Tax insight

IRS issues guidance and resumes accepting group exemption applications

Insight
5 minute read
January 30, 2026

What happened?

The IRS recently issued Rev. Proc. 2026-8, which revises the procedures for organizations seeking an exemption from federal income tax on a group basis under Section 501(c). The updated guidance supersedes prior IRS guidance on group exemptions and establishes requirements and ongoing responsibilities for central organizations and their subordinate organizations operating under a group exemption letter.

Why is it relevant?

Certain organizations must apply to the IRS for a tax exemption, including organizations described in Sections 501(c)(3), (9), and (17). Other organizations described in Section 501(c) may apply for a tax exemption but are not required to do so. Treasury regulations provide that the requirement to apply for a tax exemption does not apply to certain types of organizations, including subordinate organizations that are a part of a group exemption letter.

Prior IRS guidance regarding obtaining and maintaining group exemption letters was contained in Rev. Proc. 80-27 (as modified by Rev. Proc. 96-40). However, in Notice 2020-36, the IRS requested public comments regarding updated procedures in connection with group exemptions. Notice 2020-36 also provided that the IRS would not accept applications for group exemptions on or after June 17, 2020, until the publication of guidance updating Rev. Proc. 80-27. With the issuance of the new guidance, the IRS will resume accepting applications for group exemption letters after January 20, 2026.

The new guidance will impact both organizations seeking new group exemption letters and organizations with existing group exemption letters, which will face updated operational and reporting expectations. The guidance provides for a transition period to allow organizations with existing rulings to conform to the new guidelines.

Action to consider

Organizations considering applying for a group exemption letter should be familiar with the requirements of Rev. Proc. 2026-8 before applying. In addition, organizations that wish to maintain an existing group exemption letter should review the requirements of Rev. Proc. 2026-8 and make any necessary adjustments prior to the end of the transition period.