IRS Updates Group Exemption Procedure

The Internal Revenue Service (IRS) has issued a notice with substantial changes to the group tax-exemption procedures. This ruling is significant to denominations that have a group ruling and churches that are covered by the ruling.

What is a group exemption and why is it helpful?

The IRS sometimes recognizes a group of organizations as tax-exempt if they are affiliated with a central organization—such as a denomination covered by the group ruling. This avoids the need for each of the organizations to apply for exemption individually. A group exemption letter has the same effect as an individual exemption letter except that it applies to more than one organization.

Group exemptions are an administrative convenience for both the IRS and organizations with many affiliated organizations. Subordinates in a group exemption do not have to file, and the IRS does not have to process separate ...