The IRS has provided guidance on the extent to which grantors, donors and contributors may rely on an organization’s listing in Publication 78, Cumulative List of Organizations described in § 170(c) of the Internal Revenue Code (Pub. 78), or on the IRS Business Master File (BMF) extract, for purposes of deducting contributions under Code Sec. 170 and making grants under Code Secs. 4942, 4945 and 4966. In addition, the IRS has clarified when it may give notice of revocation, including revocations under Code Sec. 6033(j), through an appropriate public announcement, such as publication in the Internal Revenue Bulletin or on the IRS’s website.
An appropriate public announcement may be published in the Internal Revenue Bulletin or on the IRS’s website at http://www.irs.gov or by such other means designed to put the public on notice of the change in the organization’s status. However, the IRS is not precluded from disallowing a deduction for any contribution made after an organization ceases to qualify under Code Sec. 170, where grantor, donee or contributor (1) had knowledge of the revocation of the organization’s exempt status prior to publication of the revocation, (2) was aware that such revocation was imminent, or (3) was in part responsible for, or was aware of, the activities or deficiencies on the part of the organization that gave rise to the loss of exemption.
Private foundations and sponsoring organizations of donor-advised funds may rely on an organization’s foundation status (or supporting organization type) set forth in Pub. 78 or the BMF extract for grant-making purposes under Code Secs. 4942, 4945 and 4966, except where the grantor (1) had knowledge of the revocation of the ruling or determination letter classifying the organization as one described in Code Sec. 509(a)(1), (2) or (3) (or specifying its supporting organization type) prior to the publication of the revocation; or (2) was in part responsible for, or was aware of, the act or the failure to act that gave rise to the revocation of the ruling or determination letter classifying the organization as one described in Code Sec. 509(a)(1), (2) or (3) (or specifying its supporting organization type).
The advance assurance of deductibility and foundation status applies only to grants or contributions made to an organization listed in or covered by Pub. 78 or the BMF extract in the organization’s official name, its recognized popular name, or a contraction of either of these names that is reasonably identifiable or widely known. The advance assurance of deductibility and foundation status does not apply to contributions or grants made nominally to an organization listed in or covered by Pub. 78 or the BMF extract but with the understanding or on a condition that they be made available to or for the use of an organization not listed in or covered by Pub. 78 or the BMF extract.
In the case of an organization that is not listed in or covered by Pub. 78 or the BMF extract, the effect of a ruling or determination letter concerning the deductibility of contributions to the organization or its foundation status is determined in the manner described in Rev. Proc. 2011-4, I.R.B. 2011-1, 123. The advance assurance of deductibility and foundation status does not apply to local organizations included in a group ruling regardless of whether the local organization appears in the BMF extract.
A grantor, donor or contributor may rely on information about an organization from the BMF extract that is obtained from a third party, so long as the following requirements are met: (1) the third party provides a report to the grantor or contributor that includes: (a) the organization’s name, EIN, foundation status under Code Sec. 509(a)(1), (2) or (3) (including supporting organization type, if applicable), and whether contributions to such organization are deductible; (b) a statement that the information is from the most current update of the BMF extract and the BMF extract revision date; and (c) the date and time the information was provided to the grantor or contributor; and (2) the grantor or contributor retains a copy of the report in hard copy or electronically.
Under Code Sec. 7428(c) an organization continues to be treated as an eligible organization with respect to contributions from individuals and from other charitable organizations during the pendency of a declaratory judgment proceeding. Statutory protection for such contributions, if declaratory judgment is sought on the revocation action, would begin on the date of publication of the revocation and end on the date on which a decision in the Tax Court becomes final or a judgment of the federal district court for the District of Columbia or the Court of Federal Claims is entered that the organization is not exempt. This reliance, however, is not extended to any individual who was responsible, in whole or in part, for the activities (or failures to act) on the part of the organization that were the basis for the revocation.
The guidance is effective on June 20, 2011. Rev. Proc. 82-39, 1982-2 C.B. 759, and Rev. Proc. 2009-32, I.R.B. 2009-28, 142, are modified and superseded.
Rev. Proc. 2011-33, 2011FED ¶46,387
Code Sec. 170
CCH Reference – 2011FED ¶11,620.103
Code Sec. 409
CCH Reference – 2011FED ¶22,812.50
Code Sec. 4942
CCH Reference – 2011FED ¶34,047.034
CCH Reference – 2011FED ¶34,047.67
Code Sec. 4945
CCH Reference – 2011FED ¶34,107.43
Code Sec. 4966
CCH Reference – 2011FED ¶34,317C.01
CCH Reference – 2011FED ¶34,317C.20
Tax Research Consultant
CCH Reference – TRC EXEMPT: 12,252.15