Summary

More than eight years after a federal appeals court decision, and nearly five years after proposed Regs were issued, IRS has finalized regulations governing the disclosure of information contained in "written determinations," which deny or revoke tax-exempt status.

Extended Summary

In a lawsuit brought by Tax Analysts, the federal appeals court for the District of Columbia Circuit invalidated in 2003 the then-existing regulations under Code Sections 6104(a) and 6110. These Regulations provided that the IRS would not disclose, even in redacted form, determinations denying or revoking tax-exempt status.

Nearly four years later, the Treasury released proposed regulations revising Reg. Sec. 301.6104(a)-1 to provide greater public access to materials. Among other things, the proposed regulations clarified that:

• No documents relating to an application will be disclosed until the IRS determines whether the applicant is tax-exempt;
• Written determinations, exemption applications, and supporting details are disclosable, even if the organization's exempt status is later revoked;
• Withdrawn requests for determination are not "applications";
• A "notice of status" filed by a Section 527 organization is open for public inspection; and
• Group exemption letters are included among the documents open for public inspection.

Exactly one comment was submitted in response to the proposed Regs, by Tax Analysts itself. In response to the comment, the final Regs further clarify that adverse determinations are also disclosable.

CPC Commentary

Following the appeals court decision, IRS began releasing rejection and revocation letters in redacted form in 2004. At first, only the final determination letters were released, but under further pressure from Tax Analysts, the Service began including the initial determination letters, which detail the facts on which the determinations are based. These have been the subject of our regular Tuesday feature.

Kallina's Korner: We thank Tax Analysts and its President, Chris Bergin, for their tireless efforts to obtain public disclosure of IRS communications. Due to their efforts, tax exempt attorneys can actually know in advance what the IRS deems to be a legitimate charitable activity and how, on a particular set of facts, to structure an organization to obtain approval.

Relevant Documents

	Tax Analysts comments on REG-116215-07	2/29/12
	Federal Register: 2012-04740	2/29/12
	Federal Register: REG-116215-07,	8/14/07
	Tax Analysts vs. IRS (DC Circuit)	12/2/03
	Section 6110: Public inspection of written determinations	3/24/10
	Section 6104: Publicity of information required from certain exempt organizations and certain trusts	3/24/10
	Section 527: Political organizations	3/24/10
	Reg. Sec. 301.6104(a)-1: Public inspection of material relating to tax-exempt organizations.	9/16/12