Recently established social welfare organizations must now notify the IRS that they are operating as tax-exempt organizations under Code Section 501(c)(4) of the tax law. The new requirement was included as a provision in the Protecting Americans from Tax Hikes (PATH) Act of 2015.
The Submission Process
Organizations are required to submit Form 8976, Notice of Intent to Operate Under Section 501(c)(4), to the IRS within 60 days after the organization is established. The notification should include the organization’s name, address, and taxpayer identification number; the organization date; the state or other jurisdiction under which the entity was organized; the annual accounting period; and a statement of purpose.
The IRS may assess penalties of $20 per day, up to a maximum of $5,000, for failing to submit the notification by the due date without reasonable cause.
Some Relief
The new regulations contain some exceptions. Social welfare organizations that either applied to the IRS for a written determination of tax-exempt status or filed at least one annual return or notice on Form 990, Form 990-EZ, or Form 990-N after December 18, 2015, but on or before July 8, 2016, are not required to submit the notification.
Not a Substitute
Organizations should bear in mind that submitting the notification is not a request for an IRS determination of tax-exempt status. Organizations seeking 501(c)(4) status must apply separately to the IRS for a written determination.
Please contact us at (847) 267-9600 if you have questions about these requirements.