[Federal Register Volume 72, Number 220 (Thursday, November 15, 2007)]
[Rules and Regulations]
[Pages 64147-64150]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-22299]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9366]
RIN 1545-BG38


Notification Requirement for Tax-Exempt Entities Not Currently 
Required to File

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary regulations.

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SUMMARY: This document contains temporary regulations describing the 
time and manner in which certain tax-exempt organizations not currently 
required to file an annual information return under section 6033(a)(1) 
are required to submit an annual electronic notice including certain 
information required by section 6033(i)(1)(A) through (F). The text of 
the temporary regulations also serves as the text of the proposed 
regulations set forth in the notice of proposed rulemaking on this 
subject in the Proposed Rules section in this issue of the Federal 
Register.

DATES: Effective Date: These regulations are effective on November 15, 
2007.
    Applicability Date: These regulations are applicable to taxable 
years beginning after December 31, 2006.

FOR FURTHER INFORMATION CONTACT: Monice Rosenbaum at (202) 622-6070 
(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    This document contains amendments to the Income Tax Regulations (26 
CFR part 1) under section 6033(i)(1) relating to the notification 
requirement for entities not currently required to file an annual 
information return under section 6033(a)(1). Section 6033(i)(1) was 
added by section 1223(a) of the Pension Protection Act of 2006, Public 
Law 109-208 (120 Stat. 1090 (2006)) (PPA 2006), effective for annual 
periods beginning after 2006. Section 6033(i)(1) requires the Treasury 
Secretary to promulgate regulations that describe the time and manner 
in which certain tax-exempt organizations not currently required to 
file an annual information return are to submit an annual electronic 
notice including information set forth in section 6033(i)(1)(A) through 
(F). Section 1223 of the PPA 2006 also contains new rules for 
termination, loss of exempt status, and reinstatement. These new rules 
do not require regulations for implementation and are therefore not 
addressed in this temporary regulation but are discussed in this 
preamble. Substantive and administrative rules related to termination, 
loss of exempt status, and reinstatement will be considered in separate 
guidance and other publications.
    Prior to the PPA 2006, either by operation of law or through 
discretionary exceptions, certain organizations were not required to 
file an information return (for example, Form 990, ``Return of 
Organization Exempt From Income Tax''). Section 6033(a)(3)(A)(ii) 
provided a mandatory exception from filing by certain organizations 
(other than private foundations) described in section 6033(a)(3)(C), 
whose annual gross receipts were normally not more than $5,000. Section 
6033(a)(3)(B) provided a discretionary exception under which the 
Secretary relieved certain other organizations from filing. Exercising 
this discretionary authority, the IRS published Announcement 82-88 
(1982-25 IRB 23 (June 21, 1982)), which provided an exception for 
organizations whose annual gross receipts were not normally in excess 
of $25,000 from filing Form 990 for tax years ending on or after 
December 31, 1982. The new electronic notice provision of section 
6033(i)(1) applies to organizations whose gross receipts are low enough 
that they are not required to file information returns under sections 
(a)(3)(A)(ii) or (a)(3)(B). The substance of this electronic notice is 
discussed below in this preamble. See Sec.  601.601(d)(2)(ii)(b).
    Section 6033(i)(2) provides that organizations required to submit 
annual electronic notification are also required to provide notice of 
termination upon the termination of the existence of the organization. 
The time and manner of the notice of termination is not specified in 
the statute.
    Section 6033(j), added by section 1223(b) of the PPA 2006, provides 
that if an organization required to file an annual information return 
under section 6033(a)(1) or submit an electronic notice under section 
6033(i) fails to provide the required return or notice for three 
consecutive years, the organization's tax-exempt status is revoked. The 
revocation is effective from the date the Secretary determines was the 
last day the organization could have timely filed the third required 
information return or submitted the notice. Any organization whose tax-
exempt status is revoked under section 6033(j)(1) must apply in order 
to obtain reinstatement of that status regardless of whether such 
organization was originally required to make an application for tax-
exempt

[[Page 64148]]

status. If, upon application for reinstatement of tax-exempt status, an 
organization can show to the satisfaction of the Secretary evidence of 
reasonable cause for the failure to file the information return or 
submit the notice, the organization's tax-exempt status may, in the 
discretion of the Secretary, be reinstated retroactive to the date of 
revocation.
    Section 7428(b), regarding limitations on declaratory judgments 
relating to status and classification of certain tax-exempt 
organizations, was amended by section 1223(c) of the PPA 2006 and 
provides that no action may be brought under section 7428 with respect 
to any revocation of tax-exempt status described in section 6033(j)(1), 
for failure to provide the required return under section 6033(a)(1) or 
notice under section 6033(i) for three consecutive years.
    Section 6652(c)(1)(E), added by section 1233(d) of the PPA 2006, 
provides that there is no monetary penalty for failure to submit any 
notice required under section 6033(i).

Explanation of Provisions

Annual Electronic Notice Requirements and Other General Requirements 
Related to Maintaining Tax-Exempt Status

    Section 6033(i)(1) provides that the annual notification, in 
electronic form, shall set forth: (A) The legal name of the 
organization, (B) any name under which the organization operates or 
does business, (C) the organization's mailing address and Internet Web 
site address (if any), (D) the organization's taxpayer identification 
number, (E) the name and address of a principal officer, and (F) 
evidence of the continuing basis for the organization's exemption from 
the filing requirements under section 6033(a)(1). The temporary 
regulations also provide that additional information necessary to 
process the notification may be required. For example, an organization 
will be required to state the tax period for which it is submitting the 
electronic notification.
    The mailing address required by section 6033(i)(1)(C) and submitted 
in the annual electronic notification shall be the organization's last 
known address as provided by Sec.  301.6212-2(a) of the Regulations on 
Procedure and Administration. This last known address may be updated as 
provided under Sec.  301.6212-2 or by clear and concise notification as 
described in Rev. Proc. 2001-18 (2001-1 CB 708). The IRS will use this 
last known address as the organization's address of record and will 
direct all mailings to this address. See Sec.  601.601(d)(2)(ii)(b).
    By submitting the annual electronic notification described in this 
paragraph, an organization acknowledges that it is not required to file 
a return under section 6033(a) because its gross receipts are not 
normally in excess of $25,000. In order to make this determination, the 
organization must keep records that enable it to calculate its gross 
receipts. All organizations are required to maintain records under 
section 6001. These records will provide evidence of the continuing 
basis for the organization's exemption from the filing requirements 
under section 6033(a)(1).
    The temporary regulations restate that an organization, even though 
relieved from filing a return under section 6033(a), is still required 
under Sec.  1.6033-2(i) and (j) to inform the IRS in writing of any 
changes in the organization's character, operation, or purpose; provide 
additional information; and file other returns of information and 
unrelated business tax returns. Organizations are also reminded that if 
the organization is required to file an unrelated business tax return, 
Form 990-T, ``Exempt Organization Business Income Tax Return,'' the 
filing of the Form 990-T does not relieve the organization from the 
requirement of submitting the annual electronic notification under 
section 6033(i).
    The statute requires that the annual notification be submitted 
electronically. There is no provision in the temporary regulations for 
any paper notification. However, if an organization that is required to 
submit an annual electronic notification files a complete Form 990 or 
Form 990EZ, ``Short Form Return of Organization Exempt From Income 
Tax,'' the annual notification requirement of section 6033(i) shall be 
deemed satisfied. The annual notification requirement is not satisfied 
if the Form 990 or Form 990-EZ contains only those items of information 
that would have been required by submitting the notification in 
electronic form.
    The notification shall be submitted on or before the 15th day of 
the fifth calendar month following the close of the period for which 
the notification is required to be submitted. Thus, an organization 
with an accounting period ending December 31, 2007, is required to 
submit the annual notification by May 15, 2008.

Annual Electronic Notification Is Not a Return

    The electronic notification is not a return because it does not 
contain sufficient data to calculate tax liability or determine tax-
exempt status. Moreover, the electronic notification does not purport 
to be a return. The electronic notification simply identifies an 
organization and indicates the basis for it not having to file an 
information return under section 6033(a)(1). Because the electronic 
notification is not a tax or information return, submission of the 
notification does not trigger the period of limitations for assessment 
under section 6501(g)(2). However, the filing of a complete Form 990 or 
Form 990-EZ, as noted in this preamble, will start the period of 
limitations for assessment under section 6501(g)(2). Furthermore, there 
is no monetary penalty for failure to file under section 6033(i). To 
further distinguish the electronic notification from a tax or 
information return, the temporary regulations provide that the 
electronic notification is submitted to the IRS, rather than filed or 
furnished, the terms used in connection with tax and information 
returns.
    The notifications required by section 6033(i) are subject to public 
disclosure and inspection. See section 6104 (generally applicable to 
Form 990 information returns). Further, this provision does not affect 
any other obligations an organization may have to file other required 
information and or tax returns, or penalties for failure to file such 
returns.

Form 990-N, Electronic Notification (e-Postcard) For Tax-Exempt 
Organizations Not Required to File Form 990 or 990-EZ

    Form 990-N, ``Electronic Notification (e-Postcard) for Tax-Exempt 
Organizations Not Required To File Form 990 or 990-EZ,'' has been 
developed to satisfy the requirements of section 6033(i)(1). The IRS 
plans to deliver a simple, Internet based process for submitting the e-
Postcard, Form 990-N. It is anticipated that organizations that do not 
have access to a computer can use their local public library to file 
the e-Postcard. Because the system will be Internet based, 
organizations should not need to purchase software to file the e-
Postcard. The temporary regulations provide that the annual electronic 
notification shall be submitted in accordance with instructions and 
publications, including those provided at the IRS Web site for exempt 
organizations.

Organizations Required To File Returns or Submit Electronic Notice

    In general, every organization exempt from taxation under section 
501(a) that is not required to file a return described in Sec.  1.6033-
2(a)(2), other than an organization described in section 401(a)

[[Page 64149]]

(qualified pension, profit-sharing, and stock bonus plans) or section 
501(d) (religious and apostolic organizations), is required to submit 
an annual electronic notice under section 6033(i). However, a 
organization that is required to file or files an annual information 
return under section 6033(a)(1) should not submit an annual electronic 
notification under section 6033(i). This includes any organization 
included in a group return as provided in Sec.  1.6033-2 for that year; 
all private foundations required to file Form 990-PF, ``Return of 
Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust 
Treated as a Private Foundation''; section 509(a)(3) supporting 
organizations required to file Form 990 or Form 990-EZ; a section 
501(c)(21) black lung trust required to file Form 990-BL, ``Information 
and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain 
Related Person''; and any organization that is required to file or 
files an annual information return under section 6033(a)(1) on any 
other form prescribed by the IRS for that purpose.
    Neither annual information returns under section 6033(a)(1) nor 
annual electronic notices under section 6033(i) are required to be 
filed or submitted by an organization exemption from taxation under 
section 501(a) that is a church, an interchurch organization of local 
units of a church, a convention or association of churches, or an 
integrated auxiliary of a church (as defined in Sec.  1.6033-2(h)); an 
exclusively religious activity of any religious order; a mission 
society sponsored by or affiliated with one or more churches or church 
denominations, more than half of the activities of which society are 
conducted in, or directed at persons in, foreign countries; an 
educational organization (below college level) that is described in 
section 170(b)(1)(A)(ii), that has a program of a general academic 
nature, and that is affiliated (within the meaning of Sec.  1.6033-
2(h)(2)) with a church or operated by a religious order; a State 
institution, the income of which is excluded from gross income under 
section 115(a); an organization described in section 501(c)(1); or an 
organization that is a governmental unit or an affiliate of a 
governmental unit exempt from Federal income tax under section 501(a) 
as described in Rev. Proc. 95-48 (1995-2 CB 418). See Sec.  
601.601(d)(2)(ii)(b).
    If an organization exempt from taxation under section 501(a) is not 
exempted in either of the two preceding paragraphs, the organization 
must submit an annual electronic notice. Thus, a black lung trust that 
normally has gross receipts of $25,000 or less is not required to file 
Form 990-BL but is required to submit an electronic notification. A 
section 509(a)(3) supporting organization of a religious organization 
that normally has gross receipts of $5,000 or less is not required to 
file Form 990 or Form 990-EZ but is required to submit an electronic 
notification.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required. It also has been 
determined that section 553(b) of the Administrative Procedure Act (5 
U.S.C. chapter 5) does not apply to these regulations. For the 
applicability of the Regulatory Flexibility Act, please refer to the 
cross-reference notice of proposed rulemaking published elsewhere in 
this issue of the Federal Register. Pursuant to section 7805(f) of the 
Internal Revenue Code, these regulations have been submitted to the 
Chief Counsel for Advocacy of the Small Business Administration for 
comment on their impact on small business.

Drafting Information

    The principal author of these regulations is Monice Rosenbaum, of 
the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and 
Government Entities). However, other personnel from the IRS and the 
Treasury Department participated in their development.

List of Subjects 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Amendments to the Regulations

0
Accordingly, 26 CFR part 1 is amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by adding an 
entry in numerical order to read as follows:

    Authority: 26 U.S.C. 7805 * * *
    Section 1.6033-6 also issued under 26 U.S.C. 6033(i)(1). * * *


0
Par. 2. Section 1.6033-6T is added to read as follows:


Sec.  1.6033-6T  Notification requirement for entities not required to 
file an annual information return under section 6033(a)(1) (taxable 
years beginning after December 31, 2006).

    (a) In general. Except as otherwise provided in this paragraph, 
every organization exempt from taxation under section 501(a) that is 
not required to file a return described in Sec.  1.6033-2(a)(2), other 
than an organization described in section 401(a) or 501(d), shall 
submit annually, in electronic form, a notification setting forth the 
items described in paragraph (b) of this section and such other 
information as may be prescribed in the instructions and publications 
issued with respect to the notification.
    (b) Organizations not required to submit annual notification. (1) 
An organization exempt from taxation under section 501(a) that is 
required to file or files an annual information return under section 
6033(a)(1) shall not submit an annual notification under section 
6033(i). This includes the following types of organizations:
    (i) Any organization included in a group return for that year under 
Sec.  1.6033-2(d).
    (ii) All private foundations required to file under Sec.  1.6033-
2(a)(2)(i) Form 990-PF, ``Return of Private Foundation or Section 
4947(a)(1) Nonexempt Charitable Trust Treated as a Private 
Foundation.''
    (iii) Section 509(a)(3) supporting organizations required to file 
under Sec.  1.6033-2(a)(2)(i) Form 990, ``Return of Organization Exempt 
From Income Tax,'' or Form 990-EZ, ``Short Form Return or Organization 
Exempt From Income Tax.''
    (iv) A section 501(c)(21) black lung trust required to file under 
Sec.  1.6033-2(a)(2)(i) Form 990-BL.
    (v) Any organization that is required to file or files an annual 
information return under section 6033(a)(1) on any other form 
prescribed by the Internal Revenue Service for that purpose.
    (2) An organization exempt from taxation under section 501(a) that 
is not required to file a return under section 6033(a)(1) is also not 
required to submit an annual notification under section 6033(i). This 
includes the following types of organizations:
    (i) A church, an interchurch organization of local units of a 
church, a convention or association of churches, or an integrated 
auxiliary of a church (as defined in Sec.  1.6033-2(h)).
    (ii) An exclusively religious activity of any religious order.
    (iii) A mission society sponsored by or affiliated with one or more 
churches or church denominations, more than one-half of the activities 
of which society are conducted in, or directed at persons in, foreign 
countries.
    (iv) An educational organization (below college level) described in 
section 170(b)(1)(A)(ii), that has a program of a general academic 
nature, and that is affiliated (within the

[[Page 64150]]

meaning of Sec.  1.6033-2(h)(2)) with a church or operated by a 
religious order.
    (v) A State institution, the income of which is excluded from gross 
income under section 115(a);
    (vi) An organization described in section 501(c)(1).
    (vii) An organization that is a governmental unit or an affiliate 
of a governmental unit exempt from Federal income tax under section 
501(a).
    (3) If an organization exempt from taxation under section 501(a) is 
not described in paragraph (b)(1) or (2) of this section, the 
organization must submit an annual notification. Thus, a black lung 
trust that normally has gross receipts of $25,000 or less is not 
required to file Form 990-BL but is required to submit electronic 
notification. A section 509(a)(3) supporting organization of a 
religious organization that normally has gross receipts of $5,000 or 
less is not required to file Form 990 or Form 990-EZ but is required to 
submit electronic notification.
    (c) Additional notification requirements--(1) In general. Any 
organization described in paragraph (a)(1) of this section shall submit 
an annual notification described in section 6033(i)(1). The annual 
notification shall--
    (i) Be in electronic form; and
    (ii) Set forth--
    (A) The legal name of the organization;
    (B) Any name under which the organization operates or does 
business;
    (C) The organization's mailing address and Internet Web site 
address (if any);
    (D) The organization's taxpayer identification number;
    (E) The name and address of a principal officer;
    (F) Evidence of the continuing basis for the organization's 
exemption from the filing requirements under section 6033(a)(1); and
    (G) Additional information necessary to process the notification.
    (2) The mailing address required by section 6033(i)(1)(C) and 
submitted in the annual notification shall be the organization's last 
known address as provided by Sec.  301.6212-2(a) of this chapter. This 
last known address may be updated as provided under Sec.  301.6212-2 of 
this chapter, or by clear and concise notification. The Internal 
Revenue Service will use this last known address as the organization's 
address of record and will direct all mailings to this address.
    (3) By submitting the annual notification described in this 
paragraph (c)(1), an organization acknowledges that it is not required 
to file a return under section 6033(a) because its annual gross 
receipts are not normally in excess of $25,000. In order to make this 
determination, the organization must keep records that enable it to 
calculate its gross receipts. All organizations are required to 
maintain records under section 6001. These records will provide 
evidence of the continuing basis for the organization's exemption from 
the filing requirements under section 6033(a)(1).
    (4) If an organization that is required to submit an annual 
electronic notification files a complete Form 990 or Form 990-EZ the 
annual notification requirement shall be deemed satisfied. The annual 
notification requirement is not satisfied if the Form 990 or Form 990-
EZ contains only those items of information that would have been 
required by submitting the notification in electronic form. Also, the 
filing of a complete Form 990 or Form 990-EZ, rather than the 
submission of an annual electronic notification, is the filing of a 
return that starts the period of limitations for assessment under 
section 6501(g)(2).
    (d) No effect on other filing requirements. An organization that is 
relieved from filing an information return under section 6033(a) is 
still subject to the requirements of Sec.  1.6033-2(i) and (j), 
concerning notice regarding changes in character, operations, or 
purpose; providing additional information; duty to file other returns 
of information; and duty to file unrelated business tax returns. If an 
organization is required to file an unrelated business tax return, Form 
990-T, ``Exempt Organization Business Income Tax Return,'' the filing 
of that return does not relieve the organization from the requirement 
of submitting notification under section 6033(i).
    (e) Accounting period for submitting electronic notification. An 
annual notification required by this section shall be on the basis of 
the established annual accounting period of the organization. If the 
organization has no established accounting period, annual notification 
shall be on the basis of the calendar year.
    (f) Time and place for submitting electronic notification. The 
annual notification required by this section shall be submitted on or 
before the 15th day of the fifth calendar month following the close of 
the period for which the notification is required to be submitted. 
Thus, an organization with an accounting period ending December 31, 
2007, is required to submit annual notification by May 15, 2008. The 
notification shall be submitted in accordance with instructions and 
publications, including those provided at the Internal Revenue Service 
Web site for exempt organizations.
    (g) Effective/applicability date. These regulations are applicable 
to annual periods beginning after 2006.
    (h) Expiration date. These regulations expire November 15, 2010.

Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
    Approved: November 6, 2007.
Eric Solomon,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. E7-22299 Filed 11-14-07; 8:45 am]
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