A group exemption letter is a ruling or determination letter issued
to a central organization recognizing on a group basis the exemption
under section 501(c) of subordinate organizations on whose behalf the
central organization has applied for recognition of exemption.
A central organization is an organization that has one
or more subordinates under its general supervision or control.
A subordinate organization is a chapter, local, post, or
unit of a central organization. A central organization may be a
subordinate itself, such as a state organization that has subordinate
units and is itself affiliated with a national (central) organization.
A subordinate organization may or may not be incorporated, but it
must have an organizing document. A subordinate that is organized and
operated in a foreign country may not be included in a group exemption
letter. A subordinate described in section 501(c)(3) may not be
included in a group exemption letter if it is a private foundation
described in section 509(a).
If your organization is a subordinate one controlled by a central
organization (for example, a church, the Boy Scouts, or a fraternal
organization), you should check with the central organization to see
if it has been issued a group exemption letter that covers your
organization. If it has, you do not have to file a separate
application unless your organization no longer wants to be included in
the group exemption letter.
If the group exemption letter does not cover your organization, ask
your central organization about being included in the next annual
group ruling update that it submits to the IRS.
If your organization is a central organization with affiliated
subordinates under its control, it may apply for a group exemption
letter for its subordinates, provided it has obtained recognition of
its own exemption. You should make the application for such
subordinates by letter instead of submitting either Form 1023 or 1024.
This procedure relieves each of the subordinates covered by a group
exemption letter from filing its own application. A central
organization obtains its own recognition of exemption by sending its
application to the IRS address shown on Form 8718 for the area in
which the central organization's principal place of business or
principal office is located.
If the central organization has previously obtained recognition of
its own exemption, it must indicate its employer identification
number, the date of the letter recognizing its exemption, and the IRS
office that issued it. It need not forward documents already
submitted. However, if it has not already done so, the central
organization must submit a copy of any amendment to its governing
instruments or internal regulations as well as any information about
changes in its character, purposes, or method of operation.
Employer identification number.
If the central organization does not have an employer
identification number (EIN), it must send a completed Form SS-4
with its exemption application. Each subordinate must have its own EIN
even if it has no employees. The central organization must send with
the group exemption application a completed Form SS-4 on behalf
of each subordinate not having an EIN.
Information required for subordinate organizations.
In addition to the information required to obtain recognition of
its own exemption, the central organization must submit information
for those subordinates to be included in the group exemption letter.
The information should be forwarded in a letter signed by a principal
officer of the central organization setting forth or including as
attachments the following.
- Information verifying that the subordinates:
- Are affiliated with the central organization,
- Are subject to its general supervision or control,
- Are all eligible to qualify for exemption under the same
paragraph of section 501(c), though not necessarily the paragraph
under which the central organization is exempt,
- Are not private foundations if the application for a group
exemption letter involves section 501(c)(3),
- Are all on the same accounting period as the central
organization if they are to be included in group returns, and
- Are organizations that have been formed within the 15-month
period preceding the date of submission of the group exemption
application if they are claiming section 501(c)(3) status and are
subject to the requirements of section 508(a) and wish to be
recognized as exempt from their dates of creation (a group exemption
letter may be issued covering subordinates, one or more of which have
not been organized within the 15-month period preceding the date of
submission, if all subordinates are willing to be recognized as exempt
only from the date of application).
- A detailed description of the purposes and activities of the
subordinates, including the sources of receipts and the nature of
- A sample copy of a uniform governing instrument (such as a
charter or articles of association) adopted by the subordinates, or,
in its absence, copies of representative instruments.
- An affirmation to the effect that, to the best of the
officer's knowledge, the purposes and activities of the subordinates
are as stated in (2) and (3), above.
- A statement that each subordinate to be included in the
group exemption letter has given written authorization to that effect,
signed by an authorized officer of the subordinate, to the central
organization (see also New 501(c)(3) organizations that want to
be included, later in this section).
- A list of subordinates to be included in the group exemption
letter to which the IRS has issued an outstanding ruling or
determination letter relating to exemption.
- If the application for a group exemption letter involves
section 501(c)(3) and is subject to the provisions of the Code
requiring that it give timely notice that it is not a private
foundation (see Private Foundations in chapter 3), an
affirmation to the effect that, to the best of the officer's knowledge
and belief, no subordinate to be included in the group exemption
letter is a private foundation as defined in section 509(a).
- For each subordinate that is a school claiming exemption
under section 501(c)(3), the information required by Revenue Ruling
71-447 and Revenue Procedure 75-50 (these requirements are
fully described in chapter 3, under Private Schools; see
also Schedule B, Form 1023).
- For any school affiliated with a church, the information to
show that the provisions of Revenue Ruling 75-231 have been
- A list of the names, mailing addresses, actual addresses if
different, and EINs of subordinates to be included in the group
exemption letter. A current directory of subordinates may be furnished
instead of the list if it includes the required information and if the
subordinates not to be included in the group exemption letter are
New 501(c)(3) organizations that want to be included.
A new organization, described in section 501(c)(3), that wants to
be included in a group exemption letter, must submit its authorization
(as explained in item number 5 above, under Information required
for subordinate organizations) to the central organization
before the end of the 15th month after it was formed in order to
satisfy the requirement of section 508(a). The central organization
must also include this subordinate in its next annual submission of
information as discussed below under Information Required
Keeping the Group Exemption Letter in Force
Continued effectiveness of a group exemption letter is based on the
- The continued existence of the central organization.
- The continued qualification of the central organization for
exemption under section 501(c).
- The submission by the central organization of the
information required annually (described below under Information
- The annual filing of an information return (Form 990, for
example) by the central organization if required.
The continued effectiveness of a group exemption letter as
to a particular subordinate is based on these four conditions,
as well as on the continued conformity by the subordinate to the
requirements for inclusion in a group exemption letter, the
authorization for inclusion, and the annual filing of any required
information return for the subordinate.
Information Required Annually
To maintain a group exemption letter, the central organization must
submit annually, at least 90 days before the close of its annual
accounting period, all of the following information.
- Information about all changes in the purposes, character, or
method of operation of the subordinates included in the group
- A separate list (that includes the names, mailing addresses,
actual addresses if different, and EINs of the affected subordinates)
for each of the three following categories.
- Subordinates that have changed their names or addresses
during the year.
- Subordinates no longer to be included in the group exemption
letter because they no longer exist or have disaffiliated or withdrawn
their authorization to the central organization.
- Subordinates to be added to the group exemption letter
because they are newly organized or affiliated or because they have
recently authorized the central organization to include them.
An annotated directory of subordinates will not be accepted for
this purpose. If there were none of the above changes, the central
organization must submit a statement to that effect.
- The information required to be submitted by a central
organization on behalf of subordinates to be included in the group
exemption letter is required for subordinates to be added to the
letter. (This information is listed in items 1 through 9, under
Information required for subordinate organizations,
earlier. However, if the information upon which the group
exemption letter was based applies in all material respects to these
subordinates, a statement to this effect may be submitted instead of
the information required by items 1 through 4 of that list.)
The organization should send this information to:
Ogden Service Center
Mail Stop 6271
1000 South 1200 West
Ogden, UT 84404-4749
Submitting the required information annually does not relieve the
central organization or any of its subordinates of the duty to submit
any other information that may be required by an EO area manager to
determine whether the conditions for continued exemption are being
Loss of Group Exemption
A group exemption letter no longer has effect, for either a
particular subordinate or the group as a whole, when:
- The central organization notifies the IRS that it is going
out of existence,
- The central organization notifies the IRS, by its annual
submission or otherwise, that any of its subordinates will no longer
fulfill the conditions for continued effectiveness, explained earlier,
- The IRS notifies the central organization or the affected
subordinate that the group exemption letter will no longer have effect
for some or all of the group because the conditions for continued
effectiveness of a group exemption letter have not been
When notice is given under any of these three conditions, the
IRS will no longer recognize the exempt status of the affected
subordinates until they file separate applications on their own behalf
or the central organization files complete supporting information for
their reinclusion in the group exemption at the time of its annual
submission. However, when the notice is given by the IRS and the
withdrawal of recognition is based on the failure of the organization
to comply with the requirements for recognition of tax-exempt status
under the particular subsection of section 501(c), the revocation will
ordinarily take effect as of the date of that failure. The notice,
however, will be given only after the appeal procedures described
earlier in this chapter are completed.