[Federal Register: August 14, 2007 (Volume 72, Number 156)]
[Proposed Rules]
[Page 45394-45397]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14au07-25]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[REG-116215-07]
RIN 1545-BG60
Public Inspection of Material Relating to Tax-Exempt
Organizations
AGENCY: Internal Revenue Service, Treasury.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This document contains proposed regulations that amend
existing regulations issued under sections 6104 and 6110 of the
Internal Revenue Code. The purpose of the proposed regulations is to
clarify rules relating to information that is made available by the IRS
for public inspection under section 6104(a) and materials that are made
publicly available under section 6110. The changes reflect IRS practice
as well as the United States Court of Appeals for the District of
Columbia Circuit's decision in Tax Analysts v. IRS, 350 F.3d 100 (D.C.
Cir. 2003). The Tax Analysts decision invalidated the portions of
Sec. Sec. 301.6104(a)-1(i) and 301.6110-1(a) that excepted rulings
that denied or revoked an organization's tax exempt status from the
public disclosure provisions of both sections 6104 and 6110. The
proposed regulations will affect organizations exempt from Federal
income tax under section 501(a) or 527, organizations that were exempt
but are no longer exempt from Federal income tax, and organizations
that were denied tax-exempt status.
DATES: Written or electronic comments and requests for a public hearing
must be received by November 13, 2007.
ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-116215-07), room
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand-delivered between the
hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-116215-07), Courier's
Desk, Internal Revenue Service, 1111 Constitution Avenue, NW.,
Washington, DC, or sent electronically via the Federal eRulemaking
Portal at http://www.regulations.gov (IRS REG-116215-07).
FOR FURTHER INFORMATION CONTACT: Concerning submission of comments,
Kelly Banks, (202) 622-7180 (not a toll-free number); concerning the
proposed regulations, Mary Ellen Keys, (202) 622-4570 (not a toll-free
number).
SUPPLEMENTARY INFORMATION:
Background
Since 1950, the Internal Revenue Code has provided for the public
inspection of information that is submitted to the IRS by certain
exempt organizations and certain trusts. Under section 6104(a), the IRS
makes available for public inspection approved applications for
exemption from Federal income tax for organizations described in
section 501(c) or (d) and exempt under section 501(a), notices of
status filed under section 527(i) by political organizations exempt
from taxation under section 527, and certain related documents. Section
6104(a) also permits the IRS to disclose whether an organization is
currently recognized as exempt and the subsection and paragraph number
of section 501 under which it is recognized. Section 6104(b) imposes an
additional obligation on the IRS to make available for public
inspection annual information returns filed by organizations exempt
from Federal income tax. Section 6104(c) governs when the IRS may
disclose certain information about charitable and certain other exempt
organizations to state officials. Section 6104(d) imposes a parallel
obligation on organizations and trusts to make available for public
inspection annual returns, applications for exemption and notices of
status. The proposed regulations do not address the obligations imposed
by subsections (b), (c) and (d).
The decision in Tax Analysts v. IRS, 350 F.3d 100 (D.C. Cir. 2003),
invalidated the portions of existing Sec. 301.6104(a)-1(i)(1), (2),
and (3) and Sec. 301.6110-1(a) that excluded rulings that denied or
revoked an organization's tax exempt status from the public disclosure
provisions of both sections 6104 and 6110. Sections 301.6104(a)-
1(i)(1), (2) and (3) excluded from disclosure by the IRS unfavorable
rulings or determination letters in response to exemption applications,
rulings or determination letters that make or modify a favorable
determination letter, and technical advice memoranda that relate to a
disapproved exemption application or the revocation or modification of
a favorable determination letter. Thus,
[[Page 45395]]
because Sec. 301.6110-1(a) provided that the disclosure of such
rulings, determination letters and technical advice memoranda is to be
determined under section 6104, they also were not available under
section 6110. The IRS has already modified its administrative practice
to follow the court's holding by making these documents available to
the public. See AOD 2004-02, 2004-29 IRB 42, Sec.
601.601(d)(2)(ii)(a). The Treasury Department and IRS now propose to
revise the existing regulations at Sec. 301.6104(a)-1 and Sec.
301.6110-1(a) to conform to the court's holding in Tax Analysts.
Explanation of Provisions
The proposed regulations remove existing Sec. 301.6104(a)-1(i) and
portions of Sec. 301.6110-1(a), in light of the holding in Tax
Analysts. The proposed regulations clarify that the term
``application'' includes information submitted to the IRS relating to
group exemption applications. The proposed regulations provide that
notices of status filed under section 527(i) and the documents
comprising the notices are available for public inspection under
section 6104(a). The proposed regulations also add to the material that
is available for public inspection the letters or documents filed with
or issued by the IRS relating to an organization's status as an
organization described in sections 509(a), 4942(j)(3), or 4943(f),
including a final determination letter that the organization is or is
not a private foundation.
The proposed regulations clarify that the IRS may disclose, in
response to or in anticipation of a request, the subsection and
paragraph number of section 501 under which an organization or group
has been determined, on the basis of its application, to qualify for
exemption from Federal income tax, and whether an organization or group
is currently recognized as exempt.
Section 6104(a) applies to the publication of certain information
related to organizations that are exempt from Federal income taxation
under section 501(a). The information covered by section 6104(a)
includes material for any taxable year during which the organization
was exempt. Under the proposed regulations, written determinations
issued by the IRS, including, for example, unfavorable rulings or
determination letters issued in response to applications for tax
exemption and rulings or determination letters revoking or modifying a
favorable determination letter, are made available for public
inspection under section 6110.
Other Changes to the Existing Regulations
The proposed regulations reorganize or revise certain provisions of
the existing regulations to eliminate redundancy and/or to provide
greater clarity. First, Sec. 301.6104(a)-1(a) is revised to clarify
that applications for exemption from Federal income tax and supporting
documents shall be open for public inspection, even if the IRS
subsequently revokes the organization's exempt status.
Second, new Sec. 301.6104(a)-1(b) is added to clarify that notices
of status filed by political organizations described in section 527 are
open for public inspection.
Third, Sec. 301.6104(a)-1(c) (formerly Sec. 301.6104(a)-1(b)) is
revised to clarify that group exemption letters are included among the
information that is available for public inspection under section
6104(a).
Fourth, Sec. 301.6104(a)-1(d) (formerly Sec. 301.6104(a)-1(c)) is
revised to clarify that, where an organization is determined to be
exempt for any taxable year, material shall not be withheld on the
basis that the organization is determined not to be exempt for any
other taxable year.
Fifth, Sec. 301.6104(a)-1(g) (formerly Sec. 301.6104(a)-1(e)),
which defines the term ``supporting document'' with respect to an
application for exemption from Federal income tax, is revised to
clarify that there are no supporting documents with respect to notices
of status filed by political organizations.
Sixth, new Sec. 301.6104(a)-1(h) is added to clarify that the IRS
may disclose, in response to or anticipation of a request, the
subsection and paragraph number of section 501 under which an
organization or group has been determined to be exempt from Federal
income taxation, whether an organization or group is exempt, or whether
the IRS has revoked an organization's or group's exemption under
section 501(c)(3).
Finally, new Sec. 301.6104(a)-1(i) is added to refer the reader to
section 6033(j), added to the Code by the Pension Protection Act of
2006, Pub. L. 109-280, 120 Stat. 780, which is an additional statutory
provision that requires disclosure of information by the IRS regarding
organizations formerly exempt from Federal income tax. Section 6033(j)
governs the publication and maintenance of a list of organizations
whose tax exempt status was revoked for failure to file required
returns or notices for three consecutive years. Likewise, this
paragraph cross-references section 7428(c), which relates to the
revocation of a determination of exempt status, and section 501(p),
added to the Code by the Military Family Tax Relief Act of 2003, Pub.
L. 108-121, 117 Stat. 1335, which relates to suspension of the tax-
exempt status of terrorist organizations, including public notice of
suspensions.
Special Analyses
It has been determined that the proposed regulations are not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It has also been
determined that section 553(b) of the Administrative Procedure Act (5
U.S.C. chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter
6) do not apply to the regulations, and, therefore, a regulatory
flexibility analysis is not required. Pursuant to section 7805(f) of
the Internal Revenue Code, this regulation has been submitted to the
Chief Counsel for Advocacy of the Small Business Administration for
comments on its impact on small businesses.
Comments and Requests for a Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any written (a signed original and 8
copies) or electronic comments that are submitted timely to the IRS.
The IRS and Treasury Department request comments on the clarity of the
proposed rules and how they can be made easier to understand. All
comments will be available for public inspection and copying. A public
hearing will be scheduled if requested in writing by any person that
timely submits written comments. If a public hearing is scheduled,
notice of the date, time, and place for the public hearing will be
published in the Federal Register.
Drafting Information
The principal author of the regulations is Mary Ellen Keys, Office
of the Associate Chief Counsel (Procedure & Administration).
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Amendments to the Regulations
Accordingly, 26 CFR part 301 is proposed to be amended as follows:
[[Page 45396]]
PART 301--PROCEDURE AND ADMINISTRATION
Paragraph 1. The authority citation for part 301 continues to read
as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Sec. 301.6104(a)-1 is revised to read as follows:
Sec. 301.6104(a)-1 Public inspection of material relating to tax-
exempt organizations.
(a) Applications for exemption from Federal income tax,
applications for a group exemption letter and supporting documents. If
the Internal Revenue Service determines that an organization described
in section 501(c) or (d) is exempt from Federal income tax for any
taxable year, the application upon which the determination is based,
together with any supporting documents, shall be open to public
inspection. Such applications and supporting documents shall be open
for public inspection even after any revocation of the Internal Revenue
Service's determination that the organization is exempt from Federal
income tax. Some applications have been destroyed and therefore are not
available for inspection. For purposes of determining the availability
for public inspection, a claim for exemption from Federal income tax
filed to reestablish exempt status after denial thereof under the
provisions of section 503 or 504 (as in effect on December 31, 1969),
or under the corresponding provisions of any prior revenue law, is
considered an application for exemption from Federal income tax.
(b) Notices of status filed by political organizations. If, in
accordance with section 527(i), an organization notifies the Internal
Revenue Service that it is a political organization as described in
section 527, exempt from Federal income tax for any taxable year, the
notice of status filed by the political organization shall be open to
public inspection.
(c) Letters or documents issued by the Internal Revenue Service
with respect to an application for exemption from Federal income tax.
If an application for exemption from Federal income tax is filed with
the Internal Revenue Service after October 31, 1976, and is open to
public inspection under paragraph (a) of this section, then any letter
or document issued to the applicant by the Internal Revenue Service
that relates to the application is also open to public inspection. For
rules relating to when a letter or document is issued, see Sec.
301.6110-2(h). Letters or documents to which this paragraph applies
include, but are not limited to--
(1) Favorable rulings and determination letters, including group
exemption letters, issued in response to applications for exemption
from Federal income tax;
(2) Technical advice memoranda issued with respect to the approval,
or subsequent approval, of an application for exemption from Federal
income tax;
(3) Letters issued in response to an application for exemption from
Federal income tax (including applications for a group exemption
letter) that propose a finding that the applicant is not entitled to be
exempt from Federal income tax, if the applicant is subsequently
determined, on the basis of that application, to be exempt from Federal
income tax; and
(4) Any letter or document issued by the Internal Revenue Service
relating to an organization's status as an organization described in
sections 509(a), 4942(j)(3), or 4943(f), including a final
determination letter that the organization is or is not a private
foundation.
(d) Requirement of exempt status. An application for exemption from
Federal income tax (including applications for a group exemption
letter), supporting documents, and letters or documents issued by the
Internal Revenue Service that relate to the application shall not be
open to public inspection before the organization is determined, on the
basis of that application, to be exempt from Federal income tax for any
taxable year. If an organization is determined to be exempt from
Federal income tax for any taxable year, these materials shall not be
withheld from public inspection on the basis that the organization is
subsequently determined not to be exempt for any other taxable year.
(e) Documents included in the term ``application for exemption from
Federal income tax.'' For purposes of this section--
(1) Prescribed application form. If a form is prescribed for an
organization's application for exemption from Federal income tax, the
application includes the form and all documents and statements that the
Internal Revenue Service requires to be filed with the form, any
amendments or revisions to the original application, or any resubmitted
applications where the original application was submitted in draft form
or was withdrawn. An application submitted in draft form or an
application submitted and later withdrawn is not considered an
application.
(2) No prescribed application form. If no form is prescribed for an
organization's application for exemption from Federal income tax, the
application includes the submission by letter requesting recognition of
tax exemption and any statements or documents as prescribed by Revenue
Procedure 2007-52, 2007-30 IRB 222, and any successor guidance. (See
Sec. 601.201(n)(7)(i) of the Statement of Procedural Rules, 26 CFR
part 601.)
(3) Application for a Group Exemption Letter. The application for a
group exemption letter includes the letter submitted by or on behalf of
subordinate organizations that seek exempt status pursuant to a group
exemption letter and any statements or documents as prescribed by
Revenue Procedure 80-27, 1980-1 CB 677, and any successor guidance.
(See Sec. 601.201(n)(8)(i) of the Statement of Procedural Rules, 26
CFR part 601.)
(4) Notice of status filed under section 527(i). For purposes of
this section, documents included in the term ``notice of status filed
under section 527(i)'' include--
(i) Form 8871, Political Organization Notice of Section 527 Status;
(ii) Form 8453-X, Declaration of Electronic Filing of Notice of
Section 527 Status; and
(iii) Any other additional forms or documents that the Internal
Revenue Service may prescribe.
(f) Material open to public inspection under section 6110. Under
section 6110, certain written determinations issued by the Internal
Revenue Service are made available for public inspection. Section 6110
does not apply, however, to material that is open to public inspection
under section 6104. See section 6110(l)(1).
(g) Supporting documents defined. For purposes of this section,
``supporting documents,'' with respect to an application for exemption
from Federal income tax, means any statement or document not described
in paragraph (e) of this section that is submitted by the organization
or group in support of its application prior to a determination
described in paragraph (c) of this section. Items submitted in
connection with an application in draft form, or with an application
submitted and later withdrawn, are not supporting documents. There are
no supporting documents with respect to Notices of Status filed by
political organizations.
(h) Statement of exempt status. For efficient tax administration,
the Internal Revenue Service may publish, in paper or electronic
format, the names of organizations currently recognized as exempt from
Federal income tax, including organizations recognized as exempt from
Federal income tax under
[[Page 45397]]
particular paragraphs of section 501(c) or section 501(d). In addition
to having the opportunity to inspect material relating to an
organization exempt from Federal income tax, a person may request a
statement, or the Internal Revenue Service may disclose, in response to
or in anticipation of a request, the following information--
(1) The subsection and paragraph of section 501 (or the
corresponding provision of any prior revenue law) under which the
organization or group has been determined, on the basis of an
application open to public inspection, to qualify for exemption from
Federal income tax; and
(2) Whether an organization or group is currently recognized as
exempt from Federal income tax.
(i) Publication of non-exempt status. (1) For publication of the
notice of the revocation of a determination that an organization is
described in section 501(c)(3), see section 7428(c).
(2) For publication of a list including any organization the tax
exemption of which is revoked for failure to file required returns or
notices for three consecutive years, see section 6033(j).
(3) For publication of notice of suspension of tax exemption of
terrorist organizations, see section 501(p).
(j) Withholding of certain information from public inspection. For
rules relating to certain information contained in an application for
exemption from Federal income tax and supporting documents that will be
withheld from public inspection, see Sec. 301.6104(a)-5(a).
(k) Procedures for inspection. For rules relating to procedures for
public inspection of applications for exemption from Federal income tax
and supporting documents, see Sec. 301.6104(a)-6.
(l) Effective/applicability date. The rules of this section apply
to taxable years ending on or after the date of publication of the
Treasury decision adopting these rules as final regulations in the
Federal Register.
Par. 3. Sec. 301.6110-1 is amended by:
1. Revising paragraph (a).
2. Adding paragraph (d).
The addition and revision read as follows:
Sec. 301.6110-1 Public inspection of written determinations and
background file documents.
(a) General rule. Except as provided in Sec. 301.6110-3, relating
to deletion of certain information, Sec. 301.6110-5(b), relating to
actions to restrain disclosure, paragraph (b)(2) of this section,
relating to technical advice memoranda involving civil fraud and
criminal investigations, and jeopardy and termination assessments, and
paragraph (b)(3) of this section, relating to general written
determinations relating to accounting or funding periods and methods,
the text of any written determination (as defined in Sec. 301.6110-
2(a)) issued pursuant to a request postmarked or hand delivered after
October 31, 1976, shall be open to public inspection in the places
provided in paragraph (c)(1) of this section. The text of any written
determination issued pursuant to a request postmarked or hand delivered
before November 1, 1976, shall be open to public inspection pursuant to
section 6110(h) and Sec. 301.6110-6, when funds are appropriated by
Congress for such purpose. The procedures and rules set forth in
Sec. Sec. 301.6110-1 through 301.6110-5 and Sec. 301.6110-7 do not
apply to written determinations issued pursuant to requests postmarked
or hand delivered before November 1, 1976, unless Sec. 301.6110-6
states otherwise. There shall also be open to public inspection in each
place of public inspection an index to the written determinations
subject to inspection at such place. Each such index shall be arranged
by section of the Internal Revenue Code, related statute or tax treaty
and by subject matter description within such section in such manner as
the Commissioner may from time to time provide. The Commissioner shall
not be required to make any written determination or background file
document open to public inspection pursuant to section 6110 or refrain
from disclosure of any such documents or any information therein,
except as provided by section 6110 or with respect to a discovery order
made in connection with a judicial proceeding. The provisions of
section 6110 shall not apply to material that is open to public
inspection under section 6104. See section 6110(l)(1).
* * * * *
(d) Effective/applicability date. The rules of paragraph (a) of
this section apply to taxable years ending on or after the date of
publication of the Treasury decision adopting these rules as final
regulations in the Federal Register.
Kevin M. Brown,
Deputy Commissioner for Services and Enforcement.
[FR Doc. E7-15952 Filed 8-13-07; 8:45 am]
BILLING CODE 4830-01-P
