[Federal Register Volume 62, Number 187 (Friday, September 26, 1997)]
[Proposed Rules]
[Pages 50533-50541]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25492]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[REG-246250-96]
RIN 1545-AV13


Public Disclosure of Material Relating to Tax-Exempt 
Organizations

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

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SUMMARY: This document contains proposed regulations relating to the 
public disclosure requirements of section 6104(e) of the Internal 
Revenue Code. The proposed regulations provide guidance for a tax-
exempt organization required to make its application for tax exemption 
and annual information return available for public inspection. The 
proposed regulations also provide guidance for a tax-exempt 
organization required to comply with requests made in writing or in 
person from individuals who seek a copy of those documents. The 
proposed regulations describe how a tax-exempt organization can make 
those documents widely available and, therefore, not be required to 
provide copies in response to individual requests. The proposed 
regulations address the standards that apply in determining whether a 
tax-exempt organization is the subject of a harassment campaign and 
guidance on the applicable procedures to obtain relief. This document 
also provides notice of a public hearing.

DATES: Written comments and requests to speak (with outlines of oral 
comments) at the public hearing scheduled for February 4, 1998, 
beginning at 10 a.m. must be submitted by December 26, 1997.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-246250-96), room 
5226, Internal Revenue Service, POB 7604, Ben Franklin Station, 
Washington DC 20044. Submissions may be hand-delivered between the 
hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-246250-96), Courier's 
Desk, Internal Revenue Service, Constitution Avenue NW., Washington DC. 
Alternatively, taxpayers may submit comments electronically via the 
Internet by selecting the ``Tax Regs'' option on the IRS Home Page, or 
by submitting comments directly to the IRS Internet site at http://
www.irs.ustreas.gov/prod/tax__regs/comments.html. The public hearing 
will be held in the IRS Auditorium, Internal Revenue Service Building, 
1111 Constitution Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Michael B. 
Blumenfeld, (202) 622-6070; concerning submissions and the hearing, 
Michael Slaughter, (202) 622-7190 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collections of information contained in this notice of proposed 
rulemaking have been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)). Comments on the collections of information should be 
sent to the Office of Management and Budget, Attn: Desk Officer for the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503, with copies to the Internal Revenue 
Service, Attn: IRS Reports Clearance Officer, T:FP, Washington, DC 
20224. Comments on the collections of information should be received by 
November 25, 1997. Comments are specifically requested concerning:
    Whether the proposed collections of information are necessary for 
the proper performance of the functions of the Internal Revenue 
Service, including whether the information will have practical utility;
    The accuracy of the estimated burden associated with the proposed 
collections of information;
    How the quality, utility, and clarity of the information to be 
collected may be enhanced;
    How the burden of complying with the proposed collections of 
information may be minimized, including through the application of 
automated collection techniques or other forms of information 
technology; and
    Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.
    The collections of information in these proposed regulations are in 
Secs. 301.6104(e)-1, 301.6104(e)-2, and 301.6104(e)-3. This information 
is required to enable a tax-exempt organization to comply with section 
6104(e) of the Internal Revenue Code. Under section 6104(e), a tax-
exempt organization is required to make its application for tax 
exemption and its annual information returns available for public 
inspection. In addition, a tax-exempt organization is required to 
comply with requests made in writing or in person from individuals who 
seek a copy of those documents or, in the alternative, to make its 
documents widely available. The requirement that a tax-exempt 
organization make its application for tax exemption and annual 
information returns available for public inspection and comply with 
requests made in writing or in person from individuals who seek a copy 
of those documents or, in the alternative, make the documents widely 
available, will enable the public to obtain information about the tax-
exempt organization. Under section 6104(e), a tax-exempt organization 
is permitted to file an application for relief from the requirement to 
provide copies if the organization reasonably believes it is the 
subject of a harassment campaign. The information a tax-exempt 
organization provides when filing an application for a determination 
that it is subject to a harassment campaign will be used by the IRS to 
make such determination. The collection of information is required to 
obtain relief from the requirement to comply with requests for copies 
if such requests are part of the harassment campaign. The likely 
respondents and/or recordkeepers are tax-exempt organizations. The 
burden for recordkeeping and for reporting is reflected below.
    Estimated total annual recordkeeping burden: 551,000 hours.
    Estimated average annual burden per recordkeeper: 30 minutes.
    Estimated number of recordkeepers: 1,100,000.
    Estimated total annual reporting burden: 500 hours.
    Estimated average annual reporting burden per respondent: 29 
minutes.
    Estimated number of respondents: 1050.
    Estimated annual frequency of responses: on occasion.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration

[[Page 50534]]

of any internal revenue law. Generally, tax returns and tax return 
information are confidential, as required by 26 U.S.C. 6103.

Background

    This document contains proposed amendments to the Income Tax 
Regulations (26 CFR part 301) relating to the section 6104(e) 
disclosure requirements affecting tax-exempt organizations 
(organizations described in sections 501 (c) or (d) and exempt from 
taxation under section 501(a)). Section 10702 of the Omnibus Budget 
Reconciliation Act of 1987 (OBRA '87) added subsection (e) to section 
6104 of the Internal Revenue Code (Code). Section 6104(e) requires each 
tax-exempt organization, including one that is a private foundation, to 
allow public inspection of the organization's application for 
recognition of tax exemption. Section 6104(e) also requires each tax-
exempt organization, other than one that is a private foundation, to 
allow public inspection at the organization's principal office (and 
certain regional or district offices) of its three most recent annual 
information returns. Each return must be made available for a 3-year 
period beginning on the date the return is required to be filed or is 
actually filed, whichever is later. Notice 88-120 (1988-2 C.B. 454), 
provided tax-exempt organizations with guidance for complying with the 
section 6104(e) public inspection requirements.
    The Taxpayer Bill of Rights 2 (TBOR2), enacted on July 30, 1996, 
amended section 6104(e) by adding additional requirements. As amended, 
section 6104(e) requires each tax-exempt organization, including one 
that is a private foundation, to comply with requests, made either in 
writing or in person, for copies of the organization's application for 
recognition of tax-exempt status. Section 6104(e) also requires each 
tax-exempt organization, other than one that is a private foundation, 
to comply with requests, made either in writing or in person, for 
copies of the organization's three most recent annual information 
returns. The organization must fulfill these requests without charge, 
other than a reasonable fee for reproduction and mailing costs. If the 
request for copies is made in person, the organization must provide the 
requested copies immediately. If the request for copies is made in 
writing, the organization must provide the copies within 30 days. 
Section 6104(e) also provides that an organization is relieved of its 
obligation to provide copies upon request if, in accordance with 
regulations to be promulgated by the Secretary of the Treasury, (1) the 
organization has made the requested documents widely available or (2) 
the Secretary of the Treasury determines, upon application by the 
organization, that the organization is subject to a harassment campaign 
such that a waiver of the obligation to provide copies would be in the 
public interest.
    In Notice 96-48 (1996-39 I.R.B. 8), the IRS invited comments on the 
changes made by TBOR2. Twenty-two comments were received and considered 
in the drafting of this notice of proposed rulemaking. The comments 
addressed a range of issues, although they made several suggestions in 
common. Several commentators requested that the guidance on the new 
disclosure requirements follow the existing guidance on the public 
inspection requirements provided in Notice 88-120. Several commentators 
also recommended that the fee charged by the IRS for copies of 
organization documents be used to establish a reasonable fee for an 
organization to charge when fulfilling requests for copies of the 
documents. A number of comments were received concerning the Internet. 
Most, but not all, of these comments urged that posting an 
organization's documents on the Internet be treated as making those 
documents widely available. Finally, several commentators asked for 
guidance in determining when an organization is subject to a harassment 
campaign, how to apply for a harassment determination, what kind of 
relief is available while such an application is pending and the effect 
of a determination that the organization is the subject of a harassment 
campaign.

Explanation of Provisions

Overview

    The proposed regulations provide guidance concerning the 
application and returns a tax-exempt organization must make available 
for public inspection and must supply in response to requests for 
copies. The proposed regulations also provide guidance on (1) the place 
and time for making these documents available for public inspection, 
(2) conditions that may be placed on requests for copies of documents, 
and (3) the amount, form and time of payment of any fees that may be 
charged. The regulations also prescribe how an organization can make 
its application for tax exemption and annual information returns widely 
available. Finally, the proposed regulations provide guidance on the 
standards that apply in determining whether an organization is the 
subject of a harassment campaign and on the applicable procedures for 
obtaining relief.

Material Required To Be Made Available for Public Inspection and 
Supplied in Response to a Request for Copies

    The proposed regulations specify the documents that a tax-exempt 
organization must make available for public inspection or supply in 
response to a request for copies. A tax-exempt organization, including 
one that is a private foundation, must make its application for tax 
exemption available. An application for tax exemption includes the 
application form (such as Form 1023 or Form 1024) and any supporting 
documents filed by the organization in support of its application. It 
also includes any letter or document issued by the IRS in connection 
with the application. Consistent with the guidance provided in Notice 
88-120, if an organization filed its application before July 15, 1987, 
the proposed regulations provide that the organization is required to 
make available a copy of its application only if it had a copy of the 
application on July 15, 1987.
    A tax-exempt organization, other than one that is a private 
foundation, must make its three most recent annual information returns 
available. Generally, an annual information return includes Forms 990, 
990-EZ, 990-BL, and Form 1065. It also includes all schedules and 
attachments filed with the IRS. An organization is not required, 
however, to disclose the parts of the return that identify names and 
addresses of contributors to the organization, nor is it required to 
disclose Form 990-T. The proposed regulations provide rules concerning 
the documents that must be made available by an organization that is 
recognized as tax-exempt under a group exemption letter or that files a 
group return pursuant to Sec. 1.6033-2(d) and Rev. Proc. 80-27, 1980-1 
C.B. 677 (or any successor provision). Finally, the proposed 
regulations provide guidance to an individual denied inspection, or a 
copy, of an application or a return. In such a case, the individual may 
provide the IRS with a statement that describes the reason why the 
individual believes the denial was in violation of legal requirements.

Place and Time Documents Must Be Available for Public Inspection

    The proposed regulations provide that a tax-exempt organization 
must make the specified documents available for public inspection at 
its principal, regional and district offices. The specified documents 
generally must be

[[Page 50535]]

available for inspection on the day of the request during the office's 
normal business hours. Consistent with section 6104(e) and Notice 88-
120, the proposed regulations provide that an office of an organization 
will be considered a regional or district office only if it has three 
or more paid full-time employees (or paid employees, whether part-time 
or full-time, whose aggregate number of paid hours per week is at least 
120). The rules exclude certain sites where the organization's 
employees perform solely exempt function activities from being treated 
as a regional or district office. In addition, the proposed regulations 
prescribe how an organization that does not maintain a permanent office 
or whose office has very limited hours during certain times of the year 
can comply with the public inspection requirements. The proposed 
regulations also provide rules concerning the conditions the 
organization may impose on public inspections that are consistent with 
Notice 88-120.

Requirement To Furnish Copy to a Requester

    The proposed regulations require that a tax-exempt organization 
accept requests for copies made in person at the same place and time 
that the information must be available for public inspection. They also 
generally require an organization to provide the copies on the day of 
the request. In unusual circumstances, an organization will be 
permitted to provide the requested copies on the next business day.
    When a request is made in writing, the proposed regulations require 
that a tax-exempt organization furnish the copies within 30 days from 
the date it receives the request. If an organization, however, requires 
advance payment of a reasonable fee for copying and mailing, it may 
provide the copies within 30 days from the date it receives payment, 
rather than from the date of the initial request.
    The proposed regulations provide guidance as to what constitutes a 
request, when a request is considered received, and when copies are 
considered provided. The proposed regulations provide that, instead of 
requesting a copy of an entire application for tax exemption or annual 
information return, individuals may request a specific part of either 
document. Finally, the proposed regulations permit a principal, 
regional, or district office of an organization to use an agent to 
process requests for copies.

Reasonable Fee for Providing Copies

    The proposed regulations provide that the reasonable fee a tax-
exempt organization is permitted to charge for copies may be no more 
than the fees charged by the IRS for copies of tax-exempt organization 
tax returns and related documents (currently $1.00 for the first page 
and $.15 for each subsequent page), plus actual postage costs. The 
proposed regulations permit an organization to collect payment in 
advance of providing the requested copies. If an organization receives 
a written request for copies with no payment enclosed, and the 
organization requires payment in advance, the organization must request 
payment within 7 days from the date it receives the request. Payment 
will be deemed to occur on the day an organization receives the cash, 
check (provided the check subsequently clears) or money order. The 
proposed regulations require an organization to accept payment made by 
cash or money order, and when the request is made in writing, also 
accept payment made by personal check. An organization is permitted, 
though not required, to accept other forms of payment. To protect 
requesters from unexpected fees where a tax-exempt organization does 
not require prepayment and where a requester does not enclose 
prepayment with a request, an organization must receive consent from a 
requester before providing copies for which the fee charged for copying 
and postage is in excess of $20.

Making Applications and Information Returns Widely Available

    The proposed regulations provide that a tax-exempt organization is 
not required to comply with requests for copies if the organization has 
made the requested documents widely available. The proposed regulations 
specify that an organization can make its application for tax exemption 
and/or an annual information return widely available by posting the 
applicable document on the organization's World Wide Web page on the 
Internet or by having the applicable document posted on another 
organization's page as part of a database of similar materials. In 
addition, the proposed regulations provide that the Commissioner may 
prescribe, by revenue procedure or other guidance, other methods that 
an organization can use to make its application and/or its return 
widely available. An organization that makes its application and/or its 
return widely available must inform individuals who request copies how 
and where to obtain the requested document. The Treasury and the IRS 
are interested in comments on additional methods by which applications 
and returns could be made widely available, including the use of a 
clearinghouse that maintains a large inventory of documents from many 
organizations.

Harassment Campaigns

    The proposed regulations provide guidance in determining whether a 
tax-exempt organization is the subject of a harassment campaign. 
Generally, a harassment campaign exists where an organization receives 
a group of requests, and the relevant facts and circumstances show that 
the purpose of the group of requests was to disrupt the operations of 
the tax-exempt organization rather than to obtain information. The 
proposed regulations also contain examples that evaluate whether 
particular situations constitute a harassment campaign and whether an 
organization has a reasonable basis for believing that a request is 
part of the harassment campaign. For example, the IRS will not allow 
organizations to suspend compliance with a request for copies from a 
representative of the news media even though the organization believes 
that request is part of a harassment campaign. The proposed regulations 
also permit an organization to disregard requests in excess of two per 
month or four per year made by a single individual or sent from a 
single address. Finally, the proposed regulations provide procedures 
for requesting a determination that an organization is subject to a 
harassment campaign, the treatment of requests for copies while a 
request for a determination is pending, and the effect of such a 
determination.

Proposed Effective Date

    These regulations are proposed to be effective beginning 60 days 
after publication of these regulations as final regulations.

Special Analyses

    Pursuant to sections 603(a) and 605(b) of the Regulatory 
Flexibility Act, it is certified that the collection of information 
referenced in this notice of proposed rulemaking will not have a 
significant economic impact on a substantial number of small entities. 
Although a substantial number of small entities will be subject to the 
collection of information requirements in these regulations, the 
requirements will not have a significant economic impact on these 
entities. The average time required to maintain and disclose the 
information required under these regulations is estimated to be 30 
minutes for each tax-exempt

[[Page 50536]]

organization. This estimate is based on the assumption that, on 
average, a tax-exempt organization will receive one request per year to 
inspect or provide copies of its application for tax exemption and its 
annual information returns. Less than 0.001 percent of the tax-exempt 
organizations affected by these regulations will be subject to the 
reporting requirements contained in the regulations. It is estimated 
that annually, approximately 1,000 tax-exempt organizations will make 
its documents widely available by posting them on the Internet. In 
addition, it is estimated that annually, approximately 50 tax-exempt 
organizations will file an application for a determination that they 
are the subject of a harassment campaign such that a waiver of the 
obligation to provide copies of their applications for tax exemption 
and their annual information returns is in the public interest. The 
average time required to complete, assemble and file an application 
describing a harassment campaign is expected to be 5 hours. Because 
applications for a harassment campaign determination will be filed so 
infrequently, they will have no effect on the average time needed to 
comply with the requirements in these regulations. In addition, a tax-
exempt organization is allowed in these regulations to charge a 
reasonable fee for providing copies to requesters. Therefore, it is 
estimated that on average it will cost tax-exempt organizations less 
than $10 per year to comply with these regulations, which is not a 
significant economic impact.
    Pursuant to section 7805(f) of the Internal Revenue Code, this 
notice of proposed rulemaking will be submitted to the Chief Counsel 
for Advocacy of the Small Business Administration for comment on its 
impact on small business.

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written comments (a signed original 
and eight (8) copies) that are submitted timely to the IRS. All 
comments will be available for public inspection and copying.
    A public hearing has been scheduled for February 4, 1998, beginning 
at 10 a.m. in the IRS Auditorium, Internal Revenue Building, 1111 
Constitution Avenue, NW., Washington, DC. Because of access 
restrictions, visitors will not be admitted beyond the Internal Revenue 
Service Building lobby more than 15 minutes before the hearing starts.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing.
    Persons that wish to present oral comments at the hearing must 
submit written comments and an outline of the topics to be discussed 
and the time devoted to each topic (signed original and eight (8) 
copies) by December 26, 1997.
    A period of 10 minutes will be allotted to each person for making 
comments.
    An agenda showing the schedule of speakers will be prepared after 
the deadline for receiving outlines has passed. Copies of the agenda 
will be available free of charge at the hearing.

Drafting Information

    The principal author of these regulations is Michael B. Blumenfeld, 
Office of Associate Chief Counsel (Employee Benefits and Exempt 
Organizations), IRS. Other personnel from the IRS and Treasury 
Department also participated in their development.

List of Subjects in 26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR Part 301 is proposed to be amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

    Paragraph 1. The authority citation for 26 CFR part 301 is amended 
by adding entries in numerical order to read as follows:

    Authority: 26 U.S.C. 7805 * * *

    Section 301.6104(e)-2 also issued under 26 U.S.C. 6104(e)(3);
    Section 301.6104(e)-3 also issued under 26 U.S.C. 6104(e)(3); * * *

    Par. 2. Sections 301.6104(e)-0, 301.6104(e)-1, 301.6104(e)-2, and 
301.6104(e)-3 are added to read as follows:


Sec. 301.6104(e)-0  Table of contents.

    This section lists captions contained in Secs. 301.6104(e)-1, 
301.6104(e)-2, and 301.6104(e)-3.

Sec. 301.6104(e)-1  Public inspection and distribution of annual 
information returns of tax-exempt organizations (other than private 
foundations) and applications for tax exemption.

    (a) In general.
    (b) Definitions.
    (1) Tax-exempt organization.
    (2) Private foundation.
    (3) Application for tax exemption.
    (i) In general.
    (ii) No prescribed application form.
    (iii) Exceptions.
    (4) Annual information return.
    (i) In general.
    (ii) Returns more than 3 years old.
    (5) Regional or district offices.
    (i) In general.
    (ii) Site not considered a regional or district office.
    (c) Special rules relating to public inspection.
    (1) Permissible conditions on public inspection.
    (2) Organizations that do not maintain permanent offices.
    (d) Special rules relating to copies.
    (1) Time and place for providing copies in response to requests 
made in person.
    (i) In general.
    (ii) Unusual circumstances.
    (iii) Agents for providing copies.
    (2) Request for copies in writing.
    (i) In general.
    (ii) Time and manner of fulfilling written requests.
    (A) In general.
    (B) Agents for providing copies.
    (3) Request for a copy of parts of document.
    (4) Fees for copies.
    (i) In general.
    (ii) Form of payment.
    (A) Request made in person.
    (B) Request made in writing.
    (iii) Avoidance of unexpected fees.
    (iv) Responding to inquiries of fees charged.
    (e) Rules relating to documents to be provided by regional and 
district offices, and local and subordinate organizations.
    (1) Documents to be provided by regional and district offices.
    (2) Documents to be provided by local and subordinate 
organizations.
    (f) Failure to comply with public inspection or copying 
requirements.
    (g) Effective date.

Sec. 301.6104(e)-2  Making applications and returns widely 
available.

    (a) In general.
    (b) Widely available.
    (1) In general.
    (2) Internet posting.
    (3) Notice requirement.
    (c) Effective date.

Sec. 301.6104(e)-3  Tax-exempt organization subject to harassment 
campaign.

    (a) In general.
    (b) Harassment.
    (c) Special rule for multiple requests from a single individual 
or address.
    (d) Harassment determination procedure.
    (e) Effect of a harassment determination.
    (f) Examples.
    (g) Effective date.


Sec. 301.6104(e)-1  Public inspection and distribution of annual 
information returns of tax-exempt organizations (other than private 
foundations) and applications for tax exemption.

    (a) In general. Except as otherwise provided in this section, a 
tax-exempt organization, including one that is a private foundation, 
shall make its application for tax exemption (as defined in paragraph 
(b)(3) of this section) available for public inspection

[[Page 50537]]

without charge at its principal, regional and district offices during 
regular business hours. A tax-exempt organization, other than a private 
foundation, shall make its annual information returns (as defined in 
paragraph (b)(4) of this section) available for public inspection 
without charge in the same offices during regular business hours. Each 
annual information return shall be made available for a period of three 
years beginning on the date the return is required to be filed 
(determined with regard to any extension of time for filing) or is 
actually filed, whichever is later. In addition, except as provided in 
Sec. 301.6104(e)-2 and Sec. 301.6104(e)-3, an organization shall 
provide a copy without charge, other than a reasonable fee for 
reproduction and actual postage costs, of all or any part of any 
application or return required to be made available for public 
inspection under this paragraph to any individual who makes a request 
for such copy in person or in writing. See paragraph (d)(4) of this 
section for rules relating to fees for copies.
    (b) Definitions. For purposes of section 6104(e) and the 
regulations thereunder, the following definitions apply:
    (1) Tax-exempt organization. The term tax-exempt organization means 
any organization that is described in section 501(c) or section 501(d) 
and is exempt from taxation under section 501(a).
    (2) Private foundation. The term private foundation means a private 
foundation as defined in section 509(a).
    (3) Application for tax exemption--(i) In general. The term 
application for tax exemption includes any prescribed application form 
(such as Form 1023 or Form 1024), all documents and statements the 
Internal Revenue Service requires an applicant to file with the form, 
any statement or other supporting document submitted by an organization 
in support of its application, and any letter or other document issued 
by the Internal Revenue Service concerning the application (such as a 
favorable determination letter or a list of questions from the Internal 
Revenue Service about the application). For example, a legal brief 
supporting an application, or a response to questions from the Internal 
Revenue Service during the application process, is a supporting 
document.
    (ii) No prescribed application form. If no form is prescribed for 
an organization's application for tax exemption, the application for 
tax exemption includes--
    (A) The application letter and copy of the articles of 
incorporation, declaration of trust, or other similar instrument that 
sets forth the permitted powers or activities of the organization;
    (B) The organization's bylaws or other code of regulations;
    (C) The organization's latest financial statements, as of the date 
the application is submitted, showing assets, liabilities, receipts and 
disbursements;
    (D) Statements describing the character of the organization, the 
purpose for which it was organized, and its actual activities;
    (E) Statements showing the sources of the organization's income and 
receipts and their disposition; and
    (F) Any other statements or documents the Internal Revenue Service 
required the organization to file with, or that the organization 
submitted in support of, the application letter.
    (iii) Exceptions. The term application for tax exemption does not 
include--
    (A) Any application for tax exemption filed by an organization that 
has not yet been recognized, on the basis of the application, by the 
Internal Revenue Service as exempt from taxation for any taxable year;
    (B) Any application for tax exemption filed before July 15, 1987 
unless the organization filing the application had a copy of the 
application on July 15, 1987; or
    (C) Any material, including the material listed in 
Sec. 301.6104(a)-1(i) and information that the Secretary would be 
required to withhold from public inspection, that is not available for 
public inspection under section 6104.
    (4) Annual information return--(i) In general. The term annual 
information return includes an exact copy of any return filed by a tax-
exempt organization pursuant to section 6033. It also includes any 
amended return filed with the Internal Revenue Service after the date 
the original return is filed. The copy must include all information 
furnished to the Internal Revenue Service on Form 990, Return of 
Organization Exempt From Income Tax, or any version of Form 990 (such 
as Forms 990-EZ or 990-BL except Form 990-T) and Form 1065, as well as 
all schedules, attachments and supporting documents, except for the 
name or address of any contributor to the organization. For example, 
the annual information return includes Schedule A of Form 990 
containing supplementary information on section 501(c)(3) 
organizations, and those parts of the return that show compensation 
paid to specific persons (Part VI of Form 990 and Parts I and II of 
Schedule A of Form 990). The term annual information return does not 
include Schedule A of Form 990-BL, Form 990-T, Exempt Organization 
Business Income Tax Return or Form 1120-POL, U.S. Income Tax Return For 
Certain Political Organizations. For purposes of this section and the 
regulations thereunder, an annual information return does not include 
the return of a private foundation. See Sec. 301.6104(d)-1 for 
requirements relating to public disclosure of private foundation annual 
returns.
    (ii) Returns more than 3 years old. The term annual information 
return does not include any return after the expiration of 3 years from 
the date the return is required to be filed (including any extension of 
time that has been granted for filing such return) or is actually 
filed, whichever is later. If an organization has filed an amended 
return, however, the amended return must be made available for a period 
of 3 years beginning on the date it is filed with the Internal Revenue 
Service.
    (5) Regional or district offices--(i) In general. A regional or 
district office is any office of a tax-exempt organization, other than 
its principal office, that has--
    (A) 3 or more paid full-time employees; or
    (B) Paid employees, whether part-time or full-time, whose aggregate 
number of paid hours a week are normally at least 120.
    (ii) Site not considered a regional or district office. A site is 
not considered a regional or district office, however, if--
    (A) The only services provided at the site further exempt purposes 
(such as day care, health care or scientific or medical research); and
    (B) The site does not serve as an office for management staff, 
other than managers involved solely in managing the exempt function 
activities at the site.
    (c) Special rules relating to public inspection--(1) Permissible 
conditions on public inspection. A tax-exempt organization may have an 
employee present in the room during an inspection. The organization, 
however, must allow the individual conducting the inspection to take 
notes freely during the inspection, and to photocopy the document at no 
charge, if the individual provides the photocopying equipment at the 
place of inspection.
    (2) Organizations that do not maintain permanent offices. If a tax-
exempt organization does not maintain a permanent office, the 
organization shall comply with the public inspection requirements of 
paragraph (a) of this section by making its application for tax

[[Page 50538]]

exemption and its annual information returns, as applicable, available 
for inspection at a reasonable location of its choice. Such an 
organization shall permit public inspection within a reasonable amount 
of time after receiving a request for inspection (normally not more 
than 2 weeks) and at a reasonable time of day. At the organization's 
option, it may mail, within 2 weeks of receiving the request, a copy of 
its application for tax exemption and annual information returns to the 
requester in lieu of allowing an inspection. The organization may 
charge the requester for copying and actual postage costs only if the 
requester consents to the charge. An organization that has a permanent 
office, but has no office hours or has very limited hours during 
certain times of the year, shall make its documents available during 
those periods when office hours are limited or not available as though 
it were an organization without a permanent office.
    (d) Special rules relating to copies--(1) Time and place for 
providing copies in response to requests made in-person--(i) In 
general. A tax-exempt organization shall provide copies of the 
documents it is required to provide under section 6104(e) in response 
to a request made in person at the time and place that it makes its 
documents available for inspection under paragraph (a) of this section. 
Except as provided in paragraph (d)(1)(ii) of this section, an 
organization shall provide such copies to a requester on the day the 
request is made.
    (ii) Unusual circumstances. Where unusual circumstances exist such 
that fulfilling a request on the same business day places an 
unreasonable burden on the tax-exempt organization, the organization 
may provide the copies in response to a request made in person on the 
next business day following the day of the request. Unusual 
circumstances may include, but are not limited to, receipt of a volume 
of requests that exceeds the organization's daily capacity to make 
copies; requests received shortly before the end of regular business 
hours that require an extensive amount of copying; or requests received 
on a day when the organization's managerial staff is conducting special 
duties, such as student registration, rather than its regular 
administrative duties.
    (iii) Agents for providing copies. A principal, regional or 
district office of a tax-exempt organization subject to the 
requirements of this section may retain a local agent, within 
reasonable proximity of the applicable office, to process in person 
requests for copies of its documents. An agent that receives a request 
for copies must provide the copies within the time and under the 
conditions that apply to the organization itself. For example, an agent 
must provide a copy to a requester on the day the agent receives the 
request. However, an office using such an agent that receives an in-
person request for a copy must immediately provide the name, address 
and telephone number of the local agent to the requester. An 
organization that notifies an in-person requester of such an agent is 
not required to respond further to the requester. However, the penalty 
provisions of sections 6652(c)(1)(C), 6652(c)(1)(D), and 6685 continue 
to apply to the tax-exempt organization if the organization's agent 
fails to provide the documents as required under section 6104(e).
    (2) Request for copies in writing--(i) In general. A tax-exempt 
organization must honor a written request for a copy of documents that 
the organization is required to provide under section 6104(e) if the 
request--
    (A) Is addressed to, and delivered by mail, electronic mail, 
facsimile, a private delivery service as defined in section 7502(f), or 
in person, to the principal, regional or district office of the 
organization; and
    (B) Sets forth the address to which the copy of the documents 
should be sent.
    (ii) Time and manner of fulfilling written requests--(A) In 
general. A tax-exempt organization receiving a written request for a 
copy shall mail the copy of the requested documents (or the requested 
parts of documents) within 30 days from the date it receives the 
request. If a tax-exempt organization requires payment in advance, it 
shall provide the copies within 30 days from the date it receives 
payment. If an organization requiring payment in advance receives a 
written request without payment or an insufficient payment, the 
organization must, within 7 days from the date it receives the request, 
notify the requester of its prepayment policy and the amount due. A 
request or payment that is mailed shall be deemed (in the absence of 
evidence to the contrary) to be received by an organization 7 days 
after the date of the postmark. Requests transmitted to the 
organization by electronic mail or facsimile shall be deemed received 
the day the request is transmitted successfully. Copies are deemed 
provided on the date of the postmark or private delivery mark (or if 
sent by certified or registered mail, the date of registration or the 
date of the postmark on the sender's receipt). If an individual making 
a request consents, a tax-exempt organization may provide a copy of the 
requested document exclusively by electronic mail. In such case, the 
material is provided on the date the organization successfully 
transmits the electronic mail.
    (B) Agents for providing copies. A tax-exempt organization subject 
to the requirements of this section may retain an agent to process 
written requests for copies of its documents. The agent shall provide 
the copies within the time and under the conditions that apply to the 
organization itself. For example, if the organization received the 
request first (e.g. before the agent), the deadline for providing a 
copy in response to a request shall be determined in reference to when 
the organization received the request, not when the agent received the 
request. An organization that transfers a request for a copy to such an 
agent is not required to respond further to the request. However, if 
the organization's agent fails to provide the documents as required 
under section 6104(e), the penalty provisions of sections 
6652(c)(1)(C), 6652(c)(1)(D), and 6685 continue to apply to the tax-
exempt organization.
    (3) Request for a copy of parts of document. A tax-exempt 
organization must fulfill a request for a copy of the organization's 
entire application for tax exemption or annual information return or 
any identifiable part, attachment or supporting paper of its 
application or return. A request for a copy of less than its entire 
application or less than its entire return must describe the 
information desired in sufficient detail to enable the organization to 
identify the desired part of the applicable document without placing an 
unreasonable burden upon the organization. For example, a request may 
be limited to those parts of an organization's annual information 
return that relates to the compensation of the organization's officers 
and managers.
    (4) Fees for copies--(i) In general. A tax-exempt organization 
charges a reasonable fee for providing copies only if it charges no 
more than the per-page copying charge stated in 
Sec. 601.702(f)(5)(iv)(B) of this chapter (fee charged by the Internal 
Revenue Service for providing copies to a requester), plus no more than 
the actual postage costs incurred by the organization to provide the 
copies. An organization may require that an individual requesting 
copies of documents pay the fee before the documents are provided. If 
the organization has provided an individual making a request with 
notice of the fee, and the individual has not paid the fee within 30 
days, or if the individual pays

[[Page 50539]]

the fee by check and the check does not clear when deposited, the 
organization may disregard the request.
    (ii) Form of payment--(A) Request made in person. If a tax-exempt 
organization charges a fee for copying as permitted under paragraph 
(d)(4)(i) of this section, it shall accept payment by cash and money 
order for requests made in person. The organization may accept other 
forms of payment, such as personal checks or credit cards.
    (B) Request made in writing. If a tax-exempt organization charges a 
fee for copying and postage as permitted under paragraph (d)(4)(i) of 
this section, it shall accept payment by certified check, personal 
check and money order for requests made in writing. The organization 
may accept other forms of payment, such as credit cards.
    (iii) Avoidance of unexpected fees. Where a tax-exempt organization 
does not require prepayment and a requester does not enclose prepayment 
with a request, an organization must receive consent from a requester 
before providing copies for which the fee charged for copying and 
postage under paragraph (d)(4)(i) of this section is in excess of $20.
    (iv) Responding to inquiries of fees charged. In order to 
facilitate a requester's ability to receive copies promptly, a tax-
exempt organization shall respond to any questions from potential 
requesters concerning its fees for copying and postage. For example, 
the organization shall inform the requester of its charge for copying 
and mailing its application for exemption and each annual information 
return, with and without attachments, so that a requester may include 
payment with the request for copies.
    (e) Rules relating to documents to be provided by regional and 
district offices, and local and subordinate organizations--(1) 
Documents to be provided by regional and district offices. A regional 
or district office of a tax-exempt organization must satisfy the same 
rules as the principal office with respect to public inspection and 
providing copies of its application for tax exemption and annual 
information returns. However, a regional or district office is not 
required to make its annual information return available for inspection 
or for providing copies until 30 days after the date the return is 
required to be filed (including any extension of time that is granted 
for filing such return) or is actually filed, whichever is later.
    (2) Documents to be provided by local and subordinate 
organizations. A local organization that does not file its own annual 
information return (because it is affiliated with a central 
organization that files a group return pursuant to Sec. 1.6033-2(d)) 
must make available the applicable annual information returns filed by 
the central organization. However, a local organization is not required 
to make its annual information return available for inspection or for 
providing copies until 30 days after the date the return is required to 
be filed (including any extension of time that is granted for filing 
such return) or is actually filed by the central organization, 
whichever is later. If a subordinate organization is covered by a group 
exemption letter, the application for tax exemption the subordinate 
organization must make available for public inspection and furnish in 
response to requests for copies is the application submitted to the 
Internal Revenue Service by its parent or supervisory organization to 
obtain the group exemption letter, as well as any additional documents 
submitted in order to cover the subordinate organization under the 
group exemption letter.
    (f) Failure to comply with public inspection or copying 
requirements. If a tax-exempt organization denies an individual's 
request for inspection or a copy of an application for tax exemption or 
an annual information return as required under section 6104(e) and this 
section, and the individual wants to alert the Internal Revenue Service 
to the possible need for enforcement action, the individual may provide 
a statement to the Director, Exempt Organizations Division, CP:E:EO, 
Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, 
D.C. 20224 that describes the reason why the individual believes the 
denial was in violation of the requirements of section 6104(e).
    (g) Effective date. This section is effective beginning 60 days 
after its publication as a final regulation in the Federal Register.


Sec. 301.6104(e)-2  Making applications and returns widely available.

    (a) In general. A tax-exempt organization is not required to comply 
with a request for a copy of its application for tax exemption or an 
annual information return pursuant to Sec. 301.6104(e)-1(a) if the 
organization has made the requested application or return widely 
available in accordance with paragraph (b) of this section. An 
organization that makes its application or return widely available must 
nevertheless make the application or return available for public 
inspection as required under Sec. 301.6104(d)-1 or Sec. 301.6104(e)-1, 
as applicable.
    (b) Widely available--(1) In general. A tax-exempt organization 
makes its application for tax exemption and/or an annual information 
return widely available if the organization uses a method specified in 
paragraph (b)(2) of this section or in a revenue procedure or other 
form of guidance issued by the Commissioner, and if the organization 
satisfies the requirements of paragraph (b)(3) of this section.
    (2) Internet posting. A tax-exempt organization can make its 
application for tax exemption and/or an annual information return 
widely available by posting the application or return on a World Wide 
Web page that the tax-exempt organization establishes and maintains or 
by having the application or return posted, as part of a database of 
similar documents of other tax-exempt organizations, on a World Wide 
Web page established and maintained by another entity. In order for the 
application or return to be widely available through an Internet 
posting, the entity maintaining the World Wide Web page must have 
procedures for ensuring the reliability and accuracy of the application 
or return that it posts on the page and must take reasonable 
precautions to prevent alteration, destruction or accidental loss of 
the application or return posted on its page. Furthermore, the 
application or return will be considered widely available only if--
    (i) It is posted in the same format used by the Internal Revenue 
Service to post forms and publications on the Internal Revenue Service 
World Wide Web page;
    (ii) The World Wide Web page through which it is available clearly 
informs readers that the document is available and provides 
instructions for downloading it;
    (iii) When downloaded and printed in hard copy, the application or 
return is in substantially the same form as the original application or 
return, and contains the same information provided in the original 
application or return filed with the Internal Revenue Service (except 
information withheld pursuant to Sec. 301.6104(e)-1(b)(4)(i) (the names 
and addresses of contributors listed on the annual information), 
Schedule A of Form 990-BL and information on the application for tax 
exemption required to be withheld under section 6104(a)(1)(D) and 
Sec. 301.6104(e)-1(b)(3) (trade secrets and similar information)); and
    (iv) A person can access and download the application or return 
without payment of a fee to the organization maintaining the World Wide 
Web page.

[[Page 50540]]

    (3) Notice requirement. If a tax-exempt organization has made its 
application for tax exemption and/or an annual information return 
otherwise widely available it must tell any individual requesting a 
copy where the documents are available (including the address on the 
World Wide Web, if applicable). If the request is made in person, the 
organization shall provide such notice to the individual immediately. 
If the request is made in writing, the notice shall be provided within 
7 days of receiving the request.
    (c) Effective date. This section is effective beginning 60 days 
after its publication as a final regulation in the Federal Register.


Sec. 301.6104(e)-3  Tax-exempt organization subject to harassment 
campaign.

    (a) In general. If the key district director for the district where 
the organization's principal office is located determines that the 
organization is the subject of a harassment campaign and compliance 
with the requests that are part of the harassment campaign would not be 
in the public interest, a tax-exempt organization is not required to 
fulfill a request (as otherwise required by Sec. 301.6104(e)-1(a)) for 
a copy that it reasonably believes is part of the campaign.
    (b) Harassment. A group of requests for an organization's 
application for tax exemption or annual information returns is 
indicative of a harassment campaign if the requests are part of a 
single coordinated effort to disrupt the operations of a tax-exempt 
organization rather than to collect information about the organization. 
Whether a group of requests constitutes a harassment campaign depends 
on the relevant facts and circumstances. Facts and circumstances that 
indicate the organization is the subject of a harassment campaign 
include: a sudden increase in the number of requests; an extraordinary 
number of requests made through form letters or similarly worded 
correspondence; evidence of a purpose to deter significantly the 
organization's employees or volunteers from pursuing the organization's 
exempt purpose; requests that contain language hostile to the 
organization; direct evidence of bad faith by organizers of the 
purported harassment campaign; evidence that the organization has 
already provided the requested documents to a member of the purported 
harassing group; and a demonstration by the tax-exempt organization 
that it routinely provides copies of its documents upon request.
    (c) Special rule for multiple requests from a single individual or 
address. A tax-exempt organization may disregard any request for copies 
of all or part of any document beyond the first two received within any 
30-day-period or the first four received within any one-year-period 
from the same individual or the same address, regardless of whether the 
key district director has determined that the organization is subject 
to a harassment campaign.
    (d) Harassment determination procedure. A tax-exempt organization 
may apply for a determination that it is the subject of a harassment 
campaign by submitting a signed application to the key district 
director for the key district where the organization's principal office 
is located. The application shall consist of a written statement giving 
the organization's name, address, employer identification number, and 
the name, address and telephone number of the person to contact 
regarding the application, and describing in detail the facts and 
circumstances that the organization believes support a determination 
that the organization is subject to a harassment campaign. The 
organization may suspend compliance with respect to any request for a 
copy of its documents based on its reasonable belief that such request 
is part of a harassment campaign, provided that the organization files 
an application for a determination within 5 days from the day the 
organization first suspends compliance with respect to a request that 
is part of the alleged campaign. In addition, the organization may 
suspend compliance with any request it reasonably believes to be part 
of a harassment campaign until it receives a response to its 
application for a harassment campaign determination.
    (e) Effect of a harassment determination. If the appropriate key 
district director determines that a tax-exempt organization is the 
subject of a harassment campaign, such organization is not required to 
comply with any request for copies that it reasonably believes is part 
of the campaign. This determination may be subject to other terms and 
conditions set forth by the key district director. A person (as defined 
in section 6652(c)(4)(C)) shall not be liable for any penalty under 
sections 6652(c)(1)(C), (D) or 6685 for failing to timely provide a 
copy of documents in response to a request covered in a request for a 
harassment determination if the organization fulfills the request 
within 30 days of receiving a determination from the key district 
director that the organization is not subject to a harassment campaign. 
Notwithstanding the preceding sentence, if the key district director 
further determines that the organization did not have a reasonable 
basis for requesting a determination that it was subject to a 
harassment campaign or reasonable belief that a request was part of the 
campaign, the person (as defined in section 6652(c)(4)(C)) remains 
liable for any penalties that result from not providing the copies in a 
timely fashion.
    (f) Examples. The provisions of this section may be further 
illustrated by the following examples.

    Example 1. V, a tax-exempt organization, receives an average of 
25 requests per month for copies of its three most recent 
information returns. In the last week of May, V is mentioned in a 
national news magazine story that discusses information contained in 
V's 1996 information return. From June 1 through June 30, 1997 V 
receives 200 requests for a copy of its documents. Other than the 
sudden increase in the number of requests for copies, there is no 
other evidence to suggest that the requests are part of an organized 
campaign to disrupt V's operations. Although fulfilling the requests 
will place a burden on V, the facts and circumstances do not show 
that V is subject to a harassment campaign. Therefore, V must 
respond timely to each of the 200 requests it receives in June.
    Example 2. Y is a tax-exempt organization that receives an 
average of 10 requests a month for copies of its annual information 
returns. From March 1, 1997 to March 31, 1997, Y receives 25 
requests for copies of its documents. Fifteen of the requests come 
from individuals Y knows to be active members of the board of 
organization X. In the past X has opposed most of the positions and 
policies that Y advocates. None of the requesters have asked for 
copies of documents from Y during the past year. Y has no other 
information about the requesters. Although the facts and 
circumstances show that some of the individuals making requests are 
hostile to Y, they do not show that the individuals have organized a 
campaign that will place enough of a burden on Y to disrupt its 
activities. Therefore, Y must respond to each of the 25 requests it 
receives in March.
    Example 3. The facts are the same as in Example 2, except that 
during March 1997, Y receives 100 requests. In addition to the 
fifteen requests from members of organization X's board, 75 of the 
requests are similarly worded form letters. Y discovers that several 
individuals associated with X have urged the X's members and 
supporters, via the Internet, to submit as many requests for a copy 
of Y's annual information returns as they can. The message 
circulated on the Internet provides a form letter that can be used 
to make the request. Both the appeal via the Internet and the 
requests for copies received by Y contain hostile language. During 
the same year but before the 100 requests were received, Y provided 
copies of its annual information returns to the headquarters of X. 
The facts and circumstances show that the 75 form letter requests 
are coordinated for the purpose of disrupting Y's operations, and 
not to collect information that has already been provided to an 
association representing the requesters' interests. Thus, the fact 
and circumstances show that Y is the subject of an organized

[[Page 50541]]

harassment campaign. To confirm that it may disregard the 90 
requests that constitute the harassment campaign, Y must apply to 
the district director for a determination. Y may disregard the 90 
requests while the application is pending and after the 
determination is received. However, it must respond within the 
applicable time limits to the 10 requests it received in March that 
were not part of the harassment campaign.
    Example 4. The facts are the same as in Example 3, except that Y 
receives 5 additional requests from representatives of the news 
media. In the past, some of these representatives have published 
articles criticizing Y. Some of these articles were hostile to Y. 
Normally, the Internal Revenue Service will not consider a tax-
exempt organization to be reasonable under paragraph (d) of this 
section if it disregards requests from members of the news media. 
There are no additional facts that demonstrate that Y could 
reasonably believe the requests from the news media to be part of 
X's harassment campaign. Thus, although Y is the subject of a 
harassment campaign, it must respond within the applicable time 
limits to the 5 requests that it received from representatives of 
the news media.

    (g) Effective date. This section is effective beginning 60 days 
after its publication as a final regulation in the Federal Register.
Michael P. Dolan,
Acting Commissioner of Internal Revenue.
[FR Doc. 97-25492 Filed 9-25-97; 8:45 am]
BILLING CODE 4830-01-U