Can a 501(c)(3) Organization Change Into a 501(c)(4) Organization?

Is it possible for a 501(c)(3) organization to change into a 501(c)(4) organization? The short answer is no (Revenue Procedure 2017-5). But it may be possible for a 501(c)(3) organization to cause the creation of a 501(c)(4) organization and subsequently dissolve, leaving only the 501(c)(4) organization. This strategy has its own complications as we describe […]

Treasury Eliminates Donor Information Disclosures by 501(c)(4) and 501(c)(6) Organizations

The Treasury Department announced a change in the regulations making it no longer necessary for 501(c)(4) and 501(c)(6) organizations to disclose the identities of their donors on their annual information returns to the IRS. More specifically, tax-exempt organizations described by section 501(c), other than section 501(c)(3) organizations, are no longer required to report the names […]

New Form 1024-A for 501(c)(4) Organizations

On January 16, 2018, the IRS released the final version of Form 1024-A, Application for Recognition of Exemption under Section 501(c)(4) of the Internal Revenue Code (“IRC”). While organizations that believe they are properly classified as a 501(c)(4) organization may self-declare their tax exempt status, organizations that choose to apply for IRC Section 501(c)(4) exemption […]

A prediction for nonprofits in 2018: Rise of the 501(c)(4) organizations

Originally published on LinkedIn. We’ll see an increase in the number of 501(c)(4) social welfare organizations being formed and receiving contributions. While contributions to 501(c)(4) organizations are not deductible as charitable contributions, this won’t matter to many donors for two major reasons: With the increase in the standard deduction, there will be a substantial reduction […]

IRS Work Plan FY 2018 (and Draft Form 1024-A)

On September 28, 2017, the IRS released its Tax Exempt and Government Entities FY 2018 Work Plan. Below are some excerpts from the Commissioners about the IRS Work Plan for the division generally in charge of nonprofit tax compliance and some highlights from the Plan: We enter Fiscal Year 2018 as a more cohesive and efficient […]

Comparing 501(c)(3) vs. 501(c)(4) for Nonprofit Startups

A nonprofit organization organized and operated for charitable purposes may be exempt under Section 501(c)(3) of the Internal Revenue Code while a nonprofit organized and operated for social welfare purposes may be exempt under Section 501(c)(4) of the Code. We are often asked about the difference between the terms “charitable” and “social welfare” and why an […]

When Should a 501(c)(3) Consider Creating an Affiliated 501(c)(4)?

501(c)(3) organizations have numerous tools at their disposal for achieving their charitable purposes, and also have the distinct advantage of being able to receive contributions that are generally tax-deductible for donors.  However, in exchange for tax-exemption and the ability to receive deductible charitable contributions, the law places some limitations on the permissible advocacy-related activities of […]

New IRS Notification Requirement for 501(c)(4) Organizations – Form 8976

On July 8, 2016, the IRS issued final and temporary regulations and published Revenue Procedure 2016-41 relating to the immediately effective requirement that organizations notify the IRS of their intent to operate under section 501(c)(4) of the Internal Revenue Code (“IRC”). Form 8976, “Notice of Intent to Operate Under Section 501(c)(4),” is the electronic notification required […]

Expedited Determination Process for 501(c)(4) Organizations

The Internal Revenue Service recently released a memorandum modifying and clarifying procedures for Section 501(c)(4) applicants seeking exemption after December 23, 2014, which may potentially be engaged in political campaign intervention or providing private benefit to a political party, but that otherwise do not present any issues regarding their exempt status. The memo directs the […]

Proposed Guidance for 501(c)(4) Social Welfare Organizations

  On November 29, 2013, a Notice of Proposed Rulemaking by the Internal Revenue Service was published in the Federal Register containing proposed regulations that provide guidance to tax-exempt social welfare organizations on political activities related to candidates that will not be considered to promote social welfare. A 501(c)(4) social welfare organization must be operated exclusively […]