IRS Announces 501(c)(4) Notification Process
The Internal Revenue Service ("IRS") has issued temporary regulations explaining how organizations exempt under Section 501(c)(4) of the Internal Revenue Code must provide notice to the Service within 60 days of formation.
On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 ("PATH Act") was signed into law, which placed additional IRS filing requirements on 501(c)(4) organizations. The PATH Act impacts newly formed 501(c)(4)s, as well as some already in existence. After the PATH Act was signed into law, the IRS issued a notice providing interim guidance and extending the due date for the notification requirement until after it issued regulations in order to provide adequate transition time for organizations to comply. Those temporary regulations, providing specific notification requirements, have now been published.
New organizations must notify the IRS within 60 days of their formation. Organizations that applied on Form 1024 for a Determination Letter or filed Form 990, on or before July 8, 2016, do not need to provide notice to the IRS. However, organizations that did not seek a Determination Letter or file a Form 990 on or before July 8, 2016 must notify the IRS of its formation by September 6, 2016.
The temporary regulations also describe the mechanism by which organizations must provide notification to the IRS. Organizations are required to electronically submit Form 8976, "Notice of Intent to Operate Under Section 501(c)(4)," and a $50 fee. Form 8976 requires the following information of the organization: (1) name and address; (2) EIN; (3) date and state of formation; (4) statement of purpose as either a social welfare organization or local association of employees; and (5) month the annual accounting period ends.
An organization will be subject to penalties for each day in violation of the regulation, and there is a separate penalty that may be imposed on the managers of the organization if the organization fails to comply.
For further information regarding the new requirements for 501(c)(4) organizations, you may contact David Powers at firstname.lastname@example.org | (202) 552-2367, or another member of Clark Hill's Political Law team.