For nearly four decades, IRS Revenue Procedure 80-27 governed how denominations and other central organizations obtained and maintained group exemption rulings. That changed in January 2026, when the IRS issued Revenue Procedure 2026-8—formally reopening the application process after a five-year pause and replacing key parts of the old framework.
The new rules mostly affect new group exemptions, but one key change also affects group exemptions.
While the guidance applies broadly to all tax-exempt groups, churches and conventions or associations of churches receive some meaningful accommodations based on their religious natures.
Here’s what matters most.
Group Structure and Eligibility
Under Revenue Procedure 2026-8, a central organization must already be recognized as tax-exempt—or apply for recognition at the same time it seeks a group exemption. If the central organization loses its exemption, all subordinate organizations lose coverage under the group ruling.
New group exemptions must include at least five subordinate organizations. Existing groups must maintain at least one subordinate to keep their ruling. A central organization may hold only one group exemption letter, though transition relief applies to certain existing arrangements.
Each subordinate must:
- Be a separate legal entity with its own governing instrument
- Have its own employer identification number (EIN)
- Qualify under the same paragraph of Section 501(c)
Type III supporting organizations and private foundations are not eligible for inclusion.
Affiliation and Supervision
For churches and church associations, affiliation is satisfied by “the sharing of common religious bonds or convictions.” Importantly, hierarchical control over local churches is not required. Inclusion in a denominational directory may help demonstrate affiliation.
Subordinates must also be subject to either general supervision or control by the central organization.
Supervision generally requires the central organization to:
- Annually obtain information about subordinates’ activities and compliance
- Annually communicate information about maintaining tax-exempt status
However, churches receive significant relief. Because churches are not required to file Form 990, central organizations are not required to collect annual financial data from subordinate churches. This accommodation substantially reduces administrative burdens.
By January 22, 2027, central organizations must confirm that each subordinate satisfies the affiliation and supervision or control tests. Organizations that do not qualify must be removed from the group ruling.
New Annual Communication Requirement
Beginning after January 22, 2027, all central organizations—including churches and conventions—must annually communicate with subordinates about how to maintain tax-exempt status.
This rule applies to both existing and new group exemptions.
This requirement can be satisfied simply by providing a link to IRS Publication 1828 or Publication 557. For most denominations, this will be a modest administrative addition rather than a significant compliance hurdle.
Churches remain exempt from mandatory annual reporting to the IRS regarding changes in subordinates. Reporting updates is optional, though it may help donors verify deductibility through the IRS Business Master File.
Attention Advantage Members: This updated section of our online Church & Clergy Tax Guide provides more detailed coverage of the changes. This update also provides a checklist for central organizations to follow, as well as a sample email for communication with subordinate organizations (a requirement for all central organizations to meet starting next January).
Church Law & Tax’s updated section about group exemptions in its online tax guide provides a sample email that central organizations can use to fulfill this annual communication requirement.
Uniform Purpose Statements
One of the most significant changes involves a “uniform purpose statement” requirement for new subordinate organizations joining a group exemption. New subordinates sharing the same purpose must include consistent language in their governing documents.
This requirement does not apply to churches already covered by a group exemption as of the issuance of Revenue Procedure 2026-8. It also does not apply retroactively.
Still, denominations that allow fully autonomous local church governance may face practical challenges in implementing standardized purpose language for new applicants.
Transition and Ongoing Relief
Certain structural requirements must be satisfied by January 22, 2027. After that date, central organizations must fully comply with the new standards.
Churches retain substantial protections. They remain exempt from Form 990 filing, are not subject to financial reporting oversight within the group, and benefit from permanent relief from certain administrative restrictions.
The Bottom Line
Revenue Procedure 2026-8 modernizes group exemption oversight without fundamentally altering church autonomy. The most significant new obligation is an annual educational communication to subordinates beginning in 2027.
With proactive roster reviews and modest administrative planning, most churches and denominational bodies should be well-positioned to maintain—and even expand—their group exemption coverage under the new framework.