Public Disclosure of Material Relating to Tax-Exempt Organizations

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 301 and 602

[TD 8818]

RIN 1545-AV13

Public Disclosure of Material Relating to Tax-Exempt

Organizations

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations relating to the

public disclosure requirements of section 6104(d) of the Internal

Revenue Code (Code), as amended by the Tax and Trade Relief Extension

Act of 1998. These final regulations apply only to tax-exempt

organizations (organizations described in sections 501(c) or (d) and

exempt under section 501(a)) other than private foundations. These

final regulations provide guidance for tax-exempt organizations (other

than private foundations) required to make their applications for tax

exemption and annual information returns available for public

inspection. In particular, these regulations provide guidance for tax-

exempt organizations required to comply with requests made in person or

in writing from individuals who seek a copy of those documents. These

regulations describe how a tax-exempt organization can make those

documents widely available and, therefore, not be required to provide

copies in response to individual requests. These regulations also

address the standards that apply in determining whether a tax-exempt

organization is the subject of a harassment campaign and provide

guidance on the applicable procedures for obtaining relief from the

requirement that copies of documents be provided in response to

requests.

DATES: These regulations are effective June 8, 1999.

FOR FURTHER INFORMATION CONTACT: Michael B. Blumenfeld, (202) 622-6070

(not toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collections of information contained in these final regulations

have been reviewed and approved by the Office of Management and Budget

in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under

control number 1545-1560. Responses to these collections of information

are mandatory.

An agency may not conduct or sponsor, and a person is not required

to respond to, a collection of information unless the collection of

information displays a valid control number.

The estimated annual burden per respondent/recordkeeper varies from

0 hours to 55 hours, depending on individual circumstances with an

estimated average of 30 minutes.

Comments on the accuracy of this burden estimate and suggestions

for reducing the burden should be sent to the Internal Revenue Service,

Attn: IRS Reports Clearance Officer, OP:FS:FP, Washington, DC 20224,

and to the Office of Management and Budget, Attn: Desk Officer for the

Department of the Treasury, Office of Information and Regulatory

Affairs, Washington, DC 20503.

Books or records relating to this collection of information must be

retained as long as their contents may become material in the

administration of any internal revenue law. Generally, tax returns and

tax return information are confidential, as required by 26 U.S.C. 6103.

Background

This document contains amendments to the Procedure and

Administration Regulations (26 CFR part 301) relating to the section

6104(d) public disclosure requirements applicable to tax-exempt

organizations (organizations described in sections 501(c) or (d) and

exempt from taxation under section 501(a)). Section 6104(d), as amended

by section 14(b) of the Tax and Trade Relief Extension Act of 1998

(Division J of H.R. 4328, the Omnibus Consolidated and Emergency

Supplemental Appropriations Act, 1999) (Public Law 105-277, 112 Stat.

2681) (Tax and Trade Relief Extension Act of 1998), will apply to

requests made to all tax-exempt organizations (other than private

foundations) after June 8, 1999. Until such date, all tax-exempt

organizations continue to be subject to the requirements of section

6104(e) as currently in effect, without regard to the Tax and Trade

Relief Extension Act of 1998.

Although the Tax and Trade Relief Extension Act of 1998 extended

fully to private foundations the public disclosure requirements that

apply to other tax-exempt organizations, those requirements do not go

into effect with respect to private foundations until the 60th day

after the Secretary of the Treasury issues final regulations under

section 6104(d) that apply to private foundations. In the meantime,

private foundations continue to be subject to the public disclosure

requirements under sections 6104(d) and (e) of the Internal Revenue

Code, as in effect prior to the Tax and Trade Relief Extension Act of

1998.

Description of Current Law Section 6104(e)

Section 10702 of the Omnibus Budget Reconciliation Act of 1987

(OBRA '87) added subsection (e) to section 6104. Section 6104(e)

requires each tax-exempt organization, including one that is a private

foundation, to allow public inspection of the organization's

application for recognition of tax exemption. Section 6104(e) also

requires each tax-exempt organization, other than one that is a private

foundation, to allow public inspection at the organization's principal

office (and certain regional or district offices) of its three most

recent annual information returns. (Section 6104(e) does not apply to

private foundation annual information returns, which are subject to

public disclosure under section 6104(d), as in effect prior to the Tax

and Trade Relief Extension Act of 1998.) Under section 6104(e), each

annual information return must be made available for a 3-year period

beginning on the date the return is required to be filed or is actually

filed, whichever is later. In Notice 88-120 (1988-2 C.B. 454), the IRS

provided tax-exempt organizations with guidance for complying with the

public inspection requirements.

The Taxpayer Bill of Rights 2 (TBOR2), enacted on July 30, 1996,

amended section 6104(e) by adding additional public disclosure

requirements. As amended, section 6104(e) requires each tax-exempt

organization, including one that is a private foundation, to comply

with requests, made either in person or in writing, for copies of the

organization's application for recognition of tax exemption. Section

6104(e) also requires each tax-exempt organization, other

[[Page 17280]]

than one that is a private foundation, to comply with requests, made

either in person or in writing, for copies of the organization's three

most recent annual information returns. The organization must fulfill

these requests without charge, other than a reasonable fee for

reproduction and postage. If the request for copies is made in person,

the organization generally must provide the requested copies

immediately. If the request for copies is made in writing, the

organization must provide the copies within 30 days. Section 6104(e)

also provides that an organization is relieved of its obligation to

provide copies upon request if, in accordance with regulations

promulgated by the Secretary of the Treasury, (1) the organization has

made the requested documents widely available, or (2) the Secretary of

the Treasury determines, upon application by the organization, that the

organization is subject to a harassment campaign such that a waiver of

the obligation to provide copies would be in the public interest.

Issuance of Proposed Regulations Under Section 6104(e)

In Notice 96-48 (1996-2 C.B. 214), the IRS invited comments on the

changes made by TBOR2. Twenty-two comments were received and considered

in the drafting of a notice of proposed rulemaking (REG-246250-96),

published in the Federal Register (62 FR 50533) on September 26, 1997.

The IRS received twenty written comments on the proposed regulations

and held a public hearing on February 4, 1998. After consideration of

all the written comments regarding the proposed regulations, and the

amendments made by the Tax and Trade Relief Extension Act of 1998,

described below, those regulations are adopted as revised by this

Treasury decision.

Amendments Made by the Tax and Trade Relief Extension Act of 1998

The Tax and Trade Relief Extension Act of 1998, which was enacted

on October 21, 1998, amended section 6104(e) of the Internal Revenue

Code to subject private foundations to the same rules regarding public

disclosure of annual information returns that apply to other tax-exempt

organizations. In addition, the Tax and Trade Relief Extension Act of

1998 repealed existing section 6104(d), and redesignated section

6104(e), as amended, as new section 6104(d). (Unless otherwise noted,

all references in these final regulations to section 6104(d) are to

section 6104(d) as amended by the Tax and Trade Relief Extension Act of

1998.)

The Tax and Trade Relief Extension Act of 1998 amendments apply to

requests made after the later of December 31, 1998 or the 60th day

after the Secretary of the Treasury issues regulations referred to in

section 6104(d)(4) (relating to when documents are made widely

available and when a particular request is considered part of a

harassment campaign). This Treasury decision adopts final regulations

under section 6104(d)(4) that are applicable to tax-exempt

organizations other than private foundations. Accordingly, amendments

to section 6104(d) will become applicable with respect to requests made

to tax-exempt organizations other than private foundations after June

8, 1999.

Future Regulations Will Apply to Private Foundations

The IRS and the Treasury Department intend to issue shortly a

notice of proposed rulemaking relating to the public disclosure

requirements of section 6104(d) as those requirements apply to private

foundations. Until 60 days after final regulations are issued, private

foundations continue to be subject to sections 6104(d) and (e), as in

effect prior to the Tax and Trade Relief Extension Act of 1998. For

that reason, existing Sec. 301.6104(d)-1, relating to public inspection

of private foundation annual returns, is not affected by this Treasury

decision.

Explanation of Provisions

Overview

The final regulations provide guidance concerning the application

for tax exemption and annual information returns a tax-exempt

organization, other than a private foundation, must make available for

public inspection and must supply in response to requests for copies.

The final regulations also provide guidance on (1) the place and time

the organization must make these documents available for public

inspection, (2) conditions the organization may place on requests for

copies of the documents, and (3) the amount, form and time of payment

of any fees the organization may charge. The final regulations also

prescribe how an organization can make its application for tax

exemption and annual information returns widely available. Finally, the

final regulations provide guidance on the standards that apply in

determining whether an organization is the subject of a harassment

campaign and on the applicable procedures for obtaining relief from the

general requirement that copies of documents be provided in response to

requests.

Application for Tax Exemption

A tax-exempt organization, other than one that is a private

foundation, must make its application for tax exemption available

pursuant to these final regulations. An application for tax exemption

includes the application form (such as Form 1023 or Form 1024) and any

supporting documents filed by, or on behalf of, the organization in

connection with its application. It also includes any letter or

document issued by the IRS in connection with the application.

Consistent with the guidance provided in Notice 88-120, if an

organization filed its application before July 15, 1987, the final

regulations provide that the organization is required to make available

a copy of its application only if it had a copy of the application on

July 15, 1987.

Annual Information Returns

A tax-exempt organization, other than one that is a private

foundation, must make its three most recent annual information returns

available pursuant to these final regulations. Generally, an annual

information return includes Forms 990, 990-EZ, 990-BL, and Form 1065.

It also includes, generally, all schedules and attachments filed with

the IRS. An organization is not required, however, to disclose the

parts of the return that identify names and addresses of contributors

to the organization, nor is it required to disclose Form 990-T.

A few commentators asked that the final regulations exempt certain

items reported on an application for tax exemption or an annual

information return from disclosure. For example, one commentator

observed that only an organization described in section 501(c)(3) is

required by statute (section 6033) to report certain compensation

information. By contrast, it is the regulations under section 6033 that

require tax-exempt organizations described in other parts of section

501(c) or section 501(d) to report certain compensation information.

Accordingly, the commentator asked that the final regulations require

public disclosure of the compensation section of Form 990 only when it

is a statutory requirement, as opposed to a regulatory requirement, to

report such information. Because section 6104(d) requires, except for

specific exceptions, disclosure of all the information reported on an

application or return, the IRS and the Treasury Department decided that

requiring public disclosure of compensation information required to be

reported on an annual information return either by

[[Page 17281]]

statute or regulation is consistent with section 6104(d).

One commentator requested that final regulations require an

organization that has not been determined by the IRS to be exempt from

taxation under section 501(a) to make its application for tax exemption

available for public inspection and to provide copies upon request.

Section 301.6104(e)-1(b)(3) of the proposed regulations provided that

an organization is not required to disclose its application for tax

exemption until the IRS determines it is exempt from taxation. Section

6104(d)(1) requires an organization to disclose its application for tax

exemption only where it is exempt under section 501(a). Thus, the

statute does not require an organization to disclose its application

for tax exemption while the application is pending or in a case where

the IRS issues an adverse determination. Accordingly, the IRS and the

Treasury Department continue to believe that the rule of the proposed

regulation is consistent with the statute and have decided not to

change this provision.

One commentator proposed that a special rule be included in the

final regulations so that a religious or apostolic organization

described in section 501(d) would not be required to publicly disclose

a Schedule K-1 of Form 1065 because it contains taxpayer information

with respect to the distributees (i.e., the ratable portions of the net

income and expenses of the individual members of the organization).

After the submission of this comment, the Internal Revenue Service

Restructuring and Reform Act of 1998, Public Law 105-206 (112 Stat.

685) was enacted. Section 6019 of this Act amended Code sections

6104(b) and 6104(e) to provide specifically that organizations

described in section 501(d) are not required to publicly disclose a

Schedule K-1 filed by the organization. Consistent with this statutory

modification of section 6104, the final regulations eliminate the

requirement that a religious or apostolic organization described in

section 501(d) disclose a Schedule K-1.

Place and Time Documents Must Be Available for Public Inspection

Section 6104(d) requires a tax-exempt organization to make its

documents available for public inspection, and provide copies upon

request, at its principal office and at certain regional or district

offices. Under Notice 88-120, certain sites where services are provided

(such as day care or health care) are not treated as regional or

district offices for purposes of the public inspection requirements,

provided that such sites do ``not serve as offices of management staff

(other than managers involved solely in managing the specific service

of that service provider office).'' The IRS and the Treasury Department

recognize that many tax-exempt organizations maintain sites where their

employees or volunteers solely provide services that further exempt

purposes, including services provided directly to the public, but do

not maintain administrative or management staff at such sites necessary

to respond to public disclosure requests. Accordingly, the proposed

regulations expanded the ``service provider exception'' of Notice 88-

120 slightly. Under the proposed regulations, sites where the only

services provided further exempt purposes (such as day care, health

care or scientific or medical research) were excluded from the

definition of a regional or district office. Thus, under the proposed

regulations, a research organization that maintains a laboratory used

solely by individuals conducting scientific research on behalf of the

organization would not have to respond to public disclosure requests

made at the laboratory even though the researchers are not providing

direct services to the public. However, a research organization would

have a public disclosure obligation at a laboratory if the organization

also uses space at that location as offices for some of its management

staff (other than those involved solely in managing the exempt function

activities at the laboratory).

Several comments were received on this topic. One commentator

expressed the view that the definition of regional or district office

in the proposed regulations was reasonably well balanced. Other

commentators, however, expressed concern that this definition would

reduce the number of sites from which the documents could be obtained.

One of these commentators expressed the view that exempting

organizations from complying with public disclosure requests made at

sites where employees engage solely in providing exempt services would

unnecessarily complicate the determination whether an organization is

required to respond to public disclosure requests at a particular site.

This commentator suggested that the final regulations treat any site

with 3 or more employees as a regional or district office where an

organization must respond to requests for public inspection or copies.

Another commentator expressed the view that the exception for sites

dedicated solely to providing exempt services was reasonable, but

suggested that the final regulations clarify what activities would

constitute management activities that would require an organization to

respond to public disclosure requests at the site.

The IRS and the Treasury Department believe that the ``regional and

district office'' rule of section 6104(d) was intended to enhance the

availability of documents in the case of an organization that maintains

management staff at one or more offices in addition to its principal

office. However, Congress explicitly recognized that the burden to an

organization of complying with requests for public inspection or copies

made at small regional or district offices (those with fewer than 3

employees) would outweigh the public benefit of increased availability

of the documents. This rationale applies equally as well to certain

sites of a tax-exempt organization where its employees and volunteers

engage solely in providing services that further exempt purposes and

which do not serve as an office for management staff. The IRS and the

Treasury Department believe the rule expressed in the proposed

regulations is consistent with the intent of the statute and prior IRS

guidance, particularly in light of the new provisions that allow copies

to be obtained by mail. Therefore, the rule of the proposed regulations

is followed in the final regulations.

The proposed regulations prescribed how an organization that does

not maintain a permanent office or whose office has very limited hours

during certain times of the year can comply with the public inspection

requirements. The proposed regulations also provided rules concerning

the conditions the organization may impose on public inspections that

are consistent with Notice 88-120. In this regard, the final

regulations follow the proposed regulations.

The proposed regulations permitted a principal, regional, or

district office of an organization to use an agent to process requests

for copies. One commentator asked that the final regulations also allow

a tax-exempt organization to retain a local agent to satisfy the

organization's public inspection obligation. After careful

consideration of this comment, the IRS and the Treasury Department have

concluded that, to avoid potential inconvenience to members of the

public, it is important that tax-exempt organizations make their

applications and returns available for inspection at their offices.

Therefore, the IRS and the Treasury Department did not adopt this

comment.

[[Page 17282]]

Another commentator asked that the final regulations clarify that

an organization may apply the same security measures to individuals

that request inspection or copies that it applies to the public in

general. The IRS and the Treasury Department have determined that the

proposed regulations would not preclude a tax-exempt organization from

implementing its normal security measures. Thus, no change is reflected

in the final regulations.

Requirement to Furnish Copy to a Requester

The proposed regulations generally required that a tax-exempt

organization accept requests for copies made in person at the same

place and time that the specified documents must be available for

public inspection. In general, the proposed regulations required that

the copies be provided on the day of the request. However, the proposed

regulations provided that, in unusual circumstances, an organization

may provide the requested copies on the next business day. Some

commentators expressed concern that a one-day delay may not be

sufficient. In response to these comments, the final regulations

provide that an organization must comply with requests for copies made

in person by providing copies no later than the next business day

following the day the unusual circumstances cease to exist. However, in

no event may the period of delay exceed five business days. In response

to another comment, the final regulations clarify that unusual

circumstances include times when the organization's managerial staff

capable of fulfilling the request attends an off-site meeting or

convention.

When a request for copies is made in writing, the proposed

regulations required that a tax-exempt organization mail the copies

within 30 days from the date it receives the request. However, the

proposed regulations provided that, if an organization requires advance

payment of a reasonable fee for copying and postage, it may provide the

copies within 30 days from the date it receives payment, rather than

from the date of the initial request. In addition, the proposed

regulations provided guidance as to what constitutes a request, when a

request is considered received, and when copies are deemed provided.

The final regulations follow the rules in the proposed regulations.

The proposed regulations provided that individuals may request a

specific part of an application for tax exemption or annual information

return. One commentator expressed concern that requiring a tax-exempt

organization to provide a copy of only part of a document may create a

significant burden on the tax-exempt organization because the

organization would have to identify the particular information

requested. In order to minimize this potential burden, without

requiring the requester to pay for a copy of parts of a document that

the requester has no interest in obtaining, the final regulations

permit a requester to request a copy of any specifically identified

part or schedule of an application or a return (except for information

which is not subject to public disclosure under section 6104(d)(3)).

For example, a requester may request a copy of Part V (List of

Officers, Directors, Trustees and Key Employees) of Form 990.

Reasonable Fee for Providing Copies

Section 6104(d)(1)(B) permits an organization to charge a

reasonable fee for the cost of copying and mailing documents in

response to requests for copies. The proposed regulations stated that a

fee was reasonable only if it did not exceed the fees the IRS charges

for copies of tax-exempt organization tax returns and related

documents. This fee is currently $1.00 for the first page and $.15 for

each subsequent page. In addition, the proposed regulations allowed a

charge for actual postage costs. Some commentators requested that the

reasonable fee be greater than the amount stated in the proposed

regulations. One commentator suggested that the final regulations allow

organizations to consider personnel costs and not limit the fee to the

IRS charge. The IRS and the Treasury Department are concerned that

permitting organizations to charge a higher fee could hinder the

public's ability to receive a copy of an application or return.

Consequently, it was decided that, on balance, the reasonable fee set

forth in the proposed regulations is appropriate. Thus, the final

regulations adopt the reasonable fee provision of the proposed

regulations.

The proposed regulations permitted an organization to collect

payment in advance of providing the requested copies. Under the

proposed regulations, if an organization receives a written request for

copies with no payment enclosed, and the organization requires payment

in advance, the organization must request payment within 7 days from

the date it receives the request. The proposed regulations required an

organization to accept payment made by cash or money order and, when

the request is made in writing, also accept payment made by personal

check. An organization is permitted to accept other forms of payment.

One commentator asked for the elimination of the requirement to accept

a personal check because an organization could be liable for bank

charges if there are insufficient funds to cover the personal check.

The final regulations generally follow the proposed regulations, except

that the final regulations provide that a tax-exempt organization that

accepts payment by credit card is not required to accept personal

checks.

Consistent with the proposed regulations, the final regulations

protect requesters from unexpected fees where a tax-exempt organization

does not require prepayment and where a requester does not enclose

prepayment with a request, by requiring that an organization must

receive consent from a requester before providing copies for which the

fee charged for copying and postage is in excess of $20.

Local and Subordinate Organizations

Some commentators stated that the proposed regulations were overly

burdensome with respect to local or subordinate organizations

recognized as tax-exempt under a group exemption letter or that file a

group return pursuant to Sec. 1.6033-2(d) and Rev. Proc. 80-27 (1980-1

C.B. 677). Specifically, they objected to the requirement that a local

or subordinate organization make available copies of documents

submitted by the central or parent organization to the IRS to include

the local or subordinate organization in the group ruling, which often

consists of lengthy lists or directories of names and addresses of

affiliated organizations. In addition, one commentator expressed the

view that the annual filing under Rev. Proc. 80-27 that a central or

parent organization submits to the IRS to cover a local or subordinate

organization under its group exemption letter does not constitute an

application for tax exemption within the meaning of section

6104(d)(2)(A). In response to these comments, the final regulations

reduce the burden on local and subordinate organizations. Under the

final regulations, a local or subordinate organization that receives a

request made in person for inspection or for a copy of its application

for tax exemption is required to acquire, and make available within a

reasonable amount of time (normally not more than two weeks), the

application for a group exemption letter (if any) filed by the central

or parent organization. In addition, a local or subordinate

organization must also make available any documents submitted by the

central or parent organization to the IRS to include the subordinate

organization in

[[Page 17283]]

the group ruling. However, if the central or parent organization

submits a list or directory of organizations covered by the group

exemption letter, the local or subordinate organization need only

provide the application for group exemption and those pages of the list

or directory that refer to it. If a local or subordinate organization

that does not file its own annual information return but is covered

under a group return receives a request made in person for inspection

or for a copy of its annual information return, the local or

subordinate organization must make its group return available for

inspection or provide copies within a reasonable amount of time

(normally not more than two weeks). However, if the group return

includes separate schedules with respect to each local or subordinate

organization included in the group return, the local or subordinate

organization receiving the request may omit any schedules relating only

to other organizations included in the group return.

If the requester seeks inspection of an application for tax

exemption or an annual information return, the local or subordinate

organization may mail a copy of the applicable document to the

requester within a reasonable amount of time (normally not more than

two weeks) in lieu of allowing an inspection. In such a case, the local

or subordinate organization may not charge for the copies without the

consent of the requester. A local or subordinate organization must

comply with written requests for copies in accordance with the general

rules for written requests discussed above.

The final regulations also clarify, consistent with Notice 88-120,

the obligation of the central or parent organization to comply, at its

principal office, with requests for inspection or copies of documents

relating to its local and subordinate organizations.

Making Applications and Information Returns Widely Available

The final regulations provide that a tax-exempt organization is not

required to comply with requests for copies if the organization has

made the requested documents widely available. The final regulations

specify that an organization can make its application for tax exemption

and/or its annual information returns widely available by posting the

applicable document on the organization's World Wide Web page on the

Internet or by having the applicable document posted on another

organization's World Wide Web page as part of a database of similar

materials, provided that the documents are posted in a format which

meets the criteria set forth in the final regulations. An organization

that makes its application for tax exemption and/or its annual

information returns widely available must provide the individuals who

request copies with the World Wide Web address where the documents are

available.

The proposed regulations provided that an organization must post

its documents on its World Wide Web page in a format that the IRS uses

to post forms and publications. Unlike the proposed regulations, the

final regulations do not enumerate one or more particular formats that

must be used. Instead, the final regulations provide that the documents

must be posted in a format that meets the following criteria. First,

any individual with access to the Internet must be able to access,

download, view and print the posted document in a format which exactly

reproduces the image of the original document filed with the IRS,

except for any information permitted to be withheld from public

disclosure under section 6104(d). The final regulations require an

exact reproduction because a format that does not exactly reproduce the

image of the original document may raise questions about the accuracy

or authenticity of the posted document. Second, the format must allow

any individual with access to the Internet to access, download, view

and print the posted document without payment of a fee to either the

tax-exempt organization or the entity maintaining the World Wide Web

page and without special computer hardware or software required for

that format, other than software that is readily available to members

of the public free of charge.

The IRS and the Treasury Department understand that some of the

formats that the IRS itself uses to post forms and publications on the

IRS World Wide Web page may not satisfy the criteria specified in the

final regulations. For example, some of these formats could require

users to have access to special hardware or software that is not

commonly used by the public to access, download, view and print

documents. The final regulations provide a one-year transition rule for

any tax-exempt organization that posted its documents on the Internet

on or before April 9, 1999 in a manner consistent with the proposed

regulations. Until June 8, 2000 such an organization will be treated as

having made its documents ``widely available'' for purposes of the

final regulations even if the format used does not currently satisfy

all of the criteria set forth in the final regulations.

Some commentators suggested that the final regulations permit an

organization to post its documents on the Internet in HTML format. As

discussed above, the approach of the final regulations is to identify

the criteria that an Internet format must satisfy. The IRS and the

Treasury Department understand that, currently, when a heavily

formatted document, such as a tax return, is posted in HTML format, it

may not exactly reproduce the image of the original document.

One format that currently satisfies the criteria set forth in the

final regulations is Portable Document Format (PDF). PDF is designed to

reproduce the image of the original document exactly. In addition,

documents in the PDF format can be viewed, navigated and printed by

anyone using the freely available reader software. Of course, there may

be other formats that currently satisfy the criteria set forth in the

final regulations. The IRS and the Treasury Department refer to PDF

only for the purpose of illustrating an acceptable format. No inference

should be drawn that the IRS and the Treasury Department view PDF as an

especially or singularly qualified format, that IRS and the Treasury

Department endorse or warrant a specific document format (or software

used in connection with a format), or that use or failure to use a

specific document format (or software used in connection with a format)

will result in any preferential treatment from the IRS or the Treasury

Department. The IRS and the Treasury Department note that a specific

format that currently satisfies the ``widely available'' criteria set

forth in the final regulations may be altered such that it no longer

satisfies the ``widely available'' criteria in the future. Conversely,

a specific format that does not currently satisfy the ``widely

available'' criteria may be refined to satisfy the ``widely available''

criteria in the future.

As technology advances, the IRS and the Treasury Department

anticipate that an increasing number of formats will meet the criteria

set forth in the final regulations. Accordingly, the IRS and the

Treasury Department do not intend to limit technologies that

organizations may use to post their documents as long as the posted

document is readily and freely accessible and appears, whether viewed

on screen or in print, exactly as the original.

The IRS and the Treasury Department will continue to consider other

additional methods by which applications and returns could be made

widely available. Accordingly, the final regulations provide that the

Commissioner may prescribe, by

[[Page 17284]]

revenue procedure or other guidance, additional methods that an

organization can use to make its application for tax exemption and/or

its annual information returns widely available.

Harassment Campaigns

The proposed regulations provided guidance in determining whether a

tax-exempt organization is the subject of a harassment campaign such

that requiring compliance with requests for copies that are part of the

harassment campaign would not be in the public interest. Generally, the

proposed regulations provided that a harassment campaign exists where

the relevant facts and circumstances show that the purpose of a group

of requests was to disrupt the operations of the tax-exempt

organization rather than to obtain information. The proposed

regulations also contained examples that evaluated whether particular

situations constituted a harassment campaign and whether an

organization had a reasonable basis for believing that a request was

part of the harassment campaign. The final regulations retain this rule

and the examples set forth in the proposed regulations.

The proposed regulations provided that an organization may suspend

compliance with a request if the organization reasonably believes that

the request is part of a harassment campaign. Commentators expressed

concern that, if there is a delay in the issuance of an IRS

determination as to whether the organization's belief is reasonable,

the organization could be subject to significant penalties for the

intervening period. The final regulations do not limit the penalties

that may be retroactively imposed in cases where an organization is

subsequently determined to have lacked a reasonable belief for

suspending compliance. However, the IRS and the Treasury Department

recognize that it may be appropriate to mitigate penalties in certain

circumstances, especially where a delay in the issuance of a

determination is completely outside the control of the organization

requesting the determination. The IRS intends to publish a revenue

procedure that will provide additional detail concerning harassment

campaign determinations procedures and may prescribe rules concerning

the imposition and mitigation of penalties.

The proposed regulations required an organization to file an

application for a harassment campaign determination within 5 days after

suspending compliance with a request that the organization believes to

be part of such harassment campaign. One commentator asked that the

time period for filing an application be expanded to either 10 or 15

business days. Another commentator observed, however, that such an

extension of time would further delay compliance with requests for

copies that an organization reasonably believes, but are determined not

to be, part of a harassment campaign. The final regulations require an

organization to file an application for a harassment determination

within 10 business days after suspending compliance. The IRS and the

Treasury Department believe that this time period strikes an

appropriate balance by providing organizations sufficient time to

prepare and file an application without substantially delaying access

to copies of the documents. In addition, the final regulations allow an

organization, without submitting an application, to disregard requests

for copies in excess of two per month or four per year made by a single

individual or sent from a single address.

Some commentators asked for clarification concerning the period

that an organization may continue not to comply with requests for

copies that are part of a harassment campaign once it has received such

a determination. The IRS and the Treasury Department believe that the

district director for the key district in which the organization's

principal office is located (or such other person as the Commissioner

may designate) should exercise reasonable discretion, based on the

facts and circumstances of each case, in deciding the exact terms and

conditions of a harassment campaign determination. Consequently, the

final regulations do not change this provision of the proposed

regulations.

Various comments concerned the examples of harassment campaigns and

requests from members of the news media. In this regard, example 4 has

been modified to better illustrate that a request made by a member of

the news media is a strong factor tending to indicate that the request

is not part of a harassment campaign.

Other Matters

The proposed regulations provided that an individual denied

inspection, or a copy, of an application for tax exemption or an annual

information return could seek assistance from the IRS by providing to

the Director of the Exempt Organizations Division a statement that

describes the request and the reason for the individual's belief that

the denial was in violation of the legal requirements. The final

regulations provide instead that such individuals should send their

statements directly to the district director for the key district in

which the principal office of the tax-exempt organization is located

(or such other person as the Commissioner may designate). Finally,

various comments raised questions regarding the availability of an

administrative appeal of a harassment campaign determination and

whether harassment campaign applications and determinations are

publicly available. Whether an administrative appeal is available and

whether a harassment campaign determination is publicly available are

matters beyond the scope of these regulations, but may be addressed in

subsequent guidance.

Effective Date

The final regulations are effective June 8, 1999.

Special Analyses

It is hereby certified that the collections of information in these

regulations will not have a significant economic impact on a

substantial number of small entities. This certification is based on

the fact that the average time required to maintain and disclose the

information required under these regulations is estimated to be 30

minutes for each tax-exempt organization. This estimate is based on the

assumption that, on average, a tax-exempt organization will receive one

request per year to inspect or provide copies of its application for

tax exemption and its annual information returns. Less than 0.001

percent of the tax-exempt organizations affected by these regulations

will be subject to the reporting requirements contained in the

regulations. It is estimated that annually, approximately 1,000 tax-

exempt organizations will make their documents widely available by

posting them on the Internet. In addition, it is estimated that

annually, approximately 50 tax-exempt organizations will file an

application for a determination that they are the subject of a

harassment campaign such that a waiver of the obligation to provide

copies of their applications for tax exemption and their annual

information returns is in the public interest. The average time

required to complete, assemble and file an application describing a

harassment campaign is expected to be 5 hours. Because applications for

a harassment campaign determination will be filed so infrequently, they

will have no effect on the average time needed to comply with the

requirements in these regulations. In addition, a tax-exempt

organization is allowed in these regulations to charge a reasonable fee

for providing copies to requesters. Therefore, it is estimated

[[Page 17285]]

that on average it will cost tax-exempt organizations less than $10 per

year to comply with these regulations, which is not a significant

economic impact. Therefore, a Regulatory Flexibility Analysis under the

Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.

Pursuant to section 7805(f) of the Internal Revenue Code, the notice of

proposed rulemaking preceding these regulations was submitted to Small

Business Administration for comment on its impact on small business.

Drafting information. The principal author of these regulations is

Michael B. Blumenfeld, Office of Associate Chief Counsel (Employee

Benefits and Exempt Organizations), IRS. Other personnel from the IRS

and the Treasury Department also participated in their development.

List of Subjects

26 CFR Part 301

Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income

taxes, Penalties, Reporting and recordkeeping requirements.

26 CFR Part 602

Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

Accordingly, 26 CFR Parts 301 and 602 are amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

Paragraph 1. The authority citation for part 301 is amended by

adding entries in numerical order to read as follows:

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

Section 301.6104(d)-4 also issued under 26 U.S.C. 6104(e)(3);

Section 301.6104(d)-5 also issued under 26 U.S.C. 6104(e)(3); *

* *

Par. 2. Sections 301.6104(d)-2 through 301.6104(d)-5 are added to

read as follows:

Sec. 301.6104(d)-2 Table of contents.

This section lists captions contained in Secs. 301.6104(d)-3

through 301.6104(d)-5.

Sec. 301.6104(d)-3 Public inspection and distribution of

applications for tax exemption and annual information returns of

tax-exempt organizations (other than private foundations).

(a) In general.

(b) Definitions.

(1) Tax-exempt organization.

(2) Private foundation.

(3) Application for tax exemption.

(i) In general.

(ii) No prescribed application form.

(iii) Exceptions.

(iv) Local or subordinate organizations.

(4) Annual information return.

(i) In general.

(ii) Exceptions.

(iii) Returns more than 3 years old.

(iv) Local or subordinate organizations.

(5) Regional or district offices.

(i) In general.

(ii) Site not considered a regional or district office.

(c) Special rules relating to public inspection.

(1) Permissible conditions on public inspection.

(2) Organizations that do not maintain permanent offices.

(d) Special rules relating to copies.

(1) Time and place for providing copies in response to requests

made in person.

(i) In general.

(ii) Unusual circumstances.

(iii) Agents for providing copies.

(2) Request for copies in writing.

(i) In general.

(ii) Time and manner of fulfilling written requests.

(A) In general.

(B) Request for a copy of parts of document.

(C) Agents for providing copies.

(3) Fees for copies.

(i) In general.

(ii) Form of payment.

(A) Request made in person.

(B) Request made in writing.

(iii) Avoidance of unexpected fees.

(iv) Responding to inquiries of fees charged.

(e) Documents to be provided by regional and district offices.

(f) Documents to be provided by local and subordinate

organizations.

(1) Applications for tax exemption.

(2) Annual information returns.

(3) Failure to comply.

(g) Failure to comply with public inspection or copying

requirements.

(h) Effective date.

Sec. 301.6104(d)-4 Making applications and returns widely

available.

(a) In general.

(b) Widely available.

(1) In general.

(2) Internet posting.

(i) In general.

(ii) Transition rule.

(iii) Reliability and accuracy.

(c) Discretion to prescribe other methods for making documents

widely available.

(d) Notice requirement.

(e) Effective date.

Sec. 301.6104(d)-5 Tax-exempt organization subject to harassment

campaign.

(a) In general.

(b) Harassment.

(c) Special rule for multiple requests from a single individual

or address.

(d) Harassment determination procedure.

(e) Effect of a harassment determination.

(f) Examples.

(g) Effective date.

Sec. 301.6104(d)-3 Public inspection and distribution of applications

for tax exemption and annual information returns of tax-exempt

organizations (other than private foundations).

(a) In general. Except as otherwise provided in this section, if a

tax-exempt organization (as defined in paragraph (b)(1) of this

section), other than a private foundation (as defined in paragraph

(b)(2) of this section), filed an application for recognition of

exemption under section 501, it shall make its application for tax

exemption (as defined in paragraph (b)(3) of this section) available

for public inspection without charge at its principal, regional and

district offices during regular business hours. Except as otherwise

provided in this section, a tax-exempt organization, other than a

private foundation, shall make its annual information returns (as

defined in paragraph (b)(4) of this section) available for public

inspection without charge in the same offices during regular business

hours. Each annual information return shall be made available for a

period of three years beginning on the date the return is required to

be filed (determined with regard to any extension of time for filing)

or is actually filed, whichever is later. In addition, except as

provided in Secs. 301.6104(d)-4 and 301.6104(d)-5, an organization

shall provide a copy without charge, other than a reasonable fee for

reproduction and actual postage costs, of all or any part of any

application or return required to be made available for public

inspection under this paragraph to any individual who makes a request

for such copy in person or in writing. See paragraph (d)(3) of this

section for rules relating to fees for copies.

(b) Definitions. For purposes of applying the provisions of section

6104(d), this section and Secs. 301.6104(d)-4 and 301.6104(d)-5, the

following definitions apply:

(1) Tax-exempt organization. The term tax-exempt organization means

any organization that is described in section 501(c) or section 501(d)

and is exempt from taxation under section 501(a).

(2) Private foundation. The term private foundation means a private

foundation as defined in section 509(a).

(3) Application for tax exemption--(i) In general. Except as

described in paragraph (b)(3)(iii) of this section, the term

application for tax exemption includes any prescribed application form

(such as Form 1023 or Form 1024), all documents and statements the

Internal Revenue Service requires an applicant to file with the form,

any

[[Page 17286]]

statement or other supporting document submitted by an organization in

support of its application, and any letter or other document issued by

the Internal Revenue Service concerning the application (such as a

favorable determination letter or a list of questions from the Internal

Revenue Service about the application). For example, a legal brief

submitted in support of an application, or a response to questions from

the Internal Revenue Service during the application process, is part of

an application for tax exemption.

(ii) No prescribed application form. If no form is prescribed for

an organization's application for tax exemption, the application for

tax exemption includes--

(A) The application letter and copy of the articles of

incorporation, declaration of trust, or other similar instrument that

sets forth the permitted powers or activities of the organization;

(B) The organization's bylaws or other code of regulations;

(C) The organization's latest financial statements showing assets,

liabilities, receipts and disbursements;

(D) Statements describing the character of the organization, the

purpose for which it was organized, and its actual activities;

(E) Statements showing the sources of the organization's income and

receipts and their disposition; and

(F) Any other statements or documents the Internal Revenue Service

required the organization to file with, or that the organization

submitted in support of, the application letter.

(iii) Exceptions. The term application for tax exemption does not

include--

(A) Any application for tax exemption filed by an organization that

the Internal Revenue Service has not yet recognized, on the basis of

the application, as exempt from taxation under section 501 for any

taxable year;

(B) Any application for tax exemption filed before July 15, 1987,

unless the organization filing the application had a copy of the

application on July 15, 1987; or

(C) Any material, including the material listed in

Sec. 301.6104(a)-1(i) and information that the Secretary would be

required to withhold from public inspection, that is not available for

public inspection under section 6104.

(iv) Local or subordinate organizations. For rules relating to

applications for tax exemption of local or subordinate organizations,

see paragraph (f)(1) of this section.

(4) Annual information return--(i) In general. Except as described

in paragraph (b)(4)(ii) of this section, the term annual information

return includes an exact copy of any return filed by a tax-exempt

organization pursuant to section 6033. It also includes any amended

return the organization files with the Internal Revenue Service after

the date the original return is filed. The copy must include all

information furnished to the Internal Revenue Service on Form 990,

Return of Organization Exempt From Income Tax, or any version of Form

990 (such as Forms 990-EZ or 990-BL except Form 990-T) and Form 1065,

as well as all schedules, attachments and supporting documents, except

for the name and address of any contributor to the organization. For

example, the annual information return includes Schedule A of Form 990

(containing supplementary information on section 501(c)(3)

organizations), and those parts of the return that show compensation

paid to specific persons (currently, Part V of Form 990 and Parts I and

II of Schedule A of Form 990).

(ii) Exceptions. The term annual information return does not

include Schedule A of Form 990-BL, Form 990-T, Exempt Organization

Business Income Tax Return, Schedule K-1 of Form 1065 or Form 1120-POL,

U.S. Income Tax Return For Certain Political Organizations, and the

return of a private foundation. See Sec. 301.6104(d)-1 for requirements

relating to public disclosure of private foundation annual returns.

(iii) Returns more than 3 years old. The term annual information

return does not include any return after the expiration of 3 years from

the date the return is required to be filed (including any extension of

time that has been granted for filing such return) or is actually

filed, whichever is later. If an organization files an amended return,

however, the amended return must be made available for a period of 3

years beginning on the date it is filed with the Internal Revenue

Service.

(iv) Local or subordinate organizations. For rules relating to

annual information returns of local or subordinate organizations, see

paragraph (f)(2) of this section.

(5) Regional or district offices--(i) In general. A regional or

district office is any office of a tax-exempt organization, other than

its principal office, that has paid employees, whether part-time or

full-time, whose aggregate number of paid hours a week are normally at

least 120.

(ii) Site not considered a regional or district office. A site is

not considered a regional or district office, however, if--

(A) The only services provided at the site further exempt purposes

(such as day care, health care or scientific or medical research); and

(B) The site does not serve as an office for management staff,

other than managers who are involved solely in managing the exempt

function activities at the site.

(c) Special rules relating to public inspection--(1) Permissible

conditions on public inspection. A tax-exempt organization may have an

employee present in the room during an inspection. The organization,

however, must allow the individual conducting the inspection to take

notes freely during the inspection. If the individual provides

photocopying equipment at the place of inspection, the organization

must allow the individual to photocopy the document at no charge.

(2) Organizations that do not maintain permanent offices. If a tax-

exempt organization does not maintain a permanent office, the

organization shall comply with the public inspection requirements of

paragraph (a) of this section by making its application for tax

exemption and its annual information returns, as applicable, available

for inspection at a reasonable location of its choice. Such an

organization shall permit public inspection within a reasonable amount

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

than 2 weeks) and at a reasonable time of day. At the organization's

option, it may mail, within 2 weeks of receiving the request, a copy of

its application for tax exemption and annual information returns to the

requester in lieu of allowing an inspection. The organization may

charge the requester for copying and actual postage costs only if the

requester consents to the charge. An organization that has a permanent

office, but has no office hours or very limited hours during certain

times of the year, shall make its documents available during those

periods when office hours are limited or not available as though it

were an organization without a permanent office.

(d) Special rules relating to copies--(1) Time and place for

providing copies in response to requests made in-person--(i) In

general. Except as provided in paragraph (d)(1)(iii) of this section, a

tax-exempt organization shall provide copies of the documents it is

required to provide under section 6104(d) in response to a request made

in person at its principal, regional and district offices during

regular business hours. Except as provided in paragraph (d)(1)(ii) of

this section, an organization

[[Page 17287]]

shall provide such copies to a requester on the day the request is

made.

(ii) Unusual circumstances. In the case of an in-person request,

where unusual circumstances exist such that fulfilling the request on

the same business day places an unreasonable burden on the tax-exempt

organization, the organization must provide the copies no later than

the next business day following the day that the unusual circumstances

cease to exist or the fifth business day after the date of the request,

whichever occurs first. Unusual circumstances include, but are not

limited to, receipt of a volume of requests that exceeds the

organization's daily capacity to make copies; requests received shortly

before the end of regular business hours that require an extensive

amount of copying; or requests received on a day when the

organization's managerial staff capable of fulfilling the request is

conducting special duties, such as student registration or attending an

off-site meeting or convention, rather than its regular administrative

duties.

(iii) Agents for providing copies. A principal, regional or

district office of a tax-exempt organization subject to the

requirements of this section may retain a local agent to process

requests made in person for copies of its documents. A local agent must

be located within reasonable proximity of the applicable office. A

local agent that receives a request made in person for copies must

provide the copies within the time limits and under the conditions that

apply to the organization itself. For example, a local agent generally

must provide a copy to a requester on the day the agent receives the

request. When a principal, regional or district office of a tax-exempt

organization using a local agent receives a request made in person for

a copy, it must immediately provide the name, address and telephone

number of the local agent to the requester. An organization that

provides this information is not required to respond further to the

requester. However, the penalty provisions of sections 6652(c)(1)(C),

6652(c)(1)(D), and 6685 continue to apply to the tax-exempt

organization if the organization's local agent fails to provide the

documents as required under section 6104(d).

(2) Request for copies in writing--(i) In general. A tax-exempt

organization must honor a written request for a copy of documents (or

the requested part) that the organization is required to provide under

section 6104(d) if the request--

(A) Is addressed to, and delivered by mail, electronic mail,

facsimile, or a private delivery service as defined in section 7502(f)

to a principal, regional or district office of the organization; and

(B) Sets forth the address to which the copy of the documents

should be sent.

(ii) Time and manner of fulfilling written requests--(A) In

general. A tax-exempt organization receiving a written request for a

copy shall mail the copy of the requested documents (or the requested

parts of documents) within 30 days from the date it receives the

request. However, if a tax-exempt organization requires payment in

advance, it is only required to provide the copies within 30 days from

the date it receives payment. For rules relating to payment, see

paragraph (d)(3) of this section. In the absence of evidence to the

contrary, a request or payment that is mailed shall be deemed to be

received by an organization 7 days after the date of the postmark. A

request that is transmitted to the organization by electronic mail or

facsimile shall be deemed received the day the request is transmitted

successfully. If an organization requiring payment in advance receives

a written request without payment or with an insufficient payment, the

organization must, within 7 days from the date it receives the request,

notify the requester of its prepayment policy and the amount due. A

copy is deemed provided on the date of the postmark or private delivery

mark (or if sent by certified or registered mail, the date of

registration or the date of the postmark on the sender's receipt). If

an individual making a request consents, a tax-exempt organization may

provide a copy of the requested document exclusively by electronic

mail. In such case, the material is provided on the date the

organization successfully transmits the electronic mail.

(B) Request for a copy of parts of document. A tax-exempt

organization must fulfill a request for a copy of the organization's

entire application for tax exemption or annual information return or

any specific part or schedule of its application or return. A request

for a copy of less than the entire application or less than the entire

return must specifically identify the requested part or schedule.

(C) Agents for providing copies. A tax-exempt organization subject

to the requirements of this section may retain an agent to process

written requests for copies of its documents. The agent shall provide

the copies within the time limits and under the conditions that apply

to the organization itself. For example, if the organization received

the request first (e.g., before the agent), the deadline for providing

a copy in response to a request shall be determined by reference to

when the organization received the request, not when the agent received

the request. An organization that transfers a request for a copy to

such an agent is not required to respond further to the request. If the

organization's agent fails to provide the documents as required under

section 6104(d), however, the penalty provisions of sections

6652(c)(1)(C), 6652(c)(1)(D), and 6685 continue to apply to the tax-

exempt organization.

(3) Fees for copies--(i) In general. A tax-exempt organization may

charge a reasonable fee for providing copies. A fee is reasonable only

if it is no more than the per-page copying charge stated in

Sec. 601.702(f)(5)(iv)(B) of this chapter (fee charged by the Internal

Revenue Service for providing copies to a requester), plus no more than

the actual postage costs incurred by the organization to provide the

copies. Before the organization provides the documents, it may require

that the individual requesting copies of the documents pay the fee. If

the organization has provided an individual making a request with

notice of the fee, and the individual does not pay the fee within 30

days, or if the individual pays the fee by check and the check does not

clear upon deposit, the organization may disregard the request.

(ii) Form of payment--(A) Request made in person. If a tax-exempt

organization charges a fee for copying (as permitted under paragraph

(d)(3)(i) of this section), it shall accept payment by cash and money

order for requests made in person. The organization may accept other

forms of payment, such as credit cards and personal checks.

(B) Request made in writing. If a tax-exempt organization charges a

fee for copying and postage (as permitted under paragraph (d)(3)(i) of

this section), it shall accept payment by certified check, money order,

and either personal check or credit card for requests made in writing.

The organization may accept other forms of payment.

(iii) Avoidance of unexpected fees. Where a tax-exempt organization

does not require prepayment and a requester does not enclose payment

with a request, an organization must receive consent from a requester

before providing copies for which the fee charged for copying and

postage exceeds $20.

(iv) Responding to inquiries of fees charged. In order to

facilitate a requester's ability to receive copies promptly, a tax-

exempt organization shall respond to any questions from potential

requesters concerning its fees for copying and postage. For example,

[[Page 17288]]

the organization shall inform the requester of its charge for copying

and mailing its application for exemption and each annual information

return, with and without attachments, so that a requester may include

payment with the request for copies.

(e) Documents to be provided by regional and district offices.

Except as otherwise provided, a regional or district office of a tax-

exempt organization must satisfy the same rules as the principal office

with respect to allowing public inspection and providing copies of its

application for tax exemption and annual information returns. A

regional or district office is not required, however, to make its

annual information return available for inspection or to provide copies

until 30 days after the date the return is required to be filed

(including any extension of time that is granted for filing such

return) or is actually filed, whichever is later.

(f) Documents to be provided by local and subordinate

organizations--(1) Applications for tax exemption. Except as otherwise

provided, a tax-exempt organization that did not file its own

application for tax exemption (because it is a local or subordinate

organization covered by a group exemption letter referred to in

Sec. 1.508-1 of this chapter) must, upon request, make available for

public inspection, or provide copies of, the application submitted to

the Internal Revenue Service by the central or parent organization to

obtain the group exemption letter and those documents which were

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

subordinate organization in the group exemption letter. However, if the

central or parent organization submits to the Internal Revenue Service

a list or directory of local or subordinate organizations covered by

the group exemption letter, the local or subordinate organization is

required to provide only the application for the group exemption ruling

and the pages of the list or directory that specifically refer to it.

The local or subordinate organization shall permit public inspection,

or comply with a request for copies made in person, within a reasonable

amount of time (normally not more than 2 weeks) after receiving a

request made in person for public inspection or copies and at a

reasonable time of day. In a case where the requester seeks inspection,

the local or subordinate organization may mail a copy of the applicable

documents to the requester within the same time period in lieu of

allowing an inspection. In such a case, the organization may charge the

requester for copying and actual postage costs only if the requester

consents to the charge. If the local or subordinate organization

receives a written request for a copy of its application for tax

exemption, it must fulfill the request in the time and manner specified

in paragraph (d)(2) of this section. The requester has the option of

requesting from the central or parent organization, at its principal

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

the material submitted by the central or parent organization to include

a local or subordinate organization in the group ruling. If the central

or parent organization submits to the Internal Revenue Service a list

or directory of local or subordinate organizations covered by the group

exemption letter, it must make such list or directory available for

public inspection, but it is required to provide copies only of those

pages of the list or directory that refer to particular local or

subordinate organizations specified by the requester. The central or

parent organization must fulfill such requests in the time and manner

specified in paragraphs (c) and (d) of this section.

(2) Annual information returns. A local or subordinate organization

that does not file its own annual information return (because it is

affiliated with a central or parent organization that files a group

return pursuant to Sec. 1.6033-2(d) of this chapter) must, upon

request, make available for public inspection, or provide copies of,

the group returns filed by the central or parent organization. However,

if the group return includes separate schedules with respect to each

local or subordinate organization included in the group return, the

local or subordinate organization receiving the request may omit any

schedules relating only to other organizations included in the group

return. The local or subordinate organization shall permit public

inspection, or comply with a request for copies made in person, within

a reasonable amount of time (normally not more than 2 weeks) after

receiving a request made in person for public inspection or copies and

at a reasonable time of day. In a case where the requester seeks

inspection, the local or subordinate organization may mail a copy of

the applicable documents to the requester within the same time period

in lieu of allowing an inspection. In such a case, the organization may

charge the requester for copying and actual postage costs only if the

requester consents to the charge. If the local or subordinate

organization receives a written request for a copy of its annual

information return, it must fulfill the request by providing a copy of

the group return in the time and manner specified in paragraph (d)(2)

of this section. The requester has the option of requesting from the

central or parent organization, at its principal office, inspection or

copies of group returns filed by the central or parent organization.

The central or parent organization must fulfill such requests in the

time and manner specified in paragraphs (c) and (d) of this section.

(3) Failure to comply. If an organization fails to comply with the

requirements specified in this paragraph, the penalty provisions of

sections 6652(c)(1)(C), 6652(c)(1)(D), and 6685 apply.

(g) Failure to comply with public inspection or copying

requirements. If a tax-exempt organization denies an individual's

request for inspection or a copy of an application for tax exemption or

an annual information return as required under this section, and the

individual wants to alert the Internal Revenue Service to the possible

need for enforcement action, the individual may provide a statement to

the district director for the key district in which the applicable tax-

exempt organization's principal office is located (or such other person

as the Commissioner may designate) that describes the reason why the

individual believes the denial was in violation of the requirements of

section 6104(d).

(h) Effective date. This section is effective June 8, 1999.

Sec. 301.6104(d)-4 Making applications and returns widely available.

(a) In general. A tax-exempt organization is not required to comply

with a request for a copy of its application for tax exemption or an

annual information return pursuant to Sec. 301.6104(d)-3(a) if the

organization has made the requested document widely available in

accordance with paragraph (b) of this section. An organization that

makes its application for tax exemption and/or annual information

return widely available must nevertheless make the document available

for public inspection as required under Sec. 301.6104(d)-3(a), as

applicable.

(b) Widely available--(1) In general. A tax-exempt organization

makes its application for tax exemption and/or an annual information

return widely available if the organization complies with the

requirements specified in paragraph (b)(2) of this section, and if the

organization satisfies the requirements of paragraph (d) of this

section.

[[Page 17289]]

(2) Internet posting--(i) In general. A tax-exempt organization can

make its application for tax exemption and/or an annual information

return widely available by posting the document on a World Wide Web

page that the tax-exempt organization establishes and maintains or by

having the document posted, as part of a database of similar documents

of other tax-exempt organizations, on a World Wide Web page established

and maintained by another entity. The document will be considered

widely available only if--

(A) the World Wide Web page through which it is available clearly

informs readers that the document is available and provides

instructions for downloading it;

(B) the document is posted in a format that, when accessed,

downloaded, viewed and printed in hard copy, exactly reproduces the

image of the application for tax exemption or annual information return

as it was originally filed with the Internal Revenue Service, except

for any information permitted by statute to be withheld from public

disclosure. (See section 6104(d)(3) and Sec. 301.6104(d)-3(b)(3) and

(4)); and

(C) any individual with access to the Internet can access,

download, view and print the document without special computer hardware

or software required for that format (other than software that is

readily available to members of the public without payment of any fee)

and without payment of a fee to the tax-exempt organization or to

another entity maintaining the World Wide Web page.

(ii) Transition rule. A tax-exempt organization that posted its

application for tax exemption or its annual information returns on a

World Wide Web page on or before April 9, 1999 in a manner consistent

with regulation project REG-246250-96 (1997 C.B. 627) (See

Sec. 601.601(d)(2) of this chapter.) will be treated as satisfying the

requirements of paragraphs (b)(2)(i)(B) & (C) of this section until

June 8, 2000 provided that an individual can access, download, view and

print the document without payment of a fee to the tax-exempt

organization or to another entity maintaining the World Wide Web page.

(iii) Reliability and accuracy. In order for the document to be

widely available through an Internet posting, the entity maintaining

the World Wide Web page must have procedures for ensuring the

reliability and accuracy of the document that it posts on the page and

must take reasonable precautions to prevent alteration, destruction or

accidental loss of the document when posted on its page. In the event

that a posted document is altered, destroyed or lost, the entity must

correct or replace the document.

(c) Discretion to prescribe other methods for making documents

widely available. The Commissioner, from time to time, may prescribe

additional methods, other than an Internet posting meeting the

requirements of paragraph (b)(2) of this section, that a tax-exempt

organization may use to make its documents widely available.

(d) Notice requirement. If a tax-exempt organization has made its

application for tax exemption and/or an annual information return

widely available it must notify any individual requesting a copy where

the documents are available (including the address on the World Wide

Web, if applicable). If the request is made in person, the organization

shall provide such notice to the individual immediately. If the request

is made in writing, the notice shall be provided within 7 days of

receiving the request.

(e) Effective date. This section is effective June 8, 1999.

Sec. 301.6104(d)-5 Tax-exempt organization subject to harassment

campaign.

(a) In general. If the district director for the key district in

which the organization's principal office is located (or such other

person as the Commissioner may designate) determines that the

organization is the subject of a harassment campaign and compliance

with the requests that are part of the harassment campaign would not be

in the public interest, a tax-exempt organization is not required to

fulfill a request for a copy (as otherwise required by

Sec. 301.6104(d)-3(a)) that it reasonably believes is part of the

campaign.

(b) Harassment. A group of requests for an organization's

application for tax exemption or annual information returns is

indicative of a harassment campaign if the requests are part of a

single coordinated effort to disrupt the operations of a tax-exempt

organization, rather than to collect information about the

organization. Whether a group of requests constitutes such a harassment

campaign depends on the relevant facts and circumstances. Facts and

circumstances that indicate the organization is the subject of a

harassment campaign include: a sudden increase in the number of

requests; an extraordinary number of requests made through form letters

or similarly worded correspondence; evidence of a purpose to deter

significantly the organization's employees or volunteers from pursuing

the organization's exempt purpose; requests that contain language

hostile to the organization; direct evidence of bad faith by organizers

of the purported harassment campaign; evidence that the organization

has already provided the requested documents to a member of the

purported harassing group; and a demonstration by the tax-exempt

organization that it routinely provides copies of its documents upon

request.

(c) Special rule for multiple requests from a single individual or

address. A tax-exempt organization may disregard any request for copies

of all or part of any document beyond the first two received within any

30-day-period or the first four received within any one-year-period

from the same individual or the same address, regardless of whether the

district director for the applicable key district (or such other person

as the Commissioner may designate) has determined that the organization

is subject to a harassment campaign.

(d) Harassment determination procedure. A tax-exempt organization

may apply for a determination that it is the subject of a harassment

campaign and that compliance with requests that are part of the

campaign would not be in the public interest by submitting a signed

application to the district director for the key district where the

organization's principal office is located (or such other person as the

Commissioner may designate). The application shall consist of a written

statement giving the organization's name, address, employer

identification number, and the name, address and telephone number of

the person to contact regarding the application. The application must

describe in detail the facts and circumstances that the organization

believes support a determination that the organization is subject to a

harassment campaign. The organization may suspend compliance with

respect to any request for a copy of its documents based on its

reasonable belief that such request is part of a harassment campaign,

provided that the organization files an application for a determination

within 10 business days from the day the organization first suspends

compliance with respect to a request that is part of the alleged

campaign. In addition, the organization may suspend compliance with any

request it reasonably believes to be part of the harassment campaign

until it receives a response to its application for a harassment

campaign determination.

(e) Effect of a harassment determination. If the appropriate

district director (or such other person as the Commissioner may

designate) determines that a tax-exempt organization is the subject of

a harassment campaign and it is not in the public interest to comply

with requests

[[Page 17290]]

that are part of the campaign, such organization is not required to

comply with any request for copies that it reasonably believes is part

of the campaign. This determination may be subject to other terms and

conditions set forth by the district director (or such other person as

the Commissioner may designate). A person (as defined in section

6652(c)(4)(C)) shall not be liable for any penalty under sections

6652(c)(1)(C), 6652(c)(1)(D) or 6685 for failing to timely provide a

copy of documents in response to a request covered in a request for a

harassment determination if the organization fulfills the request

within 30 days of receiving a determination from the district director

(or such other person as the Commissioner may designate) that the

organization is not subject to a harassment campaign. Notwithstanding

the preceding sentence, if the district director (or such other person

as the Commissioner may designate) further determines that the

organization did not have a reasonable basis for requesting a

determination that it was subject to a harassment campaign or

reasonable belief that a request was part of the campaign, the person

(as defined in section 6652(c)(4)(C)) remains liable for any penalties

that result from not providing the copies in a timely fashion.

(f) Examples. The provisions of this section are illustrated by the

following examples:

Example 1. V, a tax-exempt organization, receives an average of

25 requests per month for copies of its three most recent

information returns. In the last week of May, V is mentioned in a

national news magazine story that discusses information contained in

V's 1996 information return. From June 1 through June 30, 1997 V

receives 200 requests for a copy of its documents. Other than the

sudden increase in the number of requests for copies, there is no

other evidence to suggest that the requests are part of an organized

campaign to disrupt V's operations. Although fulfilling the requests

will place a burden on V, the facts and circumstances do not show

that V is subject to a harassment campaign. Therefore, V must

respond timely to each of the 200 requests it receives in June.

Example 2. Y is a tax-exempt organization that receives an

average of 10 requests a month for copies of its annual information

returns. From March 1, 1997 to March 31, 1997, Y receives 25

requests for copies of its documents. Fifteen of the requests come

from individuals Y knows to be active members of the board of

organization X. In the past X has opposed most of the positions and

policies that Y advocates. None of the requesters have asked for

copies of documents from Y during the past year. Y has no other

information about the requesters. Although the facts and

circumstances show that some of the individuals making requests are

hostile to Y, they do not show that the individuals have organized a

campaign that will place enough of a burden on Y to disrupt its

activities. Therefore, Y must respond to each of the 25 requests it

receives in March.

Example 3. The facts are the same as in Example 2, except that

during March 1997, Y receives 100 requests. In addition to the

fifteen requests from members of organization X's board, 75 of the

requests are similarly worded form letters. Y discovers that several

individuals associated with X have urged the X's members and

supporters, via the Internet, to submit as many requests for a copy

of Y's annual information returns as they can. The message

circulated on the Internet provides a form letter that can be used

to make the request. Both the appeal via the Internet and the

requests for copies received by Y contain hostile language. During

the same year but before the 100 requests were received, Y provided

copies of its annual information returns to the headquarters of X.

The facts and circumstances show that the 75 form letter requests

are coordinated for the purpose of disrupting Y's operations, and

not to collect information that has already been provided to an

association representing the requesters' interests. Thus, the fact

and circumstances show that Y is the subject of an organized

harassment campaign. To confirm that it may disregard the 90

requests that constitute the harassment campaign, Y must apply to

the applicable district director (or such other person as the

Commissioner may designate) for a determination. Y may disregard the

90 requests while the application is pending and after the

determination is received. However, it must respond within the

applicable time limits to the 10 requests it received in March that

were not part of the harassment campaign.

Example 4. The facts are the same as in Example 3, except that Y

receives 5 additional requests from 5 different representatives of

the news media who in the past have published articles about Y. Some

of these articles were hostile to Y. Normally, the Internal Revenue

Service will not consider a tax-exempt organization to have a

reasonable belief that a request from a member of the news media is

part of a harassment campaign absent additional facts that

demonstrate that the organization could reasonably believe the

particular requests from the news media to be part of a harassment

campaign. Thus, absent such additional facts, Y must respond within

the applicable time limits to the 5 requests that it received from

representatives of the news media.

(g) Effective date. This section is effective June 8, 1999.

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

Paragraph 3. The authority for part 602 continues to read as

follows:

Authority: 26 U.S.C. 7805.

Par. 4. In Sec. 602.101, paragraph (b) is amended by adding the

following entries in numerical order to the table to read as follows:

Sec. 602.101 OMB Control numbers.

* * * * *

(b) * * *

------------------------------------------------------------------------

Current OMB

CFR part or section where identified and described control No.

------------------------------------------------------------------------

* * * *

* * *

301.6104(d)-3........................................... 1545-1560

301.6104(d)-4........................................... 1545-1560

301.6104(d)-5........................................... 1545-1560

* * * *

* * *

------------------------------------------------------------------------

[[Page 17291]]

Approved: March 25, 1999.

Robert E. Wenzel,

Deputy Commissioner of Internal Revenue.

Donald C. Lubick,

Assistant Secretary of the Treasury (Tax Policy).

[FR Doc. 99-8638 Filed 4-8-99; 8:45 am]

BILLING CODE 4830-01-U