

One commenter recommended revising the rule regarding the effective date

of exemption of subordinate organizations included in a group application

because it penalizes innocent subordinate organizations if only one subordinate organization was formed more than

27 months before the postmark date of

the group application and creates a disincentive for organizations to be included

in a group application. According to this

commenter, any organization formed

within 27 months of the postmark date

of the application should be treated as

tax-exempt from its date of formation

even if there are other subordinate organizations included in the group application that were formed more than 27

months before the postmark date.

Rev. Proc. 2026-8 does not include

the suggested revision. Like the rules in

section 10 of the proposed revenue procedure, section 10.01 of Rev. Proc. 2026-8

provides that if any subordinate organization included in a group application was

formed more than 27 months before the

submission of the group application, the

effective date of exemption for all subordinate organizations listed in the group

application will be the submission date of

the group application. However, section

10.01 of Rev. Proc. 2026-8 differs from

the corresponding provisions in Rev. Proc.

80-27 and the proposed revenue procedure

in that it provides that subordinate organizations recognized as tax-exempt or that

are included in another group exemption

letter immediately prior to being included

in the group application retain their effective date of exemption. This revision

provides continuity for those subordinate organizations by clarifying that they

retain their effective date of exemption.

The Treasury Department and the IRS

believe sections 10.01 and 10.02 of Rev.

Proc. 2026-8 provide central organizations with sufficient flexibility to achieve

the desired effective date of exemption for

each subordinate organization, while continuing to facilitate efficient processing of

group applications in the same manner as

the effective date rules contained in Rev.

Proc. 80-27.

.20 Preexisting Subordinate Organization Rule and Transition Period.

The proposed revenue procedure contained two provisions limiting its applicability to preexisting group exemption

letters and preexisting subordinate organizations.6 The first rule provided that

certain provisions of the proposed revenue procedure do not apply to preexisting

subordinate organizations (PSO rule). The

second rule provided that certain provisions of the proposed revenue procedure

do not apply during a one-year transition

period.

One commenter said the PSO rule

should be expanded to exclude preexisting

subordinate organizations from all requirements in the proposed revenue procedure

that are not contained in Rev. Proc. 80-27.

According to this commenter, the new

requirements could cause thousands of

organizations to be removed from preexisting group exemption letters and forced

to apply for tax-exempt status individually. Alternatively, the commenter recommended several variations of the PSO

rule providing a more limited application

of the rule regarding the matching, foundation classification, and similar purpose

requirements. The Treasury Department

and IRS do not adopt any of the commenters’ recommendations because they would

essentially require the IRS to operate the

group exemption letter program using two

vastly different sets of rules and doing so

would unduly burden the IRS. Further,

the commenter’s suggestions regarding

applying the PSO rule with respect to the

matching, foundation classification, and

similar purpose requirements are not discussed because these requirements have

been substantially revised in, or omitted

from, Rev. Proc. 2065-8, as explained in

sections III.08, III.09, and III.10 of this

notice.

A commenter requested that a preexisting subordinate organization that has

had its tax-exempt status automatically

revoked, but subsequently reinstated,

be considered a preexisting subordinate

organization for purposes of the PSO

rule. This commenter expressed concern

that providing otherwise would be unduly

burdensome for unsophisticated organizations because they are more likely to have

their exemption automatically revoked.

Under section 3.10 of Rev. Proc. 20268, a preexisting subordinate organization

whose exemption has been automatically

revoked also loses its status as a preexisting subordinate organization. Reinstatement of tax-exempt status, whether

retroactive or not, will not cause the organization to regain its status as a preexisting

subordinate organization. A subordinate

A “preexisting group exemption letter” is any group exemption letter in existence on the date Rev. Proc. 2026-8 is published in the Internal Revenue Bulletin. Rev. Proc. 2026-8, § 3.09. A

“preexisting subordinate organization” is any subordinate organization included in a preexisting group exemption letter on the date Rev. Proc. 2026-8 is published in the Internal Revenue

Bulletin. Id. at § 3.10.

January 20, 2026

376

Bulletin No. 2026–4

organization that has its tax-exempt status

automatically revoked is removed from a

group exemption letter pursuant to section

8.02(1)(a)(iii) of Rev. Proc. 2026-8. If the

organization is subsequently added back

to the group exemption letter, it will not

meet the definition of a preexisting subordinate organization because it is added to

the group exemption letter after the publication date of Rev. Proc. 2026-8. While

this result may burden some subordinate

organizations, it is necessary for proper

administration of the group exemption

letter program and to ensure that organizations comply with their obligations

under Rev. Proc. 2026-8. To illustrate the

consequences where a preexisting subordinate organization is removed from a

group exemption letter, section 3.10 of

Rev. Proc. 2026-8 contains a revised definition of the term preexisting subordinate

organization and section 12.03(5) of Rev.

Proc. 2026-8 provides an example of the

effect of removal.

A commenter requested expansion of

the transition period from one year to three

years. The Treasury Department and the

IRS do not adopt this suggestion because

extending the transition period to three

years would require the IRS to administer two group exemption letter programs

for the duration of the extended period,

which would unduly increase the administrative burden and decrease the efficiency

of the group exemption letter program.

Accordingly, the transition period in section 12.02(2) of Rev. Proc. 2026-8 has

not been extended to three years. Instead,

section 12.02(2) of Rev. Proc. 2026-8

provides for a transition period ending on

January 22, 2027, rather than exactly one

year after publication of the revenue procedure. The Treasury Department and the

IRS made this revision to ease the administrative burden of the group exemption

letter program on the IRS.

Although Rev. Proc. 2026-8 does not

include any of the revisions to the PSO

rule and transition period specifically

requested by commenters, the Treasury

Department and the IRS revised these

rules after further considering their scope

and application. Under the proposed revenue procedure, the general supervision

and control standards were not applicable

to preexisting subordinate organizations.

The Treasury Department and IRS do not

Bulletin No. 2026–4

believe preexisting subordinate organizations should be permanently excepted

from the new affiliation, supervision, and

control provisions contained in the proposed revenue procedure. Instead, it is

more appropriate to require preexisting

subordinate organizations to comply with

the new provisions after the transition

period. Accordingly, sections 12.02(2)(a)

(iii) and 12.02(2)(d) of Rev. Proc. 2026-8

provide that the general supervision and

control provisions are covered by the

transition rule and apply to preexisting

group exemption letters and preexisting

subordinate organizations after a transition period ending on January 22, 2027.

This change facilitates uniformity in the

administration of the group exemption

letter program by limiting the time during

which the IRS must administer two different group exemption letter programs.

This change also benefits central organizations with preexisting group exemption

letters by affording them time to ensure

that their relationships with their preexisting subordinate organizations comply

with Rev. Proc. 2026-8. In addition, the

proposed revenue procedure inadvertently

failed to include the affiliation provision

in the PSO rule or the transition period.

Sections 12.02(2)(a)(iii) and 12.02(2)(d)

of Rev. Proc. 2026-8 clarify that the affiliation provision also applies to preexisting

group exemption letters and preexisting

subordinate organizations after the transition period ending on January 22, 2027.

The PSO rule and transition period

in the proposed revenue procedure have

also been revised to conform with revisions made to other provisions of the proposed revenue procedure. For example,

the foundation classification requirement,

similar purpose requirement, and uniform

governing instrument requirement have

each been removed from the PSO rule, as

these requirements were eliminated from

the operative rules. In addition, the PSO

rule in section 12.02(3)(a) of Rev. Proc.

2026-8 provides that preexisting subordinate organizations need not comply with

the uniform purpose statement requirement found in section 4.03(2)(b) of Rev.

Proc. 2026-8.

Although it appears that the application of the PSO rule and transition period

to the matching requirement has been

revised as published in Rev. Proc. 2026-

377

8, the revisions are not substantive. The

PSO rule in the proposed revenue procedure provided that the matching requirement did not apply to preexisting subordinate organizations and did not draw a

distinction between the requirement that

subordinate organizations be described in

the same paragraph of § 501(c) as the central organization and the requirement that

subordinate organizations be described in

the same paragraph of § 501(c) as other

subordinate organizations covered by the

group exemption letter. However, a subsequent provision of the proposed revenue

procedure, separate from the transition

period of the proposed revenue procedure,

provided that central organizations with

a preexisting group exemption letter had

the duration of the transition period to

ensure that all subordinate organizations

were described in the same paragraph of

§ 501(c). Like the proposed revenue procedure, Rev. Proc. 2026-8 provides that

central organizations have the duration

of the transition period to comply with

the matching requirement obligating all

subordinate organizations covered by a

group exemption letter to be described in

the same paragraph of § 501(c); however,

this provision is clearly contained in the

transition period in section 12.02(2) of

Rev. Proc. 2026-8. As explained above in

section III.08 of this notice, the matching

requirement in Rev. Proc. 2026-8 does

not require subordinate organizations to

be described in the same paragraph of

§ 501(c) as the central organization, so

this requirement is not addressed in the

PSO rule or transition period provision.

Finally, the proposed revenue procedure inadvertently excluded organizations

described in § 501(c)(29) from its PSO

rule. Accordingly, section 12.02(3)(c) of

Rev. Proc. 2026-8 includes organizations

described in § 501(c)(29) in the PSO rule.

.21 Declaratory Judgment Provisions

of § 7428.

Section 11 of the proposed revenue

procedure explained when the declaratory judgment provisions of § 7428 apply

in the context of group exemption letters.

The Treasury Department and IRS have

determined that it is more appropriate to

provide such guidance in a future update

to section 10 of Rev. Proc. 2026-5 (or its

successor), which explains when and how

a declaratory judgment proceeding under

January 20, 2026

§ 7428 may be filed in the United States

Tax Court, the United States Court of Federal Claims, or the District Court of the

United States for the District of Columbia.

Section 11 of Rev. Proc. 2026-8 provides

information regarding whether a declaratory judgement action under § 7428 must

be filed by a controlling organization or a

subordinate organization.

.22 Reliance.

Section 12 of the proposed revenue procedure, which related to donor reliance on

a group exemption letter, explained how

donors could verify that contributions to

a subordinate organization are deductible

under § 170. A commenter suggested several revisions to this provision to address

issues that are unique to subordinate organizations. As stated in Notice 2020-36, the

reliance section of the proposed revenue

procedure was intended to incorporate

previously issued guidance rather than

propose new policies and procedures.

After further consideration, the Treasury

Department and the IRS have excluded

the donor reliance provisions from Rev.

Proc. 2026-8 because the rules governing

donor reliance are already published in

Rev. Proc. 2018-32, 2018-23 I.R.B. 739.

Accordingly, Rev. Proc. 2026-8 does not

include the commenter’s suggested revisions.

.23 Annual Filing Requirement / Disclosure of Group Applications and Group

Exemption Letter Requests.

Sections 7 and 13 of the proposed revenue procedure addressed the filing of

group returns under § 6033 and the disclosure of group returns, group applications, and supporting documents under

§ 6104(a) and (d). These sections simply

incorporated information located in previously published guidance. After further

consideration, the Treasury Department

and the IRS have excluded these sections

from Rev. Proc. 2026-8.

SECTION IV. DRAFTING

INFORMATION

The principal author of this notice

is Seth Groman of the Office of Associate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes). For further information regarding

this notice contact Seth Groman at (202)

317-5640 (not a toll-free call).

2026 Standard Mileage

Rates

Notice 2026-10

SECTION 1. PURPOSE

This notice provides the optional 2026

standard mileage rates for taxpayers to

use in computing the deductible costs

of operating an automobile for business,

charitable, medical, or moving expense

purposes. This notice also provides the

amount taxpayers must use in calculating reductions to basis for depreciation

taken under the business standard mileage

rate, and the maximum standard automobile cost that may be used in computing

the allowance under a fixed and variable

rate (FAVR) plan. Additionally, this notice

provides the maximum fair market value

(FMV) of employer-provided automobiles

first made available to employees for personal use in calendar year 2026 for which

employers may use the fleet-average valuation rule in § 1.61-21(d)(5)(v) or the

vehicle cents-per-mile valuation rule in

§ 1.61-21(e).1

SECTION 2. BACKGROUND

Rev. Proc. 2019-46, 2019-49 I.R.B.

1301, provides rules for computing the

deductible costs of operating an automobile for business, charitable, medical, or

moving expense purposes, and for substantiating, under § 274(d) and § 1.2745, the amount of ordinary and necessary

business expenses of local transportation

or travel away from home. Taxpayers

using the standard mileage rates must

comply with Rev. Proc. 2019‑46, except

to the extent the law has been specifically

changed by Public Law 119-21, 139 Stat.

72 (July 4, 2025), commonly known as the

One, Big, Beautiful Bill Act (OBBBA).

However, a taxpayer is not required to use

the substantiation methods described in

Rev. Proc. 2019-46, but instead may substantiate using actual allowable expense

amounts, if the taxpayer maintains adequate records or other sufficient evidence.

An independent contractor conducts

an annual study for the Internal Revenue

Service of the fixed and variable costs

of operating an automobile to determine

the standard mileage rates for business,

medical, and moving use reflected in this

notice. The standard mileage rate for charitable use is set by § 170(i).

Longstanding regulations under § 61

provide special valuation rules for employer-provided automobiles. The amount

that must be included in the employee’s

income and wages for the personal use

of an employer-provided automobile

generally is determined by reference to

the automobile’s FMV. If an employer

chooses to use a special valuation rule, the

special value is treated as the FMV of the

benefit for income tax and employment

tax purposes. Section 1.61-21(b)(4). Two

such special valuation rules, the fleet-average valuation rule and the vehicle centsper-mile valuation rule, are set forth in

§ 1.61-21(d)(5)(v) and § 1.61-21(e),

respectively. These two special valuation

rules are subject to limitations, including

that they may be used only in connection

with automobiles having values that do

not exceed a maximum amount set forth

in the regulations.

SECTION 3. STANDARD MILEAGE

RATES

The standard mileage rate for transportation or travel expenses for 2026 is 72.5

cents per mile for all miles of business

use (business standard mileage rate). See

section 4 of Rev. Proc. 2019-46. However,

§ 70110 of the OBBBA made permanent

the disallowance for all miscellaneous

itemized deductions that are subject to

the two-percent of adjusted gross income

floor under § 67, including unreimbursed

employee travel expenses. Thus, the

business standard mileage rate provided

in this notice cannot be used to claim an

itemized deduction for unreimbursed

employee travel expenses, except for cer-

Unless otherwise specified, all “section” or “§” references are to sections of the Internal Revenue Code or the Income Tax Regulations (26 CFR part 1).

January 20, 2026

378

Bulletin No. 2026–4

tain educator expenses as described later.

However, deductions for expenses that are

deductible in determining adjusted gross

income remain allowable. For example, members of a reserve component of

the Armed Forces of the United States

(Armed Forces), state or local government

officials paid in whole or in part on a fee

basis, and certain performing artists are

entitled to deduct unreimbursed employee

travel expenses as an adjustment to total

income on line 12 of Schedule 1 of Form

1040 (2025), U.S. Individual Income Tax

Return, not as an itemized deduction on

Schedule A of Form 1040 (2025), and

therefore may continue to use the business standard mileage rate. See § 62(a)

(2). Similarly, eligible educators are also

entitled to deduct certain unreimbursed

employee travel expenses as an adjustment to total income on line 11 of Schedule 1 of Form 1040 (2025) up to the dollar

limit, but alternatively they may be entitled to an itemized deduction on Schedule

A of Form 1040 for 2026. See §§ 62(a)(2)

(D) and 67(b)(13).

The standard mileage rate is 14 cents

per mile for use of an automobile in rendering gratuitous services to a charitable

organization under § 170. See § 170(i);

see also section 5 of Rev. Proc. 2019-46.

The standard mileage rate for 2026 is

20.5 cents per mile for use of an automobile: (1) for medical care described

in § 213; or (2) as part of a move for

which the expenses are deductible

under § 217(g), as supplemented by

§ 217(k)(2). See also section 5 of Rev.

Proc. 2019-46. Section 70113(a) of the

OBBBA made permanent the disallowance for the deduction for moving

expenses, except to the extent § 217(g)

applies, for taxable years beginning after

December 31, 2017, and § 70113(b) of

the OBBBA added a new provision that

included certain members of the intelligence community within the scope of

§ 217(g). Accordingly, members of the

Bulletin No. 2026–4

Armed Forces on active duty who move

pursuant to a military order and incident

to a permanent change of station to whom

§ 217(g) applies and members of the

intelligence community who move after

December 31, 2025, pursuant to a change

of assignment which requires relocation,

are permitted to deduct certain moving

expenses. Thus, except for taxpayers to

whom § 217(g) applies, including certain

members of the intelligence community,

the standard mileage rate provided in this

notice is not applicable for the use of an

automobile as part of a move.

SECTION 4. BASIS REDUCTION

AMOUNT

For automobiles a taxpayer uses for

business purposes, the portion of the

business standard mileage rate treated as

depreciation is 26 cents per mile for 2022,

28 cents per mile for 2023, 30 cents per

mile for 2024, 33 cents per mile for 2025,

and 35 cents per mile for 2026. See section 4.04 of Rev. Proc. 2019-46.

SECTION 5. MAXIMUM STANDARD

AUTOMOBILE COST

For purposes of computing the allowance under a FAVR plan, the standard

automobile cost may not exceed $61,700

for automobiles (including trucks and

vans). See section 6.02(6) of Rev. Proc.

2019-46.

SECTION 6. MAXIMUM VALUE

OF EMPLOYER-PROVIDED

AUTOMOBILES

For purposes of the fleet-average valuation rule in § 1.61-21(d)(5)(v) and the

vehicle cents-per-mile valuation rule in

§ 1.61-21(e), the maximum FMV of automobiles (including trucks and vans) first

made available to employees in calendar

year 2026 is $61,700.

379

SECTION 7. EFFECTIVE DATE

This notice is effective for: (1) deductible transportation expenses paid or

incurred on or after January 1, 2026; (2)

mileage allowances or reimbursements

paid to a charitable volunteer or a member

of the Armed Forces to whom § 217(g)

applies and certain members of the intelligence community: (a) on or after January 1, 2026, and (b) for transportation

expenses the charitable volunteer or such

member of the Armed Forces or member

of the intelligence community pays or

incurs on or after January 1, 2026; and

(3) for purposes of the maximum FMV

of employer-provided automobiles for

which employers may use the fleet-average valuation rule in § 1.61-21(d)(5)

(v) or the vehicle cents-per-mile rule

in § 1.61-21(e), automobiles first made

available to employees for personal use

on or after January 1, 2026.

SECTION 8. EFFECT ON OTHER

DOCUMENTS

Notice 2025-5 is superseded.

DRAFTING INFORMATION

The principal author of this notice is

Christian Lagorio of the Office of Associate Chief Counsel (Income Tax and

Accounting). For further information

on this notice regarding the use of an

employee-provided automobile, contact

Mr. Lagorio at (202) 317-7005 (not a

toll-free number). For further information on this notice regarding the use of an

employer-provided automobile, contact

Stephanie Caden of the Office of Associate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes), at (202) 317-4774 (not a toll-free

number).

January 20, 2026

26 CFR 601.201: Rulings and determination letters

(Also: §501; 1.501(a)-1)

Rev. Proc. 2026-8

TABLE OF CONTENTS

SECTION 1. PURPOSE

SECTION 2. BACKGROUND

SECTION 3. DEFINITIONS OF TERMS USED IN THIS REVENUE PROCEDURE

SECTION 4. REQUIREMENTS TO OBTAIN AND MAINTAIN A GROUP EXEMPTION LETTER

.01 General requirements

(1) Recognition of exemption

(2) Minimum number of subordinate organizations

(3) Only one group exemption letter

.02 The central organization’s relationship with its subordinate organizations

(1) In general

(2) Affiliated

(3) General supervision

(4) Control

(5) Example of general supervision when not all subordinate organizations are required to file annual information

returns or notices

.03 Organizations eligible for initial inclusion in a group application, or subsequent addition to a group exemption letter, as

subordinate organizations

(1) In general

(2) Requirements for initial inclusion in a group application, or subsequent addition to a group exemption letter, as a

subordinate organization

.04 Organizations not eligible for initial inclusion in a group application, or subsequent addition to a group exemption letter,

as subordinate organizations

.05 Continued inclusion in a group exemption letter

.06 Authorization for initial inclusion in a group application, or subsequent addition to a group exemption letter, as a

subordinate organization

(1) In general

(2) Removal

.07 Employer identification numbers (EINs)

.08 Annual information return or notice

SECTION 5. CONSIDERATION OF GROUP APPLICATIONS

.01 Group applications

.02 Non-acceptance

.03 Circumstances under which group exemption letters are not ordinarily issued

SECTION 6. INSTRUCTIONS FOR SUBMITTING A GROUP APPLICATION

.01 Group applications

.02 Electronic submission

.03 Information about the central organization

(1) In general

(2) Request concurrent with application

.04 Information about the subordinate organizations

(1) In general

(2) Additional requirements

(3) Updates to a pending group application

.05 New group application after the termination of a group exemption letter

January 20, 2026

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Bulletin No. 2026–4

SECTION 7. INFORMATION REQUIRED TO MAINTAIN A GROUP EXEMPTION LETTER

.01 Information required annually

.02 Supplemental group ruling information (SGRI)

(1) Change in purpose, character, or method of operation

(2) Lists of certain changes

(3) Organizations to be added to the group exemption letter as subordinate organizations

(4) Other information

(5) No change

.03 Electronic submission

.04 Additional information

.05 Exception for central organizations that are churches or conventions or associations of churches

SECTION 8. TERMINATION OF, OR REMOVAL FROM, THE GROUP EXEMPTION LETTER

.01 Termination of the group exemption letter

(1) Termination by the IRS

(2) Termination by the central organization

.02 Removal from the group exemption letter

(1) Basis for removal by the IRS

(2) Basis for removal by the central organization

(3) Notification

(4) Group exemption letter remains in effect

SECTION 9. EFFECT OF NON-ACCEPTANCE, NON-ISSUANCE, TERMINATION, OR REMOVAL

.01 Effect of non-acceptance or non-issuance

.02 Effect of termination

.03 Effect of removal

.04 Churches and conventions or associations of churches

.05 Subsequent recognition of exemption

(1) In general

(2) Organization required to file an application

(3) Organization not required to file an application

.06 Subsequent exemption without recognition from the IRS

.07 Automatic revocation

SECTION 10. EFFECTIVE DATE OF EXEMPTION

.01 Initial inclusion

.02 Subsequent addition

.03 Non-acceptance, non-issuance, termination, or removal

(1) In general

(2) Organizations filing an application

(3) Organizations being included in a new group application

(4) Organizations being added to a group exemption letter

(5) Automatic revocation

SECTION 11. DECLARATORY JUDGMENT PROVISIONS OF § 7428

.01 In general

.02 Who must file

SECTION 12. APPLICABILITY

.01 New group exemption letters

.02 Preexisting group exemption letters

(1) In general

(2) Transition period for certain requirements applicable to preexisting group exemption letters and preexisting

subordinate organizations

(3) Certain requirements not applicable to preexisting subordinate organizations

Bulletin No. 2026–4

381

January 20, 2026

.03

Examples

(1) Example 1. Two preexisting group exemption letters for subordinate organizations described in different

paragraphs of § 501(c)

(2) Example 2. One preexisting group exemption letter with no subordinate organizations

(3) Example 3. One preexisting group exemption letter with subordinate organizations described in different

paragraphs of § 501(c)

(4) Example 4. One preexisting group exemption letter with preexisting subordinate organizations described in the

same paragraph of § 501(c)

(5) Example 5. Removal of a preexisting subordinate organization from a preexisting group exemption letter

SECTION 13. PAPERWORK REDUCTION ACT

SECTION 14. EFFECT ON OTHER REVENUE PROCEDURES

SECTION 15. EFFECTIVE DATE

SECTION 16. DRAFTING INFORMATION

SECTION 1. PURPOSE

This revenue procedure modifies and

supersedes Rev. Proc. 80-27, 1980-1

C.B. 677 (as modified by Rev. Proc.

96-40, 1996-2 C.B. 301) by setting forth

updated procedures to obtain recognition

of exemption from federal income tax on

a group basis for organizations described

in § 501(c) of the Internal Revenue Code

(Code)1 that are affiliated with and under

the general supervision or control of a

central organization. This revenue procedure relieves each subordinate organization included in a group exemption letter

from filing its own application for recognition of exemption. This revenue procedure also sets forth updated procedures a

central organization must follow to maintain a group exemption letter.

SECTION 2. BACKGROUND

.01 Section 508 provides special rules

with respect to organizations described in

§ 501(c)(3), including the general requirement in § 508(a) that organizations must

notify the Secretary of the Treasury or the

Secretary’s delegate (Secretary) that they

are applying for recognition of § 501(c)

(3) status. Section 505 provides additional

requirements for organizations described

in § 501(c)(9) or (17), including the general requirement in § 505(c) that organizations must notify the Secretary that they

are applying for recognition of exemption under § 501(c)(9) or (17). Sections

1.508-1(a)(1) and 1.505(c)-1T provide

additional information regarding the way

the notice required under §§ 508(a) and

505(c) is given to the Internal Revenue

Service (IRS). Organizations described

in other paragraphs of § 501(c), such as

social welfare organizations described in

§ 501(c)(4), may, but are not required to,

apply for recognition of exemption. However, § 506 generally requires an organization described in § 501(c)(4) to notify

the Secretary, in the manner prescribed in

§ 1.506-1, of the organization’s intent to

operate as such no later than 60 days after

the organization is established.

.02 Section 508(c)(2)(B) permits the

Secretary, by regulation, to except organizations from the § 508(a) notice requirement if the Secretary determines that

full compliance is not necessary for the

efficient administration of the provisions

relating to private foundations.

.03 Section 1.508-1(a)(3)(i) provides

that the § 508(a) notice requirement does

not apply to specific types of organizations, including subordinate organizations

included in a group exemption letter.

.04 Rev. Proc. 68-13, 1968-1 C.B. 764,

superseded by Rev. Proc. 72-41, 1972-2

C.B. 820, Rev. Proc. 77-38, 1977-2 C.B.

571, and Rev. Proc. 80-27, set forth the

first published procedures for obtaining

recognition of exemption from federal

income tax on a group basis for organizations described in § 501(c). The most

recent guidance regarding group exemption letters is set forth in Rev. Proc. 80-27,

as modified by Rev. Proc. 96-40.

.05 Rev. Proc. 2018-32, 2018-23 I.R.B.

739, sets forth the extent to which grantors and contributors may rely on the listing of a central organization in IRS databases of organizations eligible to receive

tax-deductible contributions under § 170,

for purposes of determining whether the

grants or contributions to the organization

may be deductible under § 170.

.06 In Notice 2020-36, 2020-21 I.R.B.

840, the Department of the Treasury (Treasury Department) and the IRS invited

comments regarding a proposed revenue

procedure that, if finalized, would modify

and supersede Rev. Proc. 80-27 by setting

forth updated procedures for obtaining

recognition of exemption from federal

income tax on a group basis for subordinate organizations described in § 501(c),

including transition relief for existing

organizations. The Treasury Department

and the IRS received 29 comments in

response to Notice 2020-36.

.07 After considering the comments

received in response to Notice 2020-36,

the Treasury Department and the IRS

issue this revenue procedure to reduce the

administrative burden and increase the

efficiency of the group exemption letter

program, improve the integrity of data

Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Income Tax Regulations (26 CFR part 1).

January 20, 2026

382

Bulletin No. 2026–4

collected for purposes of oversight of the

group exemption letter program, increase

the transparency of the group exemption

letter program, and increase compliance

by central organizations and subordinate

organizations with requirements of the

group exemption letter program. This revenue procedure also provides greater certainty and clarity to central organizations

and subordinate organizations under existing group exemption letters and organizations that file an application for a group

exemption letter after the date of publication of this revenue procedure in the Internal Revenue Bulletin (publication date).

.08 Notice 2020-36 provides that the

IRS will not accept applications for group

exemption letters on or after June 17,

2020, until publication of the final revenue procedure or other guidance in the

Internal Revenue Bulletin. The IRS will

resume accepting applications for group

exemption letters after January 20, 2026,

the publication date.

SECTION 3. DEFINITIONS OF

TERMS USED IN THIS REVENUE

PROCEDURE

.01 The term “annual information

return or notice” means the return or

notice an organization must file annually

under § 6033(a) or (i) of the Code (that is,

Form 990, Return of Organization Exempt

From Income Tax; Form 990-EZ, Short

Form Return of Organization Exempt

From Income Tax; Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt

Organizations Not Required to File Form

990 or Form 990-EZ; or, in the context

of a central organization that is a private

foundation, Form 990-PF, Return of Private Foundation).

.02 The term “application” means a

request for recognition of exemption from

federal income tax under § 501 in the

manner described by Rev. Proc. 2026-5,

2026-1 I.R.B. 258 (or its successor).

.03 The term “application for reinstatement” means an application filed in the

manner described by Rev. Proc. 2014-11,

2014-3 I.R.B. 411, as supplemented by

Rev. Proc. 2026-5 (or its successor), after

an organization’s exemption has been

automatically revoked.

.04 The term “automatically revoked”

means, with respect to an organization, the

Bulletin No. 2026–4

revocation of the organization’s exemption by operation of § 6033(j) for failure to

file an annual information return or notice

for three consecutive years.

.05 The term “central organization”

means an organization described in

§ 501(c), a political subdivision or integral

part of a political subdivision, or an instrumentality of a political subdivision that

has one or more subordinate organizations

under its general supervision or control.

.06 The term “a church or a convention

or association of churches” has the same

meaning as the term in § 170(b)(1)(A)(i).

.07 The term “group application”

means an application for a group exemption letter.

.08 The term “group exemption letter” means a letter issued by the IRS to

a central organization recognizing the

exemption from federal income tax on a

group basis for subordinate organizations

described in § 501(c).

.09 The term “preexisting group

exemption letter” means a group exemption letter in existence on the publication

date.

.10 The term “preexisting subordinate

organization” means a subordinate organization included in a preexisting group

exemption letter on the publication date.

If a preexisting subordinate organization

is removed from a group exemption letter and is subsequently added back to the

group exemption letter from which it was

removed, it will not be a preexisting subordinate organization.

.11 The term “submission date” means(1) In the case of any document filed

on paper with the IRS, (a) the postmark

date applied by the United States Postal

Service, or (b) for any document given

to a designated delivery service (as such

term is defined in § 7502(f)(2)) for delivery, the date that is recorded electronically

to a database by the designated delivery

service or marked on the cover of the document by the designated delivery service;

and

(2) In the case of any document filed

electronically with the IRS, the date of

transmittal to the IRS.

.12 The term “subordinate organization” means an organization described in

§ 501(c) that is a chapter, local, post, or

unit of a central organization. It must have

a governing instrument (for example, a

383

charter, trust indenture, articles of association, etc.), whether or not it is incorporated.

.13 The term “supplemental group ruling information” or “SGRI” means the

information described in section 7.02 of

this revenue procedure that a central organization must submit annually to the IRS

about its subordinate organizations unless

an exception applies.

SECTION 4. REQUIREMENTS TO

OBTAIN AND MAINTAIN A GROUP

EXEMPTION LETTER

.01 General requirements.

(1) Recognition of exemption. On or

before the date it files a group application, a central organization described in

§ 501(c) must either (a) be recognized

by the IRS as tax-exempt, (b) have filed

an application, or (c) in the case of a central organization that has had its exemption automatically revoked, have filed an

application for reinstatement.

(2) Minimum number of subordinate

organizations. A central organization must

have at least five subordinate organizations to obtain a group exemption letter,

and it must have at least one subordinate

organization to maintain the group exemption letter thereafter (except as provided in

section 12.02(2)(a)(i) of this revenue procedure, which provides a transition period

for preexisting group exemption letters).

(3) Only one group exemption letter.

A central organization may maintain only

one group exemption letter (except as

provided in section 12.02(2)(a)(ii) of this

revenue procedure, which provides a transition period for preexisting group exemption letters).

.02 The central organization’s relationship with its subordinate organizations.

(1) In general. Each subordinate organization initially included in a group

application, or subsequently added to a

group exemption letter, must be (1) affiliated with the central organization, and

(2) subject to its general supervision or

control, as such terms are defined in this

section 4.02 (except as provided in section

12.02(2)(a)(iii) of this revenue procedure,

which provides a transition period for

preexisting subordinate organizations).

The terms “affiliated,” “general supervision,” and “control,” as used in this reve-

January 20, 2026

nue procedure, apply only for purposes of

this revenue procedure and § 1.6033-2(d)

(relating to group returns).

(2) Affiliated. A subordinate organization’s affiliation with the central organization is demonstrated by facts and circumstances showing that it is a chapter, local,

post, or unit of the central organization.

For example, a subordinate organization

may demonstrate its affiliation with a central organization by (a) the inclusion of its

information on a group return described in

§ 1.6033-2(d) that includes the four-digit

group exemption number (GEN); (b) the

current inclusion of the subordinate organization in a directory of subordinate organizations updated annually by the central

organization; or (c) in the case of a subordinate organization that is a church or

a convention or association of churches,

the sharing of common religious bonds or

convictions with the central organization.

(3) General supervision.

(a) In general. A subordinate organization is subject to the general supervision

of a central organization if the central

organization:

(i) Annually obtains, reviews, and

retains information on the subordinate

organization’s finances, activities, and

compliance with annual filing requirements; and

(ii) Annually transmits (including electronically) written information to, or otherwise educates, the subordinate organization about the requirements to maintain

tax-exempt status under the applicable

paragraph of § 501(c), including, but not

limited to, annual filing requirements, if

applicable.

(b) Form 990 or Form 990-EZ. A central organization may obtain the information regarding a subordinate organization

required by section 4.02(3)(a)(i) of this

revenue procedure by obtaining a copy of

the subordinate organization’s Form 990

or Form 990-EZ. A copy of the subordinate organization’s Form 990-N is not sufficient to satisfy the requirement to obtain

the information regarding the subordinate

organization required by section 4.02(3)

(a)(i) of this revenue procedure.

(c) Exception for subordinate organizations not required to file annual information returns or notices. If a subordinate organization is not required to file

an annual information return or notice,

January 20, 2026

a central organization may, but is not

required to, satisfy section 4.02(3)(a)(i) of

this revenue procedure regarding the subordinate organization. See section 4.02(5)

of this revenue procedure for an example

illustrating the operation of this section

4.02(3).

(4) Control. A subordinate organization

is subject to the control of a central organization if:

(a) The central organization appoints

the subordinate organization’s directors or

trustees who possess a majority of the voting power with respect to the subordinate

organization’s governance;

(b) The central organization appoints a

majority of the subordinate organization’s

officers;

directors or trustees possessing a majority of the voting power with respect to the

subordinate organization’s governance are

directors or trustees of the central organization;

(d) A majority of the subordinate organization’s officers are officers of the central organization; or

(e) The central organization and the

subordinate organization enter into a written agreement that evidences the central

organization’s control over the subordinate organization’s activities and operations. For example, the written agreement

may contain provisions that describe an

alternative governance structure in which

the central organization must approve the

election of the subordinate organization’s

directors or has the right to remove directors at any time with or without cause.

Alternatively, the central organization

may enter into a management agreement

with the subordinate organization giving it

direct control over the subordinate organization’s activities and operations.

(5) Example of general supervision

when not all subordinate organizations

are required to file annual information

returns or notices.

(a) Central organization A is described

in § 501(c)(3). A has a group exemption letter for subordinate organizations

described in § 501(c)(3) that are organized

and operated for charitable, educational,

and religious purposes. A is a church

and the subordinate organizations are

churches, schools (below college level),

and hospitals.

384

(b) A exercises general supervision

over A’s subordinate organizations that are

hospitals by annually obtaining, reviewing, and retaining copies of those subordinate organizations’ annual information

returns and by annually providing each

hospital an electronic link to the current

version of Publication 557, Tax-Exempt

Status for Your Organization, available on

irs.gov, which provides information about

the requirements to maintain tax-exempt

status under § 501(c)(3) and annual filing

requirements.

over A’s subordinate organizations that

are churches and schools by annually providing each church and school an electronic link to the current version of Publication 1828, Tax Guide for Churches &

Religious Organizations, available on irs.

gov, which provides information about the

requirements to maintain tax-exempt status under § 501(c)(3). A is not required to

annually obtain, review, or retain information on the finances, activities, and compliance with annual filing requirements

of the subordinate organizations that are

churches or schools because those subordinate organizations are not required to

file annual information returns or notices

pursuant to § 1.6033-2(g)(1)(i).

.03 Organizations eligible for initial

inclusion in a group application, or subsequent addition to a group exemption letter,

as subordinate organizations.

(1) In general. An organization

described in § 501(c) is eligible for initial

inclusion in a group application, or subsequent addition to a group exemption letter,

as a subordinate organization if it meets

the requirements of section 4.03(2) of this

revenue procedure and is not described in

section 4.04 of this revenue procedure.

(2) Requirements for initial inclusion

in a group application, or subsequent

addition to a group exemption letter, as a

subordinate organization. In addition to

being affiliated with the central organization and subject to its general supervision

or control, all subordinate organizations

initially included in a group application,

or subsequently added to a group exemption letter, must meet the requirements of

this section 4.03(2) (except as provided in

sections 12.02(2) and 12.02(3) of this revenue procedure, regarding requirements

applicable to preexisting subordinate

Bulletin No. 2026–4

organizations after a transition period and

requirements not applicable to preexisting

subordinate organizations).

(a) Matching requirement. All subordinate organizations under a group exemption letter must be described in the same

paragraph of § 501(c). Subordinate organizations are not required to be described

in the same paragraph of § 501(c) as the

central organization.

(b) Uniform purpose statement requirement. Subordinate organizations that

share the same purpose must have a uniform purpose statement in their governing

inst

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