The IRS has just released final and temporary regulations, as well as Revenue Procedure 2016-41, that shed some light on the new notification requirement for 501(c)(4) organizations.
As a refresher, legislation passed late last year requires 501(c)(4) organizations to notify the IRS that they are operating as 501(c)(4) organizations within 60 days of creation date. Subsequent guidance from the IRS clarified that the requirement would not go into effect until 60 days after implementing regulations were published. So with the release of the new regulations, that notification is due no later than September 6, 2016. However, organizations are not required to file the notification if they’ve filed a Form 1024 for recognition of exempt status or an appropriate form of the Form 990 on or before July 8, 2016.
This notification requirement changes the landscape somewhat for 501(c)(4) organizations, which are not technically required to apply to the IRS for recognition of exempt status—though they may choose to do so regardless, using Form 1024. In contrast, most 501(c)(3) organizations are required to file for recognition of exempt status. However, 501(c)(4) organizations generally are required to file some version of annual Form 990 (an information return), so the notion of a filing with the IRS should not be completely foreign.
Notification to the IRS must be on new Form 8976, and is an online filing. It will require basic information including the organization’s name, address, date of formation, accounting year end, and a statement of purpose that the organization will operate as either a social welfare organization or local association of employees. There is a $50 filing fee, and organizations can face penalties for late filing.
The guidance underscores what the notification is (and is not):
- It is not a request for a determination of exempt status—organizations will need to file Form 1024 if they wish to receive that determination.
- Similarly, acknowledgment by the IRS of receiving the notice is not a determination of exempt status.
- It does not replace the annual 990 filing requirement.
- It is not subject to public inspection.