[Federal Register Volume 72, Number 220 (Thursday, November 15, 2007)]
[Rules and Regulations]
[Pages 64147-64150]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-22299]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9366]
RIN 1545-BG38
Notification Requirement for Tax-Exempt Entities Not Currently
Required to File
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Temporary regulations.
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SUMMARY: This document contains temporary regulations describing the
time and manner in which certain tax-exempt organizations not currently
required to file an annual information return under section 6033(a)(1)
are required to submit an annual electronic notice including certain
information required by section 6033(i)(1)(A) through (F). The text of
the temporary regulations also serves as the text of the proposed
regulations set forth in the notice of proposed rulemaking on this
subject in the Proposed Rules section in this issue of the Federal
Register.
DATES: Effective Date: These regulations are effective on November 15,
2007.
Applicability Date: These regulations are applicable to taxable
years beginning after December 31, 2006.
FOR FURTHER INFORMATION CONTACT: Monice Rosenbaum at (202) 622-6070
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to the Income Tax Regulations (26
CFR part 1) under section 6033(i)(1) relating to the notification
requirement for entities not currently required to file an annual
information return under section 6033(a)(1). Section 6033(i)(1) was
added by section 1223(a) of the Pension Protection Act of 2006, Public
Law 109-208 (120 Stat. 1090 (2006)) (PPA 2006), effective for annual
periods beginning after 2006. Section 6033(i)(1) requires the Treasury
Secretary to promulgate regulations that describe the time and manner
in which certain tax-exempt organizations not currently required to
file an annual information return are to submit an annual electronic
notice including information set forth in section 6033(i)(1)(A) through
(F). Section 1223 of the PPA 2006 also contains new rules for
termination, loss of exempt status, and reinstatement. These new rules
do not require regulations for implementation and are therefore not
addressed in this temporary regulation but are discussed in this
preamble. Substantive and administrative rules related to termination,
loss of exempt status, and reinstatement will be considered in separate
guidance and other publications.
Prior to the PPA 2006, either by operation of law or through
discretionary exceptions, certain organizations were not required to
file an information return (for example, Form 990, ``Return of
Organization Exempt From Income Tax''). Section 6033(a)(3)(A)(ii)
provided a mandatory exception from filing by certain organizations
(other than private foundations) described in section 6033(a)(3)(C),
whose annual gross receipts were normally not more than $5,000. Section
6033(a)(3)(B) provided a discretionary exception under which the
Secretary relieved certain other organizations from filing. Exercising
this discretionary authority, the IRS published Announcement 82-88
(1982-25 IRB 23 (June 21, 1982)), which provided an exception for
organizations whose annual gross receipts were not normally in excess
of $25,000 from filing Form 990 for tax years ending on or after
December 31, 1982. The new electronic notice provision of section
6033(i)(1) applies to organizations whose gross receipts are low enough
that they are not required to file information returns under sections
(a)(3)(A)(ii) or (a)(3)(B). The substance of this electronic notice is
discussed below in this preamble. See Sec. 601.601(d)(2)(ii)(b).
Section 6033(i)(2) provides that organizations required to submit
annual electronic notification are also required to provide notice of
termination upon the termination of the existence of the organization.
The time and manner of the notice of termination is not specified in
the statute.
Section 6033(j), added by section 1223(b) of the PPA 2006, provides
that if an organization required to file an annual information return
under section 6033(a)(1) or submit an electronic notice under section
6033(i) fails to provide the required return or notice for three
consecutive years, the organization's tax-exempt status is revoked. The
revocation is effective from the date the Secretary determines was the
last day the organization could have timely filed the third required
information return or submitted the notice. Any organization whose tax-
exempt status is revoked under section 6033(j)(1) must apply in order
to obtain reinstatement of that status regardless of whether such
organization was originally required to make an application for tax-
exempt
[[Page 64148]]
status. If, upon application for reinstatement of tax-exempt status, an
organization can show to the satisfaction of the Secretary evidence of
reasonable cause for the failure to file the information return or
submit the notice, the organization's tax-exempt status may, in the
discretion of the Secretary, be reinstated retroactive to the date of
revocation.
Section 7428(b), regarding limitations on declaratory judgments
relating to status and classification of certain tax-exempt
organizations, was amended by section 1223(c) of the PPA 2006 and
provides that no action may be brought under section 7428 with respect
to any revocation of tax-exempt status described in section 6033(j)(1),
for failure to provide the required return under section 6033(a)(1) or
notice under section 6033(i) for three consecutive years.
Section 6652(c)(1)(E), added by section 1233(d) of the PPA 2006,
provides that there is no monetary penalty for failure to submit any
notice required under section 6033(i).
Explanation of Provisions
Annual Electronic Notice Requirements and Other General Requirements
Related to Maintaining Tax-Exempt Status
Section 6033(i)(1) provides that the annual notification, in
electronic form, shall set forth: (A) The legal name of the
organization, (B) any name under which the organization operates or
does business, (C) the organization's mailing address and Internet Web
site address (if any), (D) the organization's taxpayer identification
number, (E) the name and address of a principal officer, and (F)
evidence of the continuing basis for the organization's exemption from
the filing requirements under section 6033(a)(1). The temporary
regulations also provide that additional information necessary to
process the notification may be required. For example, an organization
will be required to state the tax period for which it is submitting the
electronic notification.
The mailing address required by section 6033(i)(1)(C) and submitted
in the annual electronic notification shall be the organization's last
known address as provided by Sec. 301.6212-2(a) of the Regulations on
Procedure and Administration. This last known address may be updated as
provided under Sec. 301.6212-2 or by clear and concise notification as
described in Rev. Proc. 2001-18 (2001-1 CB 708). The IRS will use this
last known address as the organization's address of record and will
direct all mailings to this address. See Sec. 601.601(d)(2)(ii)(b).
By submitting the annual electronic notification described in this
paragraph, an organization acknowledges that it is not required to file
a return under section 6033(a) because its gross receipts are not
normally in excess of $25,000. In order to make this determination, the
organization must keep records that enable it to calculate its gross
receipts. All organizations are required to maintain records under
section 6001. These records will provide evidence of the continuing
basis for the organization's exemption from the filing requirements
under section 6033(a)(1).
The temporary regulations restate that an organization, even though
relieved from filing a return under section 6033(a), is still required
under Sec. 1.6033-2(i) and (j) to inform the IRS in writing of any
changes in the organization's character, operation, or purpose; provide
additional information; and file other returns of information and
unrelated business tax returns. Organizations are also reminded that if
the organization is required to file an unrelated business tax return,
Form 990-T, ``Exempt Organization Business Income Tax Return,'' the
filing of the Form 990-T does not relieve the organization from the
requirement of submitting the annual electronic notification under
section 6033(i).
The statute requires that the annual notification be submitted
electronically. There is no provision in the temporary regulations for
any paper notification. However, if an organization that is required to
submit an annual electronic notification files a complete Form 990 or
Form 990EZ, ``Short Form Return of Organization Exempt From Income
Tax,'' the annual notification requirement of section 6033(i) shall be
deemed satisfied. The annual notification requirement is not satisfied
if the Form 990 or Form 990-EZ contains only those items of information
that would have been required by submitting the notification in
electronic form.
The notification shall be submitted on or before the 15th day of
the fifth calendar month following the close of the period for which
the notification is required to be submitted. Thus, an organization
with an accounting period ending December 31, 2007, is required to
submit the annual notification by May 15, 2008.
Annual Electronic Notification Is Not a Return
The electronic notification is not a return because it does not
contain sufficient data to calculate tax liability or determine tax-
exempt status. Moreover, the electronic notification does not purport
to be a return. The electronic notification simply identifies an
organization and indicates the basis for it not having to file an
information return under section 6033(a)(1). Because the electronic
notification is not a tax or information return, submission of the
notification does not trigger the period of limitations for assessment
under section 6501(g)(2). However, the filing of a complete Form 990 or
Form 990-EZ, as noted in this preamble, will start the period of
limitations for assessment under section 6501(g)(2). Furthermore, there
is no monetary penalty for failure to file under section 6033(i). To
further distinguish the electronic notification from a tax or
information return, the temporary regulations provide that the
electronic notification is submitted to the IRS, rather than filed or
furnished, the terms used in connection with tax and information
returns.
The notifications required by section 6033(i) are subject to public
disclosure and inspection. See section 6104 (generally applicable to
Form 990 information returns). Further, this provision does not affect
any other obligations an organization may have to file other required
information and or tax returns, or penalties for failure to file such
returns.
Form 990-N, Electronic Notification (e-Postcard) For Tax-Exempt
Organizations Not Required to File Form 990 or 990-EZ
Form 990-N, ``Electronic Notification (e-Postcard) for Tax-Exempt
Organizations Not Required To File Form 990 or 990-EZ,'' has been
developed to satisfy the requirements of section 6033(i)(1). The IRS
plans to deliver a simple, Internet based process for submitting the e-
Postcard, Form 990-N. It is anticipated that organizations that do not
have access to a computer can use their local public library to file
the e-Postcard. Because the system will be Internet based,
organizations should not need to purchase software to file the e-
Postcard. The temporary regulations provide that the annual electronic
notification shall be submitted in accordance with instructions and
publications, including those provided at the IRS Web site for exempt
organizations.
Organizations Required To File Returns or Submit Electronic Notice
In general, every organization exempt from taxation under section
501(a) that is not required to file a return described in Sec. 1.6033-
2(a)(2), other than an organization described in section 401(a)
[[Page 64149]]
(qualified pension, profit-sharing, and stock bonus plans) or section
501(d) (religious and apostolic organizations), is required to submit
an annual electronic notice under section 6033(i). However, a
organization that is required to file or files an annual information
return under section 6033(a)(1) should not submit an annual electronic
notification under section 6033(i). This includes any organization
included in a group return as provided in Sec. 1.6033-2 for that year;
all private foundations required to file Form 990-PF, ``Return of
Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust
Treated as a Private Foundation''; section 509(a)(3) supporting
organizations required to file Form 990 or Form 990-EZ; a section
501(c)(21) black lung trust required to file Form 990-BL, ``Information
and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain
Related Person''; and any organization that is required to file or
files an annual information return under section 6033(a)(1) on any
other form prescribed by the IRS for that purpose.
Neither annual information returns under section 6033(a)(1) nor
annual electronic notices under section 6033(i) are required to be
filed or submitted by an organization exemption from taxation under
section 501(a) that is a church, an interchurch organization of local
units of a church, a convention or association of churches, or an
integrated auxiliary of a church (as defined in Sec. 1.6033-2(h)); an
exclusively religious activity of any religious order; a mission
society sponsored by or affiliated with one or more churches or church
denominations, more than half of the activities of which society are
conducted in, or directed at persons in, foreign countries; an
educational organization (below college level) that is described in
section 170(b)(1)(A)(ii), that has a program of a general academic
nature, and that is affiliated (within the meaning of Sec. 1.6033-
2(h)(2)) with a church or operated by a religious order; a State
institution, the income of which is excluded from gross income under
section 115(a); an organization described in section 501(c)(1); or an
organization that is a governmental unit or an affiliate of a
governmental unit exempt from Federal income tax under section 501(a)
as described in Rev. Proc. 95-48 (1995-2 CB 418). See Sec.
601.601(d)(2)(ii)(b).
If an organization exempt from taxation under section 501(a) is not
exempted in either of the two preceding paragraphs, the organization
must submit an annual electronic notice. Thus, a black lung trust that
normally has gross receipts of $25,000 or less is not required to file
Form 990-BL but is required to submit an electronic notification. A
section 509(a)(3) supporting organization of a religious organization
that normally has gross receipts of $5,000 or less is not required to
file Form 990 or Form 990-EZ but is required to submit an electronic
notification.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It also has been
determined that section 553(b) of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these regulations. For the
applicability of the Regulatory Flexibility Act, please refer to the
cross-reference notice of proposed rulemaking published elsewhere in
this issue of the Federal Register. Pursuant to section 7805(f) of the
Internal Revenue Code, these regulations have been submitted to the
Chief Counsel for Advocacy of the Small Business Administration for
comment on their impact on small business.
Drafting Information
The principal author of these regulations is Monice Rosenbaum, of
the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and
Government Entities). However, other personnel from the IRS and the
Treasury Department participated in their development.
List of Subjects 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Amendments to the Regulations
0
Accordingly, 26 CFR part 1 is amended as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 is amended by adding an
entry in numerical order to read as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.6033-6 also issued under 26 U.S.C. 6033(i)(1). * * *
0
Par. 2. Section 1.6033-6T is added to read as follows:
Sec. 1.6033-6T Notification requirement for entities not required to
file an annual information return under section 6033(a)(1) (taxable
years beginning after December 31, 2006).
(a) In general. Except as otherwise provided in this paragraph,
every organization exempt from taxation under section 501(a) that is
not required to file a return described in Sec. 1.6033-2(a)(2), other
than an organization described in section 401(a) or 501(d), shall
submit annually, in electronic form, a notification setting forth the
items described in paragraph (b) of this section and such other
information as may be prescribed in the instructions and publications
issued with respect to the notification.
(b) Organizations not required to submit annual notification. (1)
An organization exempt from taxation under section 501(a) that is
required to file or files an annual information return under section
6033(a)(1) shall not submit an annual notification under section
6033(i). This includes the following types of organizations:
(i) Any organization included in a group return for that year under
Sec. 1.6033-2(d).
(ii) All private foundations required to file under Sec. 1.6033-
2(a)(2)(i) Form 990-PF, ``Return of Private Foundation or Section
4947(a)(1) Nonexempt Charitable Trust Treated as a Private
Foundation.''
(iii) Section 509(a)(3) supporting organizations required to file
under Sec. 1.6033-2(a)(2)(i) Form 990, ``Return of Organization Exempt
From Income Tax,'' or Form 990-EZ, ``Short Form Return or Organization
Exempt From Income Tax.''
(iv) A section 501(c)(21) black lung trust required to file under
Sec. 1.6033-2(a)(2)(i) Form 990-BL.
(v) Any organization that is required to file or files an annual
information return under section 6033(a)(1) on any other form
prescribed by the Internal Revenue Service for that purpose.
(2) An organization exempt from taxation under section 501(a) that
is not required to file a return under section 6033(a)(1) is also not
required to submit an annual notification under section 6033(i). This
includes the following types of organizations:
(i) A church, an interchurch organization of local units of a
church, a convention or association of churches, or an integrated
auxiliary of a church (as defined in Sec. 1.6033-2(h)).
(ii) An exclusively religious activity of any religious order.
(iii) A mission society sponsored by or affiliated with one or more
churches or church denominations, more than one-half of the activities
of which society are conducted in, or directed at persons in, foreign
countries.
(iv) An educational organization (below college level) described in
section 170(b)(1)(A)(ii), that has a program of a general academic
nature, and that is affiliated (within the
[[Page 64150]]
meaning of Sec. 1.6033-2(h)(2)) with a church or operated by a
religious order.
(v) A State institution, the income of which is excluded from gross
income under section 115(a);
(vi) An organization described in section 501(c)(1).
(vii) An organization that is a governmental unit or an affiliate
of a governmental unit exempt from Federal income tax under section
501(a).
(3) If an organization exempt from taxation under section 501(a) is
not described in paragraph (b)(1) or (2) of this section, the
organization must submit an annual notification. Thus, a black lung
trust that normally has gross receipts of $25,000 or less is not
required to file Form 990-BL but is required to submit electronic
notification. A section 509(a)(3) supporting organization of a
religious organization that normally has gross receipts of $5,000 or
less is not required to file Form 990 or Form 990-EZ but is required to
submit electronic notification.
(c) Additional notification requirements--(1) In general. Any
organization described in paragraph (a)(1) of this section shall submit
an annual notification described in section 6033(i)(1). The annual
notification shall--
(i) Be in electronic form; and
(ii) Set forth--
(A) The legal name of the organization;
(B) Any name under which the organization operates or does
business;
(C) The organization's mailing address and Internet Web site
address (if any);
(D) The organization's taxpayer identification number;
(E) The name and address of a principal officer;
(F) Evidence of the continuing basis for the organization's
exemption from the filing requirements under section 6033(a)(1); and
(G) Additional information necessary to process the notification.
(2) The mailing address required by section 6033(i)(1)(C) and
submitted in the annual notification shall be the organization's last
known address as provided by Sec. 301.6212-2(a) of this chapter. This
last known address may be updated as provided under Sec. 301.6212-2 of
this chapter, or by clear and concise notification. The Internal
Revenue Service will use this last known address as the organization's
address of record and will direct all mailings to this address.
(3) By submitting the annual notification described in this
paragraph (c)(1), an organization acknowledges that it is not required
to file a return under section 6033(a) because its annual gross
receipts are not normally in excess of $25,000. In order to make this
determination, the organization must keep records that enable it to
calculate its gross receipts. All organizations are required to
maintain records under section 6001. These records will provide
evidence of the continuing basis for the organization's exemption from
the filing requirements under section 6033(a)(1).
(4) If an organization that is required to submit an annual
electronic notification files a complete Form 990 or Form 990-EZ the
annual notification requirement shall be deemed satisfied. The annual
notification requirement is not satisfied if the Form 990 or Form 990-
EZ contains only those items of information that would have been
required by submitting the notification in electronic form. Also, the
filing of a complete Form 990 or Form 990-EZ, rather than the
submission of an annual electronic notification, is the filing of a
return that starts the period of limitations for assessment under
section 6501(g)(2).
(d) No effect on other filing requirements. An organization that is
relieved from filing an information return under section 6033(a) is
still subject to the requirements of Sec. 1.6033-2(i) and (j),
concerning notice regarding changes in character, operations, or
purpose; providing additional information; duty to file other returns
of information; and duty to file unrelated business tax returns. If an
organization is required to file an unrelated business tax return, Form
990-T, ``Exempt Organization Business Income Tax Return,'' the filing
of that return does not relieve the organization from the requirement
of submitting notification under section 6033(i).
(e) Accounting period for submitting electronic notification. An
annual notification required by this section shall be on the basis of
the established annual accounting period of the organization. If the
organization has no established accounting period, annual notification
shall be on the basis of the calendar year.
(f) Time and place for submitting electronic notification. The
annual notification required by this section shall be submitted on or
before the 15th day of the fifth calendar month following the close of
the period for which the notification is required to be submitted.
Thus, an organization with an accounting period ending December 31,
2007, is required to submit annual notification by May 15, 2008. The
notification shall be submitted in accordance with instructions and
publications, including those provided at the Internal Revenue Service
Web site for exempt organizations.
(g) Effective/applicability date. These regulations are applicable
to annual periods beginning after 2006.
(h) Expiration date. These regulations expire November 15, 2010.
Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
Approved: November 6, 2007.
Eric Solomon,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. E7-22299 Filed 11-14-07; 8:45 am]
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