Group Exemption

Group Exemption

A determination by the IRS that several organizations have tax exempt status due to connection to a single, parent non-profit organization. It should be noted that this tax exempt status may be given even before the parent organization has received 501(c)3 status.
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"Student group exemption bills lead to government-funded discrimination and make college campuses less inclusive and more divisive," observed Vanessa Wolbrink, AU legislative assistant, in a blog post.
In a report to the IRS this past summer, the Advisory Committee on Tax Exempt and Government Entities (ACT) recommended that the IRS retain the group exemption process but eliminate group returns and require every chapter or subordinate organization to file their own Form 990.
* AB 404: Eliminates requirements for certain tax-exempt entities that are granted a group exemption to apply separately for state exemption,
State and local affiliates may apply for 501(c)(3) status through MTNA's group exemption process.
"No-one is asking for a waiver or a group exemption but we do want guidelines to do away with the current legal uncertainty."
Only those chapters having a separate EIN are included under SPJ's group exemption number.
(24) In addition, the Commission did not wish to abandon entirely its claim to effective control by issuing a group exemption, which puts a veil of intransparency over entire classes of possibly restrictive transactions.
The charity is not automatically granted tax-exempt status unless the parent organization has a group exemption letter.
301.6104(d)-3(f) governs subordinate organizations included in a group exemption. The exemption application of the parent organization, as well as any paperwork submitted to the IRS for including the subordinate in the group exemption, is subject to public inspection.
Under the new regulations, a local or subordinate organization that is covered by a group exemption letter and receives a document inspection request, or a request for copies, must make available within a reasonable time (normally not more than two weeks) the group exemption application filed by the central or parent organization.
This new corporation can be formed if the system has a group exemption letter from the IRS allowing subordinate entities to be formed under the parent not-for-profit.
To take advantage of this opportunity, affiliates must review their constitutions for compliance with Code Section 501(c)(3) requirements and submit a letter authorizing the national organization to include them on MTNA's "group exemption roster." The national headquarters provides guidelines for completing the process.

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