[Federal Register Volume 72, Number 156 (Tuesday, August 14, 2007)]
[Proposed Rules]
[Pages 45394-45397]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-15952]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[REG-116215-07]
RIN 1545-BG60


Public Inspection of Material Relating to Tax-Exempt 
Organizations

AGENCY: Internal Revenue Service, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations that amend 
existing regulations issued under sections 6104 and 6110 of the 
Internal Revenue Code. The purpose of the proposed regulations is to 
clarify rules relating to information that is made available by the IRS 
for public inspection under section 6104(a) and materials that are made 
publicly available under section 6110. The changes reflect IRS practice 
as well as the United States Court of Appeals for the District of 
Columbia Circuit's decision in Tax Analysts v. IRS, 350 F.3d 100 (D.C. 
Cir. 2003). The Tax Analysts decision invalidated the portions of 
Sec. Sec.  301.6104(a)-1(i) and 301.6110-1(a) that excepted rulings 
that denied or revoked an organization's tax exempt status from the 
public disclosure provisions of both sections 6104 and 6110. The 
proposed regulations will affect organizations exempt from Federal 
income tax under section 501(a) or 527, organizations that were exempt 
but are no longer exempt from Federal income tax, and organizations 
that were denied tax-exempt status.

DATES: Written or electronic comments and requests for a public hearing 
must be received by November 13, 2007.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-116215-07), room 
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered between the 
hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-116215-07), Courier's 
Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., 
Washington, DC, or sent electronically via the Federal eRulemaking 
Portal at www.regulations.gov (IRS REG-116215-07).

FOR FURTHER INFORMATION CONTACT: Concerning submission of comments, 
Kelly Banks, (202) 622-7180 (not a toll-free number); concerning the 
proposed regulations, Mary Ellen Keys, (202) 622-4570 (not a toll-free 
number).

SUPPLEMENTARY INFORMATION: 

Background

    Since 1950, the Internal Revenue Code has provided for the public 
inspection of information that is submitted to the IRS by certain 
exempt organizations and certain trusts. Under section 6104(a), the IRS 
makes available for public inspection approved applications for 
exemption from Federal income tax for organizations described in 
section 501(c) or (d) and exempt under section 501(a), notices of 
status filed under section 527(i) by political organizations exempt 
from taxation under section 527, and certain related documents. Section 
6104(a) also permits the IRS to disclose whether an organization is 
currently recognized as exempt and the subsection and paragraph number 
of section 501 under which it is recognized. Section 6104(b) imposes an 
additional obligation on the IRS to make available for public 
inspection annual information returns filed by organizations exempt 
from Federal income tax. Section 6104(c) governs when the IRS may 
disclose certain information about charitable and certain other exempt 
organizations to state officials. Section 6104(d) imposes a parallel 
obligation on organizations and trusts to make available for public 
inspection annual returns, applications for exemption and notices of 
status. The proposed regulations do not address the obligations imposed 
by subsections (b), (c) and (d).
    The decision in Tax Analysts v. IRS, 350 F.3d 100 (D.C. Cir. 2003), 
invalidated the portions of existing Sec.  301.6104(a)-1(i)(1), (2), 
and (3) and Sec.  301.6110-1(a) that excluded rulings that denied or 
revoked an organization's tax exempt status from the public disclosure 
provisions of both sections 6104 and 6110. Sections 301.6104(a)-
1(i)(1), (2) and (3) excluded from disclosure by the IRS unfavorable 
rulings or determination letters in response to exemption applications, 
rulings or determination letters that make or modify a favorable 
determination letter, and technical advice memoranda that relate to a 
disapproved exemption application or the revocation or modification of 
a favorable determination letter. Thus,

[[Page 45395]]

because Sec.  301.6110-1(a) provided that the disclosure of such 
rulings, determination letters and technical advice memoranda is to be 
determined under section 6104, they also were not available under 
section 6110. The IRS has already modified its administrative practice 
to follow the court's holding by making these documents available to 
the public. See AOD 2004-02, 2004-29 IRB 42, Sec.  
601.601(d)(2)(ii)(a). The Treasury Department and IRS now propose to 
revise the existing regulations at Sec.  301.6104(a)-1 and Sec.  
301.6110-1(a) to conform to the court's holding in Tax Analysts.

Explanation of Provisions

    The proposed regulations remove existing Sec.  301.6104(a)-1(i) and 
portions of Sec.  301.6110-1(a), in light of the holding in Tax 
Analysts. The proposed regulations clarify that the term 
``application'' includes information submitted to the IRS relating to 
group exemption applications. The proposed regulations provide that 
notices of status filed under section 527(i) and the documents 
comprising the notices are available for public inspection under 
section 6104(a). The proposed regulations also add to the material that 
is available for public inspection the letters or documents filed with 
or issued by the IRS relating to an organization's status as an 
organization described in sections 509(a), 4942(j)(3), or 4943(f), 
including a final determination letter that the organization is or is 
not a private foundation.
    The proposed regulations clarify that the IRS may disclose, in 
response to or in anticipation of a request, the subsection and 
paragraph number of section 501 under which an organization or group 
has been determined, on the basis of its application, to qualify for 
exemption from Federal income tax, and whether an organization or group 
is currently recognized as exempt.
    Section 6104(a) applies to the publication of certain information 
related to organizations that are exempt from Federal income taxation 
under section 501(a). The information covered by section 6104(a) 
includes material for any taxable year during which the organization 
was exempt. Under the proposed regulations, written determinations 
issued by the IRS, including, for example, unfavorable rulings or 
determination letters issued in response to applications for tax 
exemption and rulings or determination letters revoking or modifying a 
favorable determination letter, are made available for public 
inspection under section 6110.

Other Changes to the Existing Regulations

    The proposed regulations reorganize or revise certain provisions of 
the existing regulations to eliminate redundancy and/or to provide 
greater clarity. First, Sec.  301.6104(a)-1(a) is revised to clarify 
that applications for exemption from Federal income tax and supporting 
documents shall be open for public inspection, even if the IRS 
subsequently revokes the organization's exempt status.
    Second, new Sec.  301.6104(a)-1(b) is added to clarify that notices 
of status filed by political organizations described in section 527 are 
open for public inspection.
    Third, Sec.  301.6104(a)-1(c) (formerly Sec.  301.6104(a)-1(b)) is 
revised to clarify that group exemption letters are included among the 
information that is available for public inspection under section 
6104(a).
    Fourth, Sec.  301.6104(a)-1(d) (formerly Sec.  301.6104(a)-1(c)) is 
revised to clarify that, where an organization is determined to be 
exempt for any taxable year, material shall not be withheld on the 
basis that the organization is determined not to be exempt for any 
other taxable year.
    Fifth, Sec.  301.6104(a)-1(g) (formerly Sec.  301.6104(a)-1(e)), 
which defines the term ``supporting document'' with respect to an 
application for exemption from Federal income tax, is revised to 
clarify that there are no supporting documents with respect to notices 
of status filed by political organizations.
    Sixth, new Sec.  301.6104(a)-1(h) is added to clarify that the IRS 
may disclose, in response to or anticipation of a request, the 
subsection and paragraph number of section 501 under which an 
organization or group has been determined to be exempt from Federal 
income taxation, whether an organization or group is exempt, or whether 
the IRS has revoked an organization's or group's exemption under 
section 501(c)(3).
    Finally, new Sec.  301.6104(a)-1(i) is added to refer the reader to 
section 6033(j), added to the Code by the Pension Protection Act of 
2006, Pub. L. 109-280, 120 Stat. 780, which is an additional statutory 
provision that requires disclosure of information by the IRS regarding 
organizations formerly exempt from Federal income tax. Section 6033(j) 
governs the publication and maintenance of a list of organizations 
whose tax exempt status was revoked for failure to file required 
returns or notices for three consecutive years. Likewise, this 
paragraph cross-references section 7428(c), which relates to the 
revocation of a determination of exempt status, and section 501(p), 
added to the Code by the Military Family Tax Relief Act of 2003, Pub. 
L. 108-121, 117 Stat. 1335, which relates to suspension of the tax-
exempt status of terrorist organizations, including public notice of 
suspensions.

Special Analyses

    It has been determined that the proposed regulations are not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required. It has also been 
determined that section 553(b) of the Administrative Procedure Act (5 
U.S.C. chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 
6) do not apply to the regulations, and, therefore, a regulatory 
flexibility analysis is not required. Pursuant to section 7805(f) of 
the Internal Revenue Code, this regulation has been submitted to the 
Chief Counsel for Advocacy of the Small Business Administration for 
comments on its impact on small businesses.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (a signed original and 8 
copies) or electronic comments that are submitted timely to the IRS. 
The IRS and Treasury Department request comments on the clarity of the 
proposed rules and how they can be made easier to understand. All 
comments will be available for public inspection and copying. A public 
hearing will be scheduled if requested in writing by any person that 
timely submits written comments. If a public hearing is scheduled, 
notice of the date, time, and place for the public hearing will be 
published in the Federal Register.

Drafting Information

    The principal author of the regulations is Mary Ellen Keys, Office 
of the Associate Chief Counsel (Procedure & Administration).

List of Subjects in 26 CFR Part 301

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

Amendments to the Regulations

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

[[Page 45396]]

PART 301--PROCEDURE AND ADMINISTRATION

    Paragraph 1. The authority citation for part 301 continues to read 
as follows:

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

    Par. 2. Sec.  301.6104(a)-1 is revised to read as follows:


Sec.  301.6104(a)-1  Public inspection of material relating to tax-
exempt organizations.

    (a) Applications for exemption from Federal income tax, 
applications for a group exemption letter and supporting documents. If 
the Internal Revenue Service determines that an organization described 
in section 501(c) or (d) is exempt from Federal income tax for any 
taxable year, the application upon which the determination is based, 
together with any supporting documents, shall be open to public 
inspection. Such applications and supporting documents shall be open 
for public inspection even after any revocation of the Internal Revenue 
Service's determination that the organization is exempt from Federal 
income tax. Some applications have been destroyed and therefore are not 
available for inspection. For purposes of determining the availability 
for public inspection, a claim for exemption from Federal income tax 
filed to reestablish exempt status after denial thereof under the 
provisions of section 503 or 504 (as in effect on December 31, 1969), 
or under the corresponding provisions of any prior revenue law, is 
considered an application for exemption from Federal income tax.
    (b) Notices of status filed by political organizations. If, in 
accordance with section 527(i), an organization notifies the Internal 
Revenue Service that it is a political organization as described in 
section 527, exempt from Federal income tax for any taxable year, the 
notice of status filed by the political organization shall be open to 
public inspection.
    (c) Letters or documents issued by the Internal Revenue Service 
with respect to an application for exemption from Federal income tax. 
If an application for exemption from Federal income tax is filed with 
the Internal Revenue Service after October 31, 1976, and is open to 
public inspection under paragraph (a) of this section, then any letter 
or document issued to the applicant by the Internal Revenue Service 
that relates to the application is also open to public inspection. For 
rules relating to when a letter or document is issued, see Sec.  
301.6110-2(h). Letters or documents to which this paragraph applies 
include, but are not limited to--
    (1) Favorable rulings and determination letters, including group 
exemption letters, issued in response to applications for exemption 
from Federal income tax;
    (2) Technical advice memoranda issued with respect to the approval, 
or subsequent approval, of an application for exemption from Federal 
income tax;
    (3) Letters issued in response to an application for exemption from 
Federal income tax (including applications for a group exemption 
letter) that propose a finding that the applicant is not entitled to be 
exempt from Federal income tax, if the applicant is subsequently 
determined, on the basis of that application, to be exempt from Federal 
income tax; and
    (4) Any letter or document issued by the Internal Revenue Service 
relating to an organization's status as an organization described in 
sections 509(a), 4942(j)(3), or 4943(f), including a final 
determination letter that the organization is or is not a private 
foundation.
    (d) Requirement of exempt status. An application for exemption from 
Federal income tax (including applications for a group exemption 
letter), supporting documents, and letters or documents issued by the 
Internal Revenue Service that relate to the application shall not be 
open to public inspection before the organization is determined, on the 
basis of that application, to be exempt from Federal income tax for any 
taxable year. If an organization is determined to be exempt from 
Federal income tax for any taxable year, these materials shall not be 
withheld from public inspection on the basis that the organization is 
subsequently determined not to be exempt for any other taxable year.
    (e) Documents included in the term ``application for exemption from 
Federal income tax.'' For purposes of this section--
    (1) Prescribed application form. If a form is prescribed for an 
organization's application for exemption from Federal income tax, the 
application includes the form and all documents and statements that the 
Internal Revenue Service requires to be filed with the form, any 
amendments or revisions to the original application, or any resubmitted 
applications where the original application was submitted in draft form 
or was withdrawn. An application submitted in draft form or an 
application submitted and later withdrawn is not considered an 
application.
    (2) No prescribed application form. If no form is prescribed for an 
organization's application for exemption from Federal income tax, the 
application includes the submission by letter requesting recognition of 
tax exemption and any statements or documents as prescribed by Revenue 
Procedure 2007-52, 2007-30 IRB 222, and any successor guidance. (See 
Sec.  601.201(n)(7)(i) of the Statement of Procedural Rules, 26 CFR 
part 601.)
    (3) Application for a Group Exemption Letter. The application for a 
group exemption letter includes the letter submitted by or on behalf of 
subordinate organizations that seek exempt status pursuant to a group 
exemption letter and any statements or documents as prescribed by 
Revenue Procedure 80-27, 1980-1 CB 677, and any successor guidance. 
(See Sec.  601.201(n)(8)(i) of the Statement of Procedural Rules, 26 
CFR part 601.)
    (4) Notice of status filed under section 527(i). For purposes of 
this section, documents included in the term ``notice of status filed 
under section 527(i)'' include--
    (i) Form 8871, Political Organization Notice of Section 527 Status;
    (ii) Form 8453-X, Declaration of Electronic Filing of Notice of 
Section 527 Status; and
    (iii) Any other additional forms or documents that the Internal 
Revenue Service may prescribe.
    (f) Material open to public inspection under section 6110. Under 
section 6110, certain written determinations issued by the Internal 
Revenue Service are made available for public inspection. Section 6110 
does not apply, however, to material that is open to public inspection 
under section 6104. See section 6110(l)(1).
    (g) Supporting documents defined. For purposes of this section, 
``supporting documents,'' with respect to an application for exemption 
from Federal income tax, means any statement or document not described 
in paragraph (e) of this section that is submitted by the organization 
or group in support of its application prior to a determination 
described in paragraph (c) of this section. Items submitted in 
connection with an application in draft form, or with an application 
submitted and later withdrawn, are not supporting documents. There are 
no supporting documents with respect to Notices of Status filed by 
political organizations.
    (h) Statement of exempt status. For efficient tax administration, 
the Internal Revenue Service may publish, in paper or electronic 
format, the names of organizations currently recognized as exempt from 
Federal income tax, including organizations recognized as exempt from 
Federal income tax under

[[Page 45397]]

particular paragraphs of section 501(c) or section 501(d). In addition 
to having the opportunity to inspect material relating to an 
organization exempt from Federal income tax, a person may request a 
statement, or the Internal Revenue Service may disclose, in response to 
or in anticipation of a request, the following information--
    (1) The subsection and paragraph of section 501 (or the 
corresponding provision of any prior revenue law) under which the 
organization or group has been determined, on the basis of an 
application open to public inspection, to qualify for exemption from 
Federal income tax; and
    (2) Whether an organization or group is currently recognized as 
exempt from Federal income tax.
    (i) Publication of non-exempt status. (1) For publication of the 
notice of the revocation of a determination that an organization is 
described in section 501(c)(3), see section 7428(c).
    (2) For publication of a list including any organization the tax 
exemption of which is revoked for failure to file required returns or 
notices for three consecutive years, see section 6033(j).
    (3) For publication of notice of suspension of tax exemption of 
terrorist organizations, see section 501(p).
    (j) Withholding of certain information from public inspection. For 
rules relating to certain information contained in an application for 
exemption from Federal income tax and supporting documents that will be 
withheld from public inspection, see Sec.  301.6104(a)-5(a).
    (k) Procedures for inspection. For rules relating to procedures for 
public inspection of applications for exemption from Federal income tax 
and supporting documents, see Sec.  301.6104(a)-6.
    (l) Effective/applicability date. The rules of this section apply 
to taxable years ending on or after the date of publication of the 
Treasury decision adopting these rules as final regulations in the 
Federal Register.
    Par. 3. Sec.  301.6110-1 is amended by:
    1. Revising paragraph (a).
    2. Adding paragraph (d).
    The addition and revision read as follows:


Sec.  301.6110-1  Public inspection of written determinations and 
background file documents.

    (a) General rule. Except as provided in Sec.  301.6110-3, relating 
to deletion of certain information, Sec.  301.6110-5(b), relating to 
actions to restrain disclosure, paragraph (b)(2) of this section, 
relating to technical advice memoranda involving civil fraud and 
criminal investigations, and jeopardy and termination assessments, and 
paragraph (b)(3) of this section, relating to general written 
determinations relating to accounting or funding periods and methods, 
the text of any written determination (as defined in Sec.  301.6110-
2(a)) issued pursuant to a request postmarked or hand delivered after 
October 31, 1976, shall be open to public inspection in the places 
provided in paragraph (c)(1) of this section. The text of any written 
determination issued pursuant to a request postmarked or hand delivered 
before November 1, 1976, shall be open to public inspection pursuant to 
section 6110(h) and Sec.  301.6110-6, when funds are appropriated by 
Congress for such purpose. The procedures and rules set forth in 
Sec. Sec.  301.6110-1 through 301.6110-5 and Sec.  301.6110-7 do not 
apply to written determinations issued pursuant to requests postmarked 
or hand delivered before November 1, 1976, unless Sec.  301.6110-6 
states otherwise. There shall also be open to public inspection in each 
place of public inspection an index to the written determinations 
subject to inspection at such place. Each such index shall be arranged 
by section of the Internal Revenue Code, related statute or tax treaty 
and by subject matter description within such section in such manner as 
the Commissioner may from time to time provide. The Commissioner shall 
not be required to make any written determination or background file 
document open to public inspection pursuant to section 6110 or refrain 
from disclosure of any such documents or any information therein, 
except as provided by section 6110 or with respect to a discovery order 
made in connection with a judicial proceeding. The provisions of 
section 6110 shall not apply to material that is open to public 
inspection under section 6104. See section 6110(l)(1).
* * * * *
    (d) Effective/applicability date. The rules of paragraph (a) of 
this section apply to taxable years ending on or after the date of 
publication of the Treasury decision adopting these rules as final 
regulations in the Federal Register.

Kevin M. Brown,
Deputy Commissioner for Services and Enforcement.
 [FR Doc. E7-15952 Filed 8-13-07; 8:45 am]
BILLING CODE 4830-01-P