The IRS transition year for existing group exemptions ends Jan. 22, with new rules to meet before then
Rev. Proc. 2026-8, issued in January, reopened group exemption applications after more than five years and set new terms. Central organizations that already hold a group exemption must bring their groups into line before Jan. 22, 2027.
Washington. Central organizations that hold a group exemption from the Internal Revenue Service have until Jan. 22, 2027, to bring their groups into line with rules the agency issued this year. The rules are not new. Treasury and the IRS released Revenue Procedure 2026-8 on Jan. 16, the law firm Ropes & Gray wrote, and it was published in the Internal Revenue Bulletin and took effect on Jan. 20. What is near is the end of the transition year it gave existing groups.
A group exemption lets a central organization cover its chapters, locals or posts under one IRS letter, so each does not have to apply for recognition of exemption on its own. The IRS stopped accepting new group applications on June 17, 2020, and resumed after Jan. 20. The procedure replaces Rev. Proc. 80-27, from 1980.
Applying for a new group exemption
A central organization now needs at least five subordinate organizations to obtain a group exemption letter, and at least one to keep it. It may hold only one letter, and all subordinates under it must be described in the same paragraph of Section 501(c), though not necessarily the central organization's own. Private foundations, organizations formed in a foreign country, Type III supporting organizations and organizations whose exemption was automatically revoked and not reinstated cannot be added.
Applications are filed electronically on Form 8940 through Pay.gov. The user fee is $3,500, according to the IRS. Each year, at least 30 but no more than 90 days before its accounting year closes, the central organization must report changes among its subordinates. Since July 14 the IRS has required new Form 15644 for that filing.
What existing groups must do by Jan. 22
The procedure states the date twice: the transition period begins on the publication date and "ends on January 22, 2027." Before then, a central organization with no subordinates must add one or give up its letter. One holding more than one letter must choose one and terminate the rest. It must make sure each existing subordinate is affiliated with it and under its general supervision or control, which includes collecting financial and activity information every year and telling subordinates in writing what they must do to stay exempt, or else remove that subordinate. Subordinates described in a different paragraph of Section 501(c) from the one on the letter must also be removed.
All of these steps are made through the annual group filing. Some rules for newcomers, such as a uniform purpose statement in each subordinate's governing documents, do not apply to subordinates already on a letter when the procedure was published.
The accounting firm Forvis Mazars recalled the deadline in a summary of a webinar posted on Sept. 28.
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501c3.help wrote this story from the sources listed with it, not from material an organization sent. Our editors approved it on Sept. 30, 2026. Stories in The Nonprofit Herald are free, and nothing is asked in return. Editorial rules.
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