[Federal Register Volume 64, Number 68 (Friday, April 9, 1999)]
[Rules and Regulations]
[Pages 17279-17291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8638]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 301 and 602

[TD 8818]
RIN 1545-AV13


Public Disclosure of Material Relating to Tax-Exempt 
Organizations

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations relating to the 
public disclosure requirements of section 6104(d) of the Internal 
Revenue Code (Code), as amended by the Tax and Trade Relief Extension 
Act of 1998. These final regulations apply only to tax-exempt 
organizations (organizations described in sections 501(c) or (d) and 
exempt under section 501(a)) other than private foundations. These 
final regulations provide guidance for tax-exempt organizations (other 
than private foundations) required to make their applications for tax 
exemption and annual information returns available for public 
inspection. In particular, these regulations provide guidance for tax-
exempt organizations required to comply with requests made in person or 
in writing from individuals who seek a copy of those documents. These 
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. These regulations also 
address the standards that apply in determining whether a tax-exempt 
organization is the subject of a harassment campaign and provide 
guidance on the applicable procedures for obtaining relief from the 
requirement that copies of documents be provided in response to 
requests.

DATES: These regulations are effective June 8, 1999.

FOR FURTHER INFORMATION CONTACT: Michael B. Blumenfeld, (202) 622-6070 
(not toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collections of information contained in these final regulations 
have been reviewed and approved by the Office of Management and Budget 
in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under 
control number 1545-1560. Responses to these collections of information 
are mandatory.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid control number.
    The estimated annual burden per respondent/recordkeeper varies from 
0 hours to 55 hours, depending on individual circumstances with an 
estimated average of 30 minutes.
    Comments on the accuracy of this burden estimate and suggestions 
for reducing the burden should be sent to the Internal Revenue Service, 
Attn: IRS Reports Clearance Officer, OP:FS:FP, Washington, DC 20224, 
and 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.
    Books or records relating to this collection of information must be 
retained as long as their contents may become material in the 
administration 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 amendments to the Procedure and 
Administration Regulations (26 CFR part 301) relating to the section 
6104(d) public disclosure requirements applicable to tax-exempt 
organizations (organizations described in sections 501(c) or (d) and 
exempt from taxation under section 501(a)). Section 6104(d), as amended 
by section 14(b) of the Tax and Trade Relief Extension Act of 1998 
(Division J of H.R. 4328, the Omnibus Consolidated and Emergency 
Supplemental Appropriations Act, 1999) (Public Law 105-277, 112 Stat. 
2681) (Tax and Trade Relief Extension Act of 1998), will apply to 
requests made to all tax-exempt organizations (other than private 
foundations) after June 8, 1999. Until such date, all tax-exempt 
organizations continue to be subject to the requirements of section 
6104(e) as currently in effect, without regard to the Tax and Trade 
Relief Extension Act of 1998.
    Although the Tax and Trade Relief Extension Act of 1998 extended 
fully to private foundations the public disclosure requirements that 
apply to other tax-exempt organizations, those requirements do not go 
into effect with respect to private foundations until the 60th day 
after the Secretary of the Treasury issues final regulations under 
section 6104(d) that apply to private foundations. In the meantime, 
private foundations continue to be subject to the public disclosure 
requirements under sections 6104(d) and (e) of the Internal Revenue 
Code, as in effect prior to the Tax and Trade Relief Extension Act of 
1998.

Description of Current Law Section 6104(e)

    Section 10702 of the Omnibus Budget Reconciliation Act of 1987 
(OBRA '87) added subsection (e) to section 6104. 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. (Section 6104(e) does not apply to 
private foundation annual information returns, which are subject to 
public disclosure under section 6104(d), as in effect prior to the Tax 
and Trade Relief Extension Act of 1998.) Under section 6104(e), each 
annual information 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. In Notice 88-120 (1988-2 C.B. 454), the IRS 
provided tax-exempt organizations with guidance for complying with the 
public inspection requirements.
    The Taxpayer Bill of Rights 2 (TBOR2), enacted on July 30, 1996, 
amended section 6104(e) by adding additional public disclosure 
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 person or in writing, for copies of the 
organization's application for recognition of tax exemption. Section 
6104(e) also requires each tax-exempt organization, other

[[Page 17280]]

than one that is a private foundation, to comply with requests, made 
either in person or in writing, 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 postage. If the request for copies is made in person, 
the organization generally 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 
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.

Issuance of Proposed Regulations Under Section 6104(e)

    In Notice 96-48 (1996-2 C.B. 214), the IRS invited comments on the 
changes made by TBOR2. Twenty-two comments were received and considered 
in the drafting of a notice of proposed rulemaking (REG-246250-96), 
published in the Federal Register (62 FR 50533) on September 26, 1997. 
The IRS received twenty written comments on the proposed regulations 
and held a public hearing on February 4, 1998. After consideration of 
all the written comments regarding the proposed regulations, and the 
amendments made by the Tax and Trade Relief Extension Act of 1998, 
described below, those regulations are adopted as revised by this 
Treasury decision.

Amendments Made by the Tax and Trade Relief Extension Act of 1998

    The Tax and Trade Relief Extension Act of 1998, which was enacted 
on October 21, 1998, amended section 6104(e) of the Internal Revenue 
Code to subject private foundations to the same rules regarding public 
disclosure of annual information returns that apply to other tax-exempt 
organizations. In addition, the Tax and Trade Relief Extension Act of 
1998 repealed existing section 6104(d), and redesignated section 
6104(e), as amended, as new section 6104(d). (Unless otherwise noted, 
all references in these final regulations to section 6104(d) are to 
section 6104(d) as amended by the Tax and Trade Relief Extension Act of 
1998.)
    The Tax and Trade Relief Extension Act of 1998 amendments apply to 
requests made after the later of December 31, 1998 or the 60th day 
after the Secretary of the Treasury issues regulations referred to in 
section 6104(d)(4) (relating to when documents are made widely 
available and when a particular request is considered part of a 
harassment campaign). This Treasury decision adopts final regulations 
under section 6104(d)(4) that are applicable to tax-exempt 
organizations other than private foundations. Accordingly, amendments 
to section 6104(d) will become applicable with respect to requests made 
to tax-exempt organizations other than private foundations after June 
8, 1999.

Future Regulations Will Apply to Private Foundations

    The IRS and the Treasury Department intend to issue shortly a 
notice of proposed rulemaking relating to the public disclosure 
requirements of section 6104(d) as those requirements apply to private 
foundations. Until 60 days after final regulations are issued, private 
foundations continue to be subject to sections 6104(d) and (e), as in 
effect prior to the Tax and Trade Relief Extension Act of 1998. For 
that reason, existing Sec. 301.6104(d)-1, relating to public inspection 
of private foundation annual returns, is not affected by this Treasury 
decision.

Explanation of Provisions

Overview

    The final regulations provide guidance concerning the application 
for tax exemption and annual information returns a tax-exempt 
organization, other than a private foundation, must make available for 
public inspection and must supply in response to requests for copies. 
The final regulations also provide guidance on (1) the place and time 
the organization must make these documents available for public 
inspection, (2) conditions the organization may place on requests for 
copies of the documents, and (3) the amount, form and time of payment 
of any fees the organization may charge. The final regulations also 
prescribe how an organization can make its application for tax 
exemption and annual information returns widely available. Finally, the 
final 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 from the 
general requirement that copies of documents be provided in response to 
requests.

Application for Tax Exemption

    A tax-exempt organization, other than one that is a private 
foundation, must make its application for tax exemption available 
pursuant to these final regulations. An application for tax exemption 
includes the application form (such as Form 1023 or Form 1024) and any 
supporting documents filed by, or on behalf of, the organization in 
connection with 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 final 
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.

Annual Information Returns

    A tax-exempt organization, other than one that is a private 
foundation, must make its three most recent annual information returns 
available pursuant to these final regulations. Generally, an annual 
information return includes Forms 990, 990-EZ, 990-BL, and Form 1065. 
It also includes, generally, 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.
    A few commentators asked that the final regulations exempt certain 
items reported on an application for tax exemption or an annual 
information return from disclosure. For example, one commentator 
observed that only an organization described in section 501(c)(3) is 
required by statute (section 6033) to report certain compensation 
information. By contrast, it is the regulations under section 6033 that 
require tax-exempt organizations described in other parts of section 
501(c) or section 501(d) to report certain compensation information. 
Accordingly, the commentator asked that the final regulations require 
public disclosure of the compensation section of Form 990 only when it 
is a statutory requirement, as opposed to a regulatory requirement, to 
report such information. Because section 6104(d) requires, except for 
specific exceptions, disclosure of all the information reported on an 
application or return, the IRS and the Treasury Department decided that 
requiring public disclosure of compensation information required to be 
reported on an annual information return either by

[[Page 17281]]

statute or regulation is consistent with section 6104(d).
    One commentator requested that final regulations require an 
organization that has not been determined by the IRS to be exempt from 
taxation under section 501(a) to make its application for tax exemption 
available for public inspection and to provide copies upon request. 
Section 301.6104(e)-1(b)(3) of the proposed regulations provided that 
an organization is not required to disclose its application for tax 
exemption until the IRS determines it is exempt from taxation. Section 
6104(d)(1) requires an organization to disclose its application for tax 
exemption only where it is exempt under section 501(a). Thus, the 
statute does not require an organization to disclose its application 
for tax exemption while the application is pending or in a case where 
the IRS issues an adverse determination. Accordingly, the IRS and the 
Treasury Department continue to believe that the rule of the proposed 
regulation is consistent with the statute and have decided not to 
change this provision.
    One commentator proposed that a special rule be included in the 
final regulations so that a religious or apostolic organization 
described in section 501(d) would not be required to publicly disclose 
a Schedule K-1 of Form 1065 because it contains taxpayer information 
with respect to the distributees (i.e., the ratable portions of the net 
income and expenses of the individual members of the organization). 
After the submission of this comment, the Internal Revenue Service 
Restructuring and Reform Act of 1998, Public Law 105-206 (112 Stat. 
685) was enacted. Section 6019 of this Act amended Code sections 
6104(b) and 6104(e) to provide specifically that organizations 
described in section 501(d) are not required to publicly disclose a 
Schedule K-1 filed by the organization. Consistent with this statutory 
modification of section 6104, the final regulations eliminate the 
requirement that a religious or apostolic organization described in 
section 501(d) disclose a Schedule K-1.

Place and Time Documents Must Be Available for Public Inspection

    Section 6104(d) requires a tax-exempt organization to make its 
documents available for public inspection, and provide copies upon 
request, at its principal office and at certain regional or district 
offices. Under Notice 88-120, certain sites where services are provided 
(such as day care or health care) are not treated as regional or 
district offices for purposes of the public inspection requirements, 
provided that such sites do ``not serve as offices of management staff 
(other than managers involved solely in managing the specific service 
of that service provider office).'' The IRS and the Treasury Department 
recognize that many tax-exempt organizations maintain sites where their 
employees or volunteers solely provide services that further exempt 
purposes, including services provided directly to the public, but do 
not maintain administrative or management staff at such sites necessary 
to respond to public disclosure requests. Accordingly, the proposed 
regulations expanded the ``service provider exception'' of Notice 88-
120 slightly. Under the proposed regulations, sites where the only 
services provided further exempt purposes (such as day care, health 
care or scientific or medical research) were excluded from the 
definition of a regional or district office. Thus, under the proposed 
regulations, a research organization that maintains a laboratory used 
solely by individuals conducting scientific research on behalf of the 
organization would not have to respond to public disclosure requests 
made at the laboratory even though the researchers are not providing 
direct services to the public. However, a research organization would 
have a public disclosure obligation at a laboratory if the organization 
also uses space at that location as offices for some of its management 
staff (other than those involved solely in managing the exempt function 
activities at the laboratory).
    Several comments were received on this topic. One commentator 
expressed the view that the definition of regional or district office 
in the proposed regulations was reasonably well balanced. Other 
commentators, however, expressed concern that this definition would 
reduce the number of sites from which the documents could be obtained. 
One of these commentators expressed the view that exempting 
organizations from complying with public disclosure requests made at 
sites where employees engage solely in providing exempt services would 
unnecessarily complicate the determination whether an organization is 
required to respond to public disclosure requests at a particular site. 
This commentator suggested that the final regulations treat any site 
with 3 or more employees as a regional or district office where an 
organization must respond to requests for public inspection or copies. 
Another commentator expressed the view that the exception for sites 
dedicated solely to providing exempt services was reasonable, but 
suggested that the final regulations clarify what activities would 
constitute management activities that would require an organization to 
respond to public disclosure requests at the site.
    The IRS and the Treasury Department believe that the ``regional and 
district office'' rule of section 6104(d) was intended to enhance the 
availability of documents in the case of an organization that maintains 
management staff at one or more offices in addition to its principal 
office. However, Congress explicitly recognized that the burden to an 
organization of complying with requests for public inspection or copies 
made at small regional or district offices (those with fewer than 3 
employees) would outweigh the public benefit of increased availability 
of the documents. This rationale applies equally as well to certain 
sites of a tax-exempt organization where its employees and volunteers 
engage solely in providing services that further exempt purposes and 
which do not serve as an office for management staff. The IRS and the 
Treasury Department believe the rule expressed in the proposed 
regulations is consistent with the intent of the statute and prior IRS 
guidance, particularly in light of the new provisions that allow copies 
to be obtained by mail. Therefore, the rule of the proposed regulations 
is followed in the final regulations.
    The proposed regulations prescribed 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 provided rules concerning 
the conditions the organization may impose on public inspections that 
are consistent with Notice 88-120. In this regard, the final 
regulations follow the proposed regulations.
    The proposed regulations permitted a principal, regional, or 
district office of an organization to use an agent to process requests 
for copies. One commentator asked that the final regulations also allow 
a tax-exempt organization to retain a local agent to satisfy the 
organization's public inspection obligation. After careful 
consideration of this comment, the IRS and the Treasury Department have 
concluded that, to avoid potential inconvenience to members of the 
public, it is important that tax-exempt organizations make their 
applications and returns available for inspection at their offices. 
Therefore, the IRS and the Treasury Department did not adopt this 
comment.

[[Page 17282]]

    Another commentator asked that the final regulations clarify that 
an organization may apply the same security measures to individuals 
that request inspection or copies that it applies to the public in 
general. The IRS and the Treasury Department have determined that the 
proposed regulations would not preclude a tax-exempt organization from 
implementing its normal security measures. Thus, no change is reflected 
in the final regulations.

Requirement to Furnish Copy to a Requester

    The proposed regulations generally required that a tax-exempt 
organization accept requests for copies made in person at the same 
place and time that the specified documents must be available for 
public inspection. In general, the proposed regulations required that 
the copies be provided on the day of the request. However, the proposed 
regulations provided that, in unusual circumstances, an organization 
may provide the requested copies on the next business day. Some 
commentators expressed concern that a one-day delay may not be 
sufficient. In response to these comments, the final regulations 
provide that an organization must comply with requests for copies made 
in person by providing copies no later than the next business day 
following the day the unusual circumstances cease to exist. However, in 
no event may the period of delay exceed five business days. In response 
to another comment, the final regulations clarify that unusual 
circumstances include times when the organization's managerial staff 
capable of fulfilling the request attends an off-site meeting or 
convention.
    When a request for copies is made in writing, the proposed 
regulations required that a tax-exempt organization mail the copies 
within 30 days from the date it receives the request. However, the 
proposed regulations provided that, if an organization requires advance 
payment of a reasonable fee for copying and postage, it may provide the 
copies within 30 days from the date it receives payment, rather than 
from the date of the initial request. In addition, the proposed 
regulations provided guidance as to what constitutes a request, when a 
request is considered received, and when copies are deemed provided. 
The final regulations follow the rules in the proposed regulations.
    The proposed regulations provided that individuals may request a 
specific part of an application for tax exemption or annual information 
return. One commentator expressed concern that requiring a tax-exempt 
organization to provide a copy of only part of a document may create a 
significant burden on the tax-exempt organization because the 
organization would have to identify the particular information 
requested. In order to minimize this potential burden, without 
requiring the requester to pay for a copy of parts of a document that 
the requester has no interest in obtaining, the final regulations 
permit a requester to request a copy of any specifically identified 
part or schedule of an application or a return (except for information 
which is not subject to public disclosure under section 6104(d)(3)). 
For example, a requester may request a copy of Part V (List of 
Officers, Directors, Trustees and Key Employees) of Form 990.

Reasonable Fee for Providing Copies

    Section 6104(d)(1)(B) permits an organization to charge a 
reasonable fee for the cost of copying and mailing documents in 
response to requests for copies. The proposed regulations stated that a 
fee was reasonable only if it did not exceed the fees the IRS charges 
for copies of tax-exempt organization tax returns and related 
documents. This fee is currently $1.00 for the first page and $.15 for 
each subsequent page. In addition, the proposed regulations allowed a 
charge for actual postage costs. Some commentators requested that the 
reasonable fee be greater than the amount stated in the proposed 
regulations. One commentator suggested that the final regulations allow 
organizations to consider personnel costs and not limit the fee to the 
IRS charge. The IRS and the Treasury Department are concerned that 
permitting organizations to charge a higher fee could hinder the 
public's ability to receive a copy of an application or return. 
Consequently, it was decided that, on balance, the reasonable fee set 
forth in the proposed regulations is appropriate. Thus, the final 
regulations adopt the reasonable fee provision of the proposed 
regulations.
    The proposed regulations permitted an organization to collect 
payment in advance of providing the requested copies. Under the 
proposed regulations, 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. The proposed regulations required 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 to accept other forms of payment. 
One commentator asked for the elimination of the requirement to accept 
a personal check because an organization could be liable for bank 
charges if there are insufficient funds to cover the personal check. 
The final regulations generally follow the proposed regulations, except 
that the final regulations provide that a tax-exempt organization that 
accepts payment by credit card is not required to accept personal 
checks.
    Consistent with the proposed regulations, the final regulations 
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, by requiring that 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.

Local and Subordinate Organizations

    Some commentators stated that the proposed regulations were overly 
burdensome with respect to local or subordinate organizations 
recognized as tax-exempt under a group exemption letter or that file a 
group return pursuant to Sec. 1.6033-2(d) and Rev. Proc. 80-27 (1980-1 
C.B. 677). Specifically, they objected to the requirement that a local 
or subordinate organization make available copies of documents 
submitted by the central or parent organization to the IRS to include 
the local or subordinate organization in the group ruling, which often 
consists of lengthy lists or directories of names and addresses of 
affiliated organizations. In addition, one commentator expressed the 
view that the annual filing under Rev. Proc. 80-27 that a central or 
parent organization submits to the IRS to cover a local or subordinate 
organization under its group exemption letter does not constitute an 
application for tax exemption within the meaning of section 
6104(d)(2)(A). In response to these comments, the final regulations 
reduce the burden on local and subordinate organizations. Under the 
final regulations, a local or subordinate organization that receives a 
request made in person for inspection or for a copy of its application 
for tax exemption is required to acquire, and make available within a 
reasonable amount of time (normally not more than two weeks), the 
application for a group exemption letter (if any) filed by the central 
or parent organization. In addition, a local or subordinate 
organization must also make available any documents submitted by the 
central or parent organization to the IRS to include the subordinate 
organization in

[[Page 17283]]

the group ruling. However, if the central or parent organization 
submits a list or directory of organizations covered by the group 
exemption letter, the local or subordinate organization need only 
provide the application for group exemption and those pages of the list 
or directory that refer to it. If a local or subordinate organization 
that does not file its own annual information return but is covered 
under a group return receives a request made in person for inspection 
or for a copy of its annual information return, the local or 
subordinate organization must make its group return available for 
inspection or provide copies within a reasonable amount of time 
(normally not more than two weeks). However, if the group return 
includes separate schedules with respect to each local or subordinate 
organization included in the group return, the local or subordinate 
organization receiving the request may omit any schedules relating only 
to other organizations included in the group return.
    If the requester seeks inspection of an application for tax 
exemption or an annual information return, the local or subordinate 
organization may mail a copy of the applicable document to the 
requester within a reasonable amount of time (normally not more than 
two weeks) in lieu of allowing an inspection. In such a case, the local 
or subordinate organization may not charge for the copies without the 
consent of the requester. A local or subordinate organization must 
comply with written requests for copies in accordance with the general 
rules for written requests discussed above.
    The final regulations also clarify, consistent with Notice 88-120, 
the obligation of the central or parent organization to comply, at its 
principal office, with requests for inspection or copies of documents 
relating to its local and subordinate organizations.

Making Applications and Information Returns Widely Available

    The final 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 final regulations 
specify that an organization can make its application for tax exemption 
and/or its annual information returns 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 World Wide Web page as part of a database of similar 
materials, provided that the documents are posted in a format which 
meets the criteria set forth in the final regulations. An organization 
that makes its application for tax exemption and/or its annual 
information returns widely available must provide the individuals who 
request copies with the World Wide Web address where the documents are 
available.
    The proposed regulations provided that an organization must post 
its documents on its World Wide Web page in a format that the IRS uses 
to post forms and publications. Unlike the proposed regulations, the 
final regulations do not enumerate one or more particular formats that 
must be used. Instead, the final regulations provide that the documents 
must be posted in a format that meets the following criteria. First, 
any individual with access to the Internet must be able to access, 
download, view and print the posted document in a format which exactly 
reproduces the image of the original document filed with the IRS, 
except for any information permitted to be withheld from public 
disclosure under section 6104(d). The final regulations require an 
exact reproduction because a format that does not exactly reproduce the 
image of the original document may raise questions about the accuracy 
or authenticity of the posted document. Second, the format must allow 
any individual with access to the Internet to access, download, view 
and print the posted document without payment of a fee to either the 
tax-exempt organization or the entity maintaining the World Wide Web 
page and without special computer hardware or software required for 
that format, other than software that is readily available to members 
of the public free of charge.
    The IRS and the Treasury Department understand that some of the 
formats that the IRS itself uses to post forms and publications on the 
IRS World Wide Web page may not satisfy the criteria specified in the 
final regulations. For example, some of these formats could require 
users to have access to special hardware or software that is not 
commonly used by the public to access, download, view and print 
documents. The final regulations provide a one-year transition rule for 
any tax-exempt organization that posted its documents on the Internet 
on or before April 9, 1999 in a manner consistent with the proposed 
regulations. Until June 8, 2000 such an organization will be treated as 
having made its documents ``widely available'' for purposes of the 
final regulations even if the format used does not currently satisfy 
all of the criteria set forth in the final regulations.
    Some commentators suggested that the final regulations permit an 
organization to post its documents on the Internet in HTML format. As 
discussed above, the approach of the final regulations is to identify 
the criteria that an Internet format must satisfy. The IRS and the 
Treasury Department understand that, currently, when a heavily 
formatted document, such as a tax return, is posted in HTML format, it 
may not exactly reproduce the image of the original document.
    One format that currently satisfies the criteria set forth in the 
final regulations is Portable Document Format (PDF). PDF is designed to 
reproduce the image of the original document exactly. In addition, 
documents in the PDF format can be viewed, navigated and printed by 
anyone using the freely available reader software. Of course, there may 
be other formats that currently satisfy the criteria set forth in the 
final regulations. The IRS and the Treasury Department refer to PDF 
only for the purpose of illustrating an acceptable format. No inference 
should be drawn that the IRS and the Treasury Department view PDF as an 
especially or singularly qualified format, that IRS and the Treasury 
Department endorse or warrant a specific document format (or software 
used in connection with a format), or that use or failure to use a 
specific document format (or software used in connection with a format) 
will result in any preferential treatment from the IRS or the Treasury 
Department. The IRS and the Treasury Department note that a specific 
format that currently satisfies the ``widely available'' criteria set 
forth in the final regulations may be altered such that it no longer 
satisfies the ``widely available'' criteria in the future. Conversely, 
a specific format that does not currently satisfy the ``widely 
available'' criteria may be refined to satisfy the ``widely available'' 
criteria in the future.
    As technology advances, the IRS and the Treasury Department 
anticipate that an increasing number of formats will meet the criteria 
set forth in the final regulations. Accordingly, the IRS and the 
Treasury Department do not intend to limit technologies that 
organizations may use to post their documents as long as the posted 
document is readily and freely accessible and appears, whether viewed 
on screen or in print, exactly as the original.
    The IRS and the Treasury Department will continue to consider other 
additional methods by which applications and returns could be made 
widely available. Accordingly, the final regulations provide that the 
Commissioner may prescribe, by

[[Page 17284]]

revenue procedure or other guidance, additional methods that an 
organization can use to make its application for tax exemption and/or 
its annual information returns widely available.

Harassment Campaigns

    The proposed regulations provided guidance in determining whether a 
tax-exempt organization is the subject of a harassment campaign such 
that requiring compliance with requests for copies that are part of the 
harassment campaign would not be in the public interest. Generally, the 
proposed regulations provided that a harassment campaign exists where 
the relevant facts and circumstances show that the purpose of a group 
of requests was to disrupt the operations of the tax-exempt 
organization rather than to obtain information. The proposed 
regulations also contained examples that evaluated whether particular 
situations constituted a harassment campaign and whether an 
organization had a reasonable basis for believing that a request was 
part of the harassment campaign. The final regulations retain this rule 
and the examples set forth in the proposed regulations.
    The proposed regulations provided that an organization may suspend 
compliance with a request if the organization reasonably believes that 
the request is part of a harassment campaign. Commentators expressed 
concern that, if there is a delay in the issuance of an IRS 
determination as to whether the organization's belief is reasonable, 
the organization could be subject to significant penalties for the 
intervening period. The final regulations do not limit the penalties 
that may be retroactively imposed in cases where an organization is 
subsequently determined to have lacked a reasonable belief for 
suspending compliance. However, the IRS and the Treasury Department 
recognize that it may be appropriate to mitigate penalties in certain 
circumstances, especially where a delay in the issuance of a 
determination is completely outside the control of the organization 
requesting the determination. The IRS intends to publish a revenue 
procedure that will provide additional detail concerning harassment 
campaign determinations procedures and may prescribe rules concerning 
the imposition and mitigation of penalties.
    The proposed regulations required an organization to file an 
application for a harassment campaign determination within 5 days after 
suspending compliance with a request that the organization believes to 
be part of such harassment campaign. One commentator asked that the 
time period for filing an application be expanded to either 10 or 15 
business days. Another commentator observed, however, that such an 
extension of time would further delay compliance with requests for 
copies that an organization reasonably believes, but are determined not 
to be, part of a harassment campaign. The final regulations require an 
organization to file an application for a harassment determination 
within 10 business days after suspending compliance. The IRS and the 
Treasury Department believe that this time period strikes an 
appropriate balance by providing organizations sufficient time to 
prepare and file an application without substantially delaying access 
to copies of the documents. In addition, the final regulations allow an 
organization, without submitting an application, to disregard requests 
for copies in excess of two per month or four per year made by a single 
individual or sent from a single address.
    Some commentators asked for clarification concerning the period 
that an organization may continue not to comply with requests for 
copies that are part of a harassment campaign once it has received such 
a determination. The IRS and the Treasury Department believe that the 
district director for the key district in which the organization's 
principal office is located (or such other person as the Commissioner 
may designate) should exercise reasonable discretion, based on the 
facts and circumstances of each case, in deciding the exact terms and 
conditions of a harassment campaign determination. Consequently, the 
final regulations do not change this provision of the proposed 
regulations.
    Various comments concerned the examples of harassment campaigns and 
requests from members of the news media. In this regard, example 4 has 
been modified to better illustrate that a request made by a member of 
the news media is a strong factor tending to indicate that the request 
is not part of a harassment campaign.

Other Matters

    The proposed regulations provided that an individual denied 
inspection, or a copy, of an application for tax exemption or an annual 
information return could seek assistance from the IRS by providing to 
the Director of the Exempt Organizations Division a statement that 
describes the request and the reason for the individual's belief that 
the denial was in violation of the legal requirements. The final 
regulations provide instead that such individuals should send their 
statements directly to the district director for the key district in 
which the principal office of the tax-exempt organization is located 
(or such other person as the Commissioner may designate). Finally, 
various comments raised questions regarding the availability of an 
administrative appeal of a harassment campaign determination and 
whether harassment campaign applications and determinations are 
publicly available. Whether an administrative appeal is available and 
whether a harassment campaign determination is publicly available are 
matters beyond the scope of these regulations, but may be addressed in 
subsequent guidance.

Effective Date

    The final regulations are effective June 8, 1999.

Special Analyses

    It is hereby certified that the collections of information in these 
regulations will not have a significant economic impact on a 
substantial number of small entities. This certification is based on 
the fact that the average time required to maintain and disclose the 
information required under these regulations is estimated to be 30 
minutes for each tax-exempt 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 their 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

[[Page 17285]]

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. Therefore, a Regulatory Flexibility Analysis under the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. 
Pursuant to section 7805(f) of the Internal Revenue Code, the notice of 
proposed rulemaking preceding these regulations was submitted to Small 
Business Administration for comment on its impact on small business.
    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 the Treasury Department also participated in their development.

List of Subjects

26 CFR Part 301

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

26 CFR Part 602

    Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR Parts 301 and 602 are amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

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

    Authority: 26 U.S.C. 7805 * * *
    Section 301.6104(d)-4 also issued under 26 U.S.C. 6104(e)(3);
    Section 301.6104(d)-5 also issued under 26 U.S.C. 6104(e)(3); * 
* *

    Par. 2. Sections 301.6104(d)-2 through 301.6104(d)-5 are added to 
read as follows:


Sec. 301.6104(d)-2  Table of contents.

    This section lists captions contained in Secs. 301.6104(d)-3 
through 301.6104(d)-5.

Sec. 301.6104(d)-3  Public inspection and distribution of 
applications for tax exemption and annual information returns of 
tax-exempt organizations (other than private foundations).

    (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.
    (iv) Local or subordinate organizations.
    (4) Annual information return.
    (i) In general.
    (ii) Exceptions.
    (iii) Returns more than 3 years old.
    (iv) Local or subordinate organizations.
    (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) Request for a copy of parts of document.
    (C) Agents for providing copies.
    (3) 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) Documents to be provided by regional and district offices.
    (f) Documents to be provided by local and subordinate 
organizations.
    (1) Applications for tax exemption.
    (2) Annual information returns.
    (3) Failure to comply.
    (g) Failure to comply with public inspection or copying 
requirements.
    (h) Effective date.

Sec. 301.6104(d)-4  Making applications and returns widely 
available.

    (a) In general.
    (b) Widely available.
    (1) In general.
    (2) Internet posting.
    (i) In general.
    (ii) Transition rule.
    (iii) Reliability and accuracy.
    (c) Discretion to prescribe other methods for making documents 
widely available.
    (d) Notice requirement.
    (e) Effective date.

Sec. 301.6104(d)-5  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(d)-3  Public inspection and distribution of applications 
for tax exemption and annual information returns of tax-exempt 
organizations (other than private foundations).

    (a) In general. Except as otherwise provided in this section, if a 
tax-exempt organization (as defined in paragraph (b)(1) of this 
section), other than a private foundation (as defined in paragraph 
(b)(2) of this section), filed an application for recognition of 
exemption under section 501, it shall make its application for tax 
exemption (as defined in paragraph (b)(3) of this section) available 
for public inspection without charge at its principal, regional and 
district offices during regular business hours. Except as otherwise 
provided in this section, 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 Secs. 301.6104(d)-4 and 301.6104(d)-5, 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)(3) of this 
section for rules relating to fees for copies.
    (b) Definitions. For purposes of applying the provisions of section 
6104(d), this section and Secs. 301.6104(d)-4 and 301.6104(d)-5, 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. Except as 
described in paragraph (b)(3)(iii) of this section, 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

[[Page 17286]]

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 
submitted in support of an application, or a response to questions from 
the Internal Revenue Service during the application process, is part of 
an application for tax exemption.
    (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 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 
the Internal Revenue Service has not yet recognized, on the basis of 
the application, as exempt from taxation under section 501 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.
    (iv) Local or subordinate organizations. For rules relating to 
applications for tax exemption of local or subordinate organizations, 
see paragraph (f)(1) of this section.
    (4) Annual information return--(i) In general. Except as described 
in paragraph (b)(4)(ii) of this section, 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 the organization files 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 and 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 (currently, Part V of Form 990 and Parts I and 
II of Schedule A of Form 990).
    (ii) Exceptions. The term annual information return does not 
include Schedule A of Form 990-BL, Form 990-T, Exempt Organization 
Business Income Tax Return, Schedule K-1 of Form 1065 or Form 1120-POL, 
U.S. Income Tax Return For Certain Political Organizations, and the 
return of a private foundation. See Sec. 301.6104(d)-1 for requirements 
relating to public disclosure of private foundation annual returns.
    (iii) 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 files 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.
    (iv) Local or subordinate organizations. For rules relating to 
annual information returns of local or subordinate organizations, see 
paragraph (f)(2) of this section.
    (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 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 who are 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. If the individual provides 
photocopying equipment at the place of inspection, the organization 
must allow the individual to photocopy the document at no charge.
    (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 
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 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. Except as provided in paragraph (d)(1)(iii) of this section, a 
tax-exempt organization shall provide copies of the documents it is 
required to provide under section 6104(d) in response to a request made 
in person at its principal, regional and district offices during 
regular business hours. Except as provided in paragraph (d)(1)(ii) of 
this section, an organization

[[Page 17287]]

shall provide such copies to a requester on the day the request is 
made.
    (ii) Unusual circumstances. In the case of an in-person request, 
where unusual circumstances exist such that fulfilling the request on 
the same business day places an unreasonable burden on the tax-exempt 
organization, the organization must provide the copies no later than 
the next business day following the day that the unusual circumstances 
cease to exist or the fifth business day after the date of the request, 
whichever occurs first. Unusual circumstances 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 capable of fulfilling the request is 
conducting special duties, such as student registration or attending an 
off-site meeting or convention, 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 to process 
requests made in person for copies of its documents. A local agent must 
be located within reasonable proximity of the applicable office. A 
local agent that receives a request made in person for copies must 
provide the copies within the time limits and under the conditions that 
apply to the organization itself. For example, a local agent generally 
must provide a copy to a requester on the day the agent receives the 
request. When a principal, regional or district office of a tax-exempt 
organization using a local agent receives a request made in person for 
a copy, it must immediately provide the name, address and telephone 
number of the local agent to the requester. An organization that 
provides this information 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 local agent fails to provide the 
documents as required under section 6104(d).
    (2) Request for copies in writing--(i) In general. A tax-exempt 
organization must honor a written request for a copy of documents (or 
the requested part) that the organization is required to provide under 
section 6104(d) if the request--
    (A) Is addressed to, and delivered by mail, electronic mail, 
facsimile, or a private delivery service as defined in section 7502(f) 
to a 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. However, if a tax-exempt organization requires payment in 
advance, it is only required to provide the copies within 30 days from 
the date it receives payment. For rules relating to payment, see 
paragraph (d)(3) of this section. In the absence of evidence to the 
contrary, a request or payment that is mailed shall be deemed to be 
received by an organization 7 days after the date of the postmark. A 
request that is transmitted to the organization by electronic mail or 
facsimile shall be deemed received the day the request is transmitted 
successfully. If an organization requiring payment in advance receives 
a written request without payment or with 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 
copy is 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) 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 specific part or schedule of its application or return. A request 
for a copy of less than the entire application or less than the entire 
return must specifically identify the requested part or schedule.
    (C) 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 limits 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 by 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. If the 
organization's agent fails to provide the documents as required under 
section 6104(d), however, the penalty provisions of sections 
6652(c)(1)(C), 6652(c)(1)(D), and 6685 continue to apply to the tax-
exempt organization.
    (3) Fees for copies--(i) In general. A tax-exempt organization may 
charge a reasonable fee for providing copies. A fee is reasonable only 
if it is 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. Before the organization provides the documents, it may require 
that the individual requesting copies of the documents pay the fee. If 
the organization has provided an individual making a request with 
notice of the fee, and the individual does not pay the fee within 30 
days, or if the individual pays the fee by check and the check does not 
clear upon deposit, 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)(3)(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 credit cards and personal checks.
    (B) Request made in writing. If a tax-exempt organization charges a 
fee for copying and postage (as permitted under paragraph (d)(3)(i) of 
this section), it shall accept payment by certified check, money order, 
and either personal check or credit card for requests made in writing. 
The organization may accept other forms of payment.
    (iii) Avoidance of unexpected fees. Where a tax-exempt organization 
does not require prepayment and a requester does not enclose payment 
with a request, an organization must receive consent from a requester 
before providing copies for which the fee charged for copying and 
postage exceeds $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,

[[Page 17288]]

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) Documents to be provided by regional and district offices. 
Except as otherwise provided, a regional or district office of a tax-
exempt organization must satisfy the same rules as the principal office 
with respect to allowing public inspection and providing copies of its 
application for tax exemption and annual information returns. A 
regional or district office is not required, however, to make its 
annual information return available for inspection or to provide 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.
    (f) Documents to be provided by local and subordinate 
organizations--(1) Applications for tax exemption. Except as otherwise 
provided, a tax-exempt organization that did not file its own 
application for tax exemption (because it is a local or subordinate 
organization covered by a group exemption letter referred to in 
Sec. 1.508-1 of this chapter) must, upon request, make available for 
public inspection, or provide copies of, the application submitted to 
the Internal Revenue Service by the central or parent organization to 
obtain the group exemption letter and those documents which were 
submitted by the central or parent organization to include the local or 
subordinate organization in the group exemption letter. However, if the 
central or parent organization submits to the Internal Revenue Service 
a list or directory of local or subordinate organizations covered by 
the group exemption letter, the local or subordinate organization is 
required to provide only the application for the group exemption ruling 
and the pages of the list or directory that specifically refer to it. 
The local or subordinate organization shall permit public inspection, 
or comply with a request for copies made in person, within a reasonable 
amount of time (normally not more than 2 weeks) after receiving a 
request made in person for public inspection or copies and at a 
reasonable time of day. In a case where the requester seeks inspection, 
the local or subordinate organization may mail a copy of the applicable 
documents to the requester within the same time period in lieu of 
allowing an inspection. In such a case, the organization may charge the 
requester for copying and actual postage costs only if the requester 
consents to the charge. If the local or subordinate organization 
receives a written request for a copy of its application for tax 
exemption, it must fulfill the request in the time and manner specified 
in paragraph (d)(2) of this section. The requester has the option of 
requesting from the central or parent organization, at its principal 
office, inspection or copies of the application for group exemption and 
the material submitted by the central or parent organization to include 
a local or subordinate organization in the group ruling. If the central 
or parent organization submits to the Internal Revenue Service a list 
or directory of local or subordinate organizations covered by the group 
exemption letter, it must make such list or directory available for 
public inspection, but it is required to provide copies only of those 
pages of the list or directory that refer to particular local or 
subordinate organizations specified by the requester. The central or 
parent organization must fulfill such requests in the time and manner 
specified in paragraphs (c) and (d) of this section.
    (2) Annual information returns. A local or subordinate organization 
that does not file its own annual information return (because it is 
affiliated with a central or parent organization that files a group 
return pursuant to Sec. 1.6033-2(d) of this chapter) must, upon 
request, make available for public inspection, or provide copies of, 
the group returns filed by the central or parent organization. However, 
if the group return includes separate schedules with respect to each 
local or subordinate organization included in the group return, the 
local or subordinate organization receiving the request may omit any 
schedules relating only to other organizations included in the group 
return. The local or subordinate organization shall permit public 
inspection, or comply with a request for copies made in person, within 
a reasonable amount of time (normally not more than 2 weeks) after 
receiving a request made in person for public inspection or copies and 
at a reasonable time of day. In a case where the requester seeks 
inspection, the local or subordinate organization may mail a copy of 
the applicable documents to the requester within the same time period 
in lieu of allowing an inspection. In such a case, the organization may 
charge the requester for copying and actual postage costs only if the 
requester consents to the charge. If the local or subordinate 
organization receives a written request for a copy of its annual 
information return, it must fulfill the request by providing a copy of 
the group return in the time and manner specified in paragraph (d)(2) 
of this section. The requester has the option of requesting from the 
central or parent organization, at its principal office, inspection or 
copies of group returns filed by the central or parent organization. 
The central or parent organization must fulfill such requests in the 
time and manner specified in paragraphs (c) and (d) of this section.
    (3) Failure to comply. If an organization fails to comply with the 
requirements specified in this paragraph, the penalty provisions of 
sections 6652(c)(1)(C), 6652(c)(1)(D), and 6685 apply.
    (g) 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 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 district director for the key district in which the applicable tax-
exempt organization's principal office is located (or such other person 
as the Commissioner may designate) that describes the reason why the 
individual believes the denial was in violation of the requirements of 
section 6104(d).
    (h) Effective date. This section is effective June 8, 1999.


Sec. 301.6104(d)-4  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(d)-3(a) if the 
organization has made the requested document widely available in 
accordance with paragraph (b) of this section. An organization that 
makes its application for tax exemption and/or annual information 
return widely available must nevertheless make the document available 
for public inspection as required under Sec. 301.6104(d)-3(a), 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 complies with the 
requirements specified in paragraph (b)(2) of this section, and if the 
organization satisfies the requirements of paragraph (d) of this 
section.

[[Page 17289]]

    (2) Internet posting--(i) In general. A tax-exempt organization can 
make its application for tax exemption and/or an annual information 
return widely available by posting the document on a World Wide Web 
page that the tax-exempt organization establishes and maintains or by 
having the document 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. The document will be considered 
widely available only if--
    (A) the World Wide Web page through which it is available clearly 
informs readers that the document is available and provides 
instructions for downloading it;
    (B) the document is posted in a format that, when accessed, 
downloaded, viewed and printed in hard copy, exactly reproduces the 
image of the application for tax exemption or annual information return 
as it was originally filed with the Internal Revenue Service, except 
for any information permitted by statute to be withheld from public 
disclosure. (See section 6104(d)(3) and Sec. 301.6104(d)-3(b)(3) and 
(4)); and
    (C) any individual with access to the Internet can access, 
download, view and print the document without special computer hardware 
or software required for that format (other than software that is 
readily available to members of the public without payment of any fee) 
and without payment of a fee to the tax-exempt organization or to 
another entity maintaining the World Wide Web page.
    (ii) Transition rule. A tax-exempt organization that posted its 
application for tax exemption or its annual information returns on a 
World Wide Web page on or before April 9, 1999 in a manner consistent 
with regulation project REG-246250-96 (1997 C.B. 627) (See 
Sec. 601.601(d)(2) of this chapter.) will be treated as satisfying the 
requirements of paragraphs (b)(2)(i)(B) & (C) of this section until 
June 8, 2000 provided that an individual can access, download, view and 
print the document without payment of a fee to the tax-exempt 
organization or to another entity maintaining the World Wide Web page.
    (iii) Reliability and accuracy. In order for the document 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 document that it posts on the page and 
must take reasonable precautions to prevent alteration, destruction or 
accidental loss of the document when posted on its page. In the event 
that a posted document is altered, destroyed or lost, the entity must 
correct or replace the document.
    (c) Discretion to prescribe other methods for making documents 
widely available. The Commissioner, from time to time, may prescribe 
additional methods, other than an Internet posting meeting the 
requirements of paragraph (b)(2) of this section, that a tax-exempt 
organization may use to make its documents widely available.
    (d) Notice requirement. If a tax-exempt organization has made its 
application for tax exemption and/or an annual information return 
widely available it must notify 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.
    (e) Effective date. This section is effective June 8, 1999.


Sec. 301.6104(d)-5  Tax-exempt organization subject to harassment 
campaign.

    (a) In general. If the district director for the key district in 
which the organization's principal office is located (or such other 
person as the Commissioner may designate) 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 for a copy (as otherwise required by 
Sec. 301.6104(d)-3(a)) 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 such 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 
district director for the applicable key district (or such other person 
as the Commissioner may designate) 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 and that compliance with requests that are part of the 
campaign would not be in the public interest by submitting a signed 
application to the district director for the key district where the 
organization's principal office is located (or such other person as the 
Commissioner may designate). 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. The application must 
describe 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 10 business 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 the harassment campaign 
until it receives a response to its application for a harassment 
campaign determination.
    (e) Effect of a harassment determination. If the appropriate 
district director (or such other person as the Commissioner may 
designate) determines that a tax-exempt organization is the subject of 
a harassment campaign and it is not in the public interest to comply 
with requests

[[Page 17290]]

that are part of the 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 district director (or such other person as 
the Commissioner may designate). A person (as defined in section 
6652(c)(4)(C)) shall not be liable for any penalty under sections 
6652(c)(1)(C), 6652(c)(1)(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 district director 
(or such other person as the Commissioner may designate) that the 
organization is not subject to a harassment campaign. Notwithstanding 
the preceding sentence, if the district director (or such other person 
as the Commissioner may designate) 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 are 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 
harassment campaign. To confirm that it may disregard the 90 
requests that constitute the harassment campaign, Y must apply to 
the applicable district director (or such other person as the 
Commissioner may designate) 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 5 different representatives of 
the news media who in the past have published articles about Y. Some 
of these articles were hostile to Y. Normally, the Internal Revenue 
Service will not consider a tax-exempt organization to have a 
reasonable belief that a request from a member of the news media is 
part of a harassment campaign absent additional facts that 
demonstrate that the organization could reasonably believe the 
particular requests from the news media to be part of a harassment 
campaign. Thus, absent such additional facts, Y 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 June 8, 1999.

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

    Paragraph 3. The authority for part 602 continues to read as 
follows:

    Authority: 26 U.S.C. 7805.

    Par. 4. In Sec. 602.101, paragraph (b) is amended by adding the 
following entries in numerical order to the table to read as follows:


Sec. 602.101  OMB Control numbers.

* * * * *
    (b) * * *

------------------------------------------------------------------------
                                                            Current OMB
   CFR part or section where identified and described       control No.
------------------------------------------------------------------------
 
*                  *                  *                  *
                  *                  *                  *
301.6104(d)-3...........................................       1545-1560
301.6104(d)-4...........................................       1545-1560
301.6104(d)-5...........................................       1545-1560
 
*                  *                  *                  *
                  *                  *                  *
------------------------------------------------------------------------


[[Page 17291]]

    Approved: March 25, 1999.
Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
Donald C. Lubick,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 99-8638 Filed 4-8-99; 8:45 am]
BILLING CODE 4830-01-U