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H And R Block Free State File

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H And R Block Free State File

H and r block free state file 1. H and r block free state file   Application, Approval, and Appeal Procedures Table of Contents Introduction Topics - This chapter discusses: Application ProceduresForms Required Required Inclusions Miscellaneous Procedures Rulings and Determination LettersEffective Date of Exemption Revocation or Modification of Exemption Appeal ProceduresAppeals Office Consideration EO Technical Consideration Administrative Remedies Appeal to Courts Group Exemption LetterCentral Organization Application Procedure Keeping the Group Exemption Letter in Force Events Causing Loss of Group Exemption Introduction If your organization is one of the organizations described in this publication and is seeking recognition of tax-exempt status from the IRS, you should follow the procedures described in this chapter and the instructions that accompany the appropriate application forms. H and r block free state file For information on section 501(c)(3) organizations, go to Section 501(c)(3) Organizations chapter 3. H and r block free state file If your organization is seeking exemption under one of the other paragraphs of section 501(c), see chapter 4. H and r block free state file Topics - This chapter discusses: Application procedures that generally apply to all organizations discussed in this publication, including the application forms; Rulings and determination letters (approvals/disapprovals); Appeal procedures available if an adverse determination letter is proposed; and Group exemption letters. H and r block free state file Application Procedures Oral requests for recognition of exemption will not be considered by the IRS. H and r block free state file Your application for tax-exempt status must be in writing using the appropriate forms as discussed below. H and r block free state file Forms Required If your organization is seeking recognition of exemption from federal income tax, it must use a specific application prescribed by the IRS in Revenue Procedure 2013–9, sec. H and r block free state file 3. H and r block free state file If your organization is a central organization with exempt status, see Group Exemption Letter , later. H and r block free state file All applications must be signed by an authorized individual. H and r block free state file Form 1023, Application for Recognition of Exemption. H and r block free state file   File Form 1023 if you are seeking recognition of exemption under section: 501(c)(3) Corporations, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports, or prevention of cruelty for children or animals, 501(e) Cooperative hospital service organization, 501(f) Cooperative service organization of operating educational organizations, 501(k) Certain organizations providing child care, 501(n) Charitable risk pools, and 501(q) Credit counseling organizations. H and r block free state file Form 1024, Application for Recognition of Exemption Under Section 501(a). H and r block free state file    File Form 1024 if you are seeking recognition of exemption under section: 501(c)(2) Title holding corporations, 501(c)(4) Civic leagues, social welfare organizations, 501(c)(5) Labor, agricultural, or horticultural organizations, 501(c)(6) Business leagues, chambers of commerce, etc. H and r block free state file , 501(c)(7) Social clubs, 501(c)(8) Fraternal beneficiary societies, orders, or associations, 501(c)(9) Voluntary employees’ beneficiary associations, 501(c)(10) Domestic fraternal societies, orders, etc. H and r block free state file , 501(c)(12) Benevolent life insurance associations, mutual ditch or irrigation companies, mutual or cooperative telephone companies, 501(c)(13) Cemetery companies, 501(c)(15) Mutual insurance companies or associations, 501(c)(17) Trusts providing for the payment of supplemental unemployment compensation benefits, 501(c)(19) A post, organization, auxiliary unit, etc. H and r block free state file of past or present members of the Armed Forces of the United States, and 501(c)(25) Title holding corporations or trusts. H and r block free state file  Form 8718, User Fee for Exempt Organization Determination Letter Request, must also be sent along with Form 1024. H and r block free state file Letter application. H and r block free state file   If your organization is seeking recognition of exemption under section 501(c)(11), (14), (16), (18), (21), (22), (23), (26), (27), (28), or (29), submit a letter application with Form 8718. H and r block free state file See Required Inclusions for the information to include with the letter application. H and r block free state file Form 1028. H and r block free state file   Use Form 1028 if your organization is a farmers’ cooperative seeking recognition of exemption under section 521. H and r block free state file You must also submit Form 8718. H and r block free state file Form 8871. H and r block free state file    Use Form 8871 if you are a political party or campaign committee for a candidate for federal, state or local office seeking to be treated as tax-exempt under section 527. H and r block free state file See Political Organization Income Tax Return , later. H and r block free state file    Some organizations do not have to use specific application forms. H and r block free state file The application your organization must use is specified in the chapter in this publication dealing with your kind of organization. H and r block free state file It is also shown in the Organization Reference Chart, later. H and r block free state file Power of attorney. H and r block free state file   If your organization expects to be represented by an individual such as an attorney, CPA, officer or other person authorized to practice before the IRS, whether in person or by correspondence, you must file a Form 2848 with your exemption application. H and r block free state file The power of attorney must specifically authorize an individual to represent your organization. H and r block free state file You cannot name an organization, firm, etc. H and r block free state file as your representative. H and r block free state file Form 2848, Power of Attorney and Declaration of Representative, can be used for this purpose. H and r block free state file The categories of individuals who can represent you before the IRS are listed on the form. H and r block free state file Non-exemption for terrorist organizations. H and r block free state file   An organization that is identified or designated as a terrorist organization within the meaning of section 501(p)(2) is not eligible to apply for recognition of exemption. H and r block free state file User fee. H and r block free state file   The law requires the payment of a user fee for determination letter requests such as your application for recognition of tax-exempt status. H and r block free state file If you are filing Form 1023, user fee information is included in Part XI. H and r block free state file If you are required to apply for recognition of exemption by submitting Form 1024, a letter application, etc. H and r block free state file and you must pay a user fee, you should use Form 8718 to figure the amount of your user fee and to pay it. H and r block free state file Your payment must accompany your request. H and r block free state file The IRS will not process a request unless the fee has been paid. H and r block free state file    For the current user fee amount and processing time for applications go to IRS. H and r block free state file gov and select “Charities and Non-Profits” from the buttons near the top. H and r block free state file Then select the underlined link “How to Apply To Be Tax-Exempt” for the latest user fees or I want to check the status of my application for more information. H and r block free state file You can also call 1-877-829-5500. H and r block free state file Required Inclusions Employer identification number (EIN). H and r block free state file   Every exempt organization must have an EIN, whether or not it has any employees. H and r block free state file An EIN is required before an exemption application is submitted. H and r block free state file Information on how to apply for an EIN by using one of the following methods can be found at Employer ID Numbers (EIN): Online— This is the preferred method for requesting an EIN. H and r block free state file The EIN is issued immediately once the application information is validated. H and r block free state file By telephone at 1-800-829-4933, from 7:00 a. H and r block free state file m. H and r block free state file to 7:00 p. H and r block free state file m. H and r block free state file local time, Monday through Friday. H and r block free state file The EIN is provided over the phone to an authorized individual. H and r block free state file By mailing or faxing Form SS-4, Application for Employer Identification Number. H and r block free state file If the faxed Form SS-4 includes the taxpayer's fax number, a fax will be sent back with the EIN within four (4) business days. H and r block free state file    Use only one method for each entity so you do not receive more than one EIN for an entity. H and r block free state file   If you previously applied for an EIN and have not yet received it, or you are unsure whether you have an EIN, please call our toll-free customer account services number, 1-877-829-5500, for assistance. H and r block free state file Organizing documents. H and r block free state file   Your application should include a copy of the organizing or enabling document that is signed by a principal officer or is accompanied by a written declaration signed by an authorized individual certifying that the document is a complete and accurate copy of the original or meets the requirements of a conformed copy. H and r block free state file   If your organizing or enabling document are articles of incorporation, include evidence that it was filed and approved by a state official. H and r block free state file (For example, a stamped “Filed” copy dated by the Secretary of State is prima facie evidence that it was filed and approved by a state official. H and r block free state file ) A copy of the articles of incorporation can also be submitted with a written declaration signed by an authorized individual indicating the copy is complete and was filed and approved by the state, including the date filed. H and r block free state file Bylaws. H and r block free state file   Bylaws alone are not organizing documents. H and r block free state file However, if your organization has adopted bylaws, include a current copy. H and r block free state file The bylaws need not be signed if submitted as an attachment. H and r block free state file   If your organization's name has been officially changed by an amendment to your organizing instruments, you should also attach a conformed copy of that amendment to your application. H and r block free state file    Bylaws may be considered an organizing document only if they are properly structured (includes name, purpose, signatures, and intent to form an organization). H and r block free state file Conformed copy. H and r block free state file   A conformed copy is a copy that agrees with the original and all amendments to it. H and r block free state file If the original document required a signature, the copy should either be signed by a principal officer or, if not signed, be accompanied by a written declaration signed by an authorized officer of the organization. H and r block free state file With either option, the officer must certify that the document is a complete and accurate copy of the original. H and r block free state file A certificate of incorporation should be approved and dated by an appropriate state official. H and r block free state file Attachments. H and r block free state file    When submitting attachments, every attachment should show your organization's name and EIN. H and r block free state file It should also state that it is an attachment to your application form and identify the part and line item number to which it applies. H and r block free state file Original documents. H and r block free state file   Do not submit original documents because they become part of the IRS file and cannot be returned. H and r block free state file Description of activities. H and r block free state file   Your application must include a full description of the proposed activities of your organization, including each of the fundraising activities of a section 501(c)(3) organization and a narrative description of anticipated receipts and contemplated expenditures. H and r block free state file When describing the activities in which your organization expects to engage, you must include the standards, criteria, procedures, or other means that your organization adopted or planned for carrying out those activities. H and r block free state file   To determine the information you need to provide, you should study the part of this publication that applies to your organization. H and r block free state file The appropriate chapter will describe the purposes and activities that your organization must pursue, engage in, and include in your application in order to achieve exempt status. H and r block free state file   Often, your organization's articles of organization (or other organizing instruments) contain descriptions of your organization's purposes and activities. H and r block free state file   Your application should describe completely and in detail your past, present, and planned activities. H and r block free state file Financial data. H and r block free state file   You must include in your application financial statements showing your receipts and expenditures and a balance sheet for the current year and the 3 preceding years (or for the number of years your organization was in existence, if less than 4 years). H and r block free state file For each accounting period, you must describe the sources of your receipts and the nature of your expenditures. H and r block free state file   If you have not yet begun operations, or have operated for less than 1 year, a proposed budget for 2 full accounting periods and a current statement of assets and liabilities will be acceptable. H and r block free state file Exempt status established in application. H and r block free state file   If your application and its supporting documents show that your organization meets the requirements for tax-exempt status under the Code section you applied, the IRS will issue a favorable determination letter or ruling. H and r block free state file Miscellaneous Procedures To help in processing your application, be sure to attach all schedules, statements, and other documents required by the application form. H and r block free state file If you do not attach them, you may have to resubmit your application or you may otherwise encounter a delay in processing your application. H and r block free state file Incomplete application. H and r block free state file   If an application is not complete and does not contain all the required attachments found under Required Inclusions, the IRS may return it to you for completion. H and r block free state file The IRS may keep the application and send a letter requesting the missing information if most of the information has been received. H and r block free state file   If the IRS returns the application or requests additional information from you, that application will be considered filed on the date the substantially completed application is postmarked, or if no postmark, received at the IRS. H and r block free state file   Generally, the user fee will not be refunded if an incomplete application is filed. H and r block free state file   Additional information may be requested if necessary to clarify the nature of your organization. H and r block free state file Application made under wrong paragraph of section 501(c). H and r block free state file   Occasionally, an organization appears to qualify for exemption under a paragraph of section 501(c) that is different from the one for which the organization applied. H and r block free state file If the application was made on Form 1024, which applies to more than one paragraph of section 501(c), the organization can be recognized as exempt under any paragraph to which the form applies if the organization has agreed to have its application considered under that paragraph. H and r block free state file It must also supply any additional information required for the application under the new paragraph. H and r block free state file Different application form needed. H and r block free state file   If a different application form is required for your organization, the IRS will so advise your organization and will provide the appropriate application form for your convenience in reapplying under that paragraph, if you wish to do so. H and r block free state file Although supporting information previously furnished need not be duplicated, you must provide any necessary additional information required for the application. H and r block free state file If your reply is not received within a limited time, your application will be processed only for the paragraph under which you originally applied. H and r block free state file   When a specific application form is needed for the paragraph under which your organization qualifies, that form is required before a letter recognizing exemption can be issued. H and r block free state file This includes cases in which a determination letter is modified to recognize an organization's exempt status under a paragraph other than the paragraph under which it originally established exemption. H and r block free state file IRS responses. H and r block free state file   Organizations that submit a complete application will receive an acknowledgment from the IRS. H and r block free state file Others will receive a letter requesting more information or returning an incomplete application. H and r block free state file Applicants also will be notified if the application is forwarded to EO Technical Office for consideration. H and r block free state file These letters will be sent out as soon as possible after receipt of the organization's application. H and r block free state file Withdrawal of application. H and r block free state file   An application may be withdrawn at any time before the issuance of a ruling or determination letter upon the written request of a principal officer or authorized representative of your organization. H and r block free state file However, the withdrawal will not prevent the information contained in the application from being used by the IRS in any subsequent examination of your organization's returns. H and r block free state file The information forwarded with an application will not be returned to your organization and, generally, when an application is withdrawn, the user fee paid will not be refunded. H and r block free state file Requests for withholding of information from the public. H and r block free state file   The law requires many exempt organizations and private foundations to make their application forms and annual information returns available for public inspection. H and r block free state file The law also requires the IRS to make available for public inspection, in accordance with section 6104 and the related regulations, your approved application for recognition of exemption (including any papers submitted in support of the application) and the ruling or determination letter (discussed later, under Rulings and Determination Letters . H and r block free state file )   Any information submitted in the application or in support of it that relates to any trade secret, patent, process, style of work, or apparatus, upon request, can be withheld from public inspection if the IRS determines that the disclosure of such information would adversely affect the organization. H and r block free state file Your request must: Identify the material to be withheld (the document, page, paragraph, and line) by clearly marking it “Not Subject To Public Inspection. H and r block free state file ” Include the reasons for your organization's position that the information is of the type that can be withheld from public inspection. H and r block free state file Be filed with the office where your organization files the documents in which the material to be withheld is contained. H and r block free state file Where to file. H and r block free state file   Send your application for exempt status and Form 8718, (if required) to: Internal Revenue Service PO Box 12192 Covington, KY 41012-0192   Your application will be considered by EO Determinations, who will either issue a favorable determination letter to your organization, issue an adverse determination letter denying the exempt status claimed in the application, or refer the case to the Exempt Organizations Technical Office (EO Technical). H and r block free state file    Form 8940, Request for Miscellaneous Determination. H and r block free state file You can request miscellaneous determinations under sections 507, 509(a), 4940, 4942, 4945, and 6033 with Form 8940. H and r block free state file Nonexempt charitable trusts also file Form 8940 for an initial determination of section 509(a)(3) status or change to their type. H and r block free state file See Form 8940 and instructions for more information. H and r block free state file Requests other than applications. H and r block free state file Requests other than applications for recognition of exemption or Form 8940 (for example, requests for rulings involving feeder organizations, application of excise taxes to activities of private foundations, taxation of unrelated business income, etc. H and r block free state file ) should be sent to: Internal Revenue Service  Attention: EO Letter Rulings PO Box 27720 McPherson Station Washington, DC 20038 These requests, similar to applications for recognition of exemption previously discussed, must be accompanied by the appropriate user fee. H and r block free state file The schedule for user fees, including those for requests other than applications, can be found in Revenue Procedure 2013-8, 2013-1 I. H and r block free state file R. H and r block free state file B. H and r block free state file 237. H and r block free state file Referral to EO Technical. H and r block free state file   EO Determinations will refer to EO Technical any exempt organization issue concerning qualification for exemption or foundation status for which there is no published precedent or for which there is reason to believe that nonuniformity exists. H and r block free state file EO Determinations can request technical advice on any technical or procedural question that cannot be resolved on the basis of law, regulations, or a clearly applicable revenue ruling or other published precedent. H and r block free state file An organization can request that an issue be referred to EO Technical for technical advice if it feels that a lack of uniformity exists as to the disposition of the issue or if an issue is so unusual or complex as to warrant consideration by EO Technical. H and r block free state file If a determination letter is issued based on technical advice from EO Technical regarding qualification for exemption or foundation status, no further administrative appeal is available on the issue that was the subject of technical advice. H and r block free state file Reminder. H and r block free state file   The law requires payment of a user fee for determination letter requests. H and r block free state file Go to IRS. H and r block free state file gov/Charities and select Current User Fees-Exempt Organizations to find the required payment. H and r block free state file Payment must accompany each request. H and r block free state file Rulings and Determination Letters Elimination of the advance public charity status. H and r block free state file   New regulations eliminate the advance ruling process for a section 501(c)(3) organization. H and r block free state file Under the new regulations, a new section 501(c)(3) organization will be classified as a publicly supported organization and not a private foundation if it can show when it applies for tax-exempt status that it reasonably can be expected to be publicly supported. H and r block free state file The new rules no longer require the organization to file Form 8734, Support Schedule for Advance Ruling Period, after completing its first 5 tax years. H and r block free state file See Elimination of the Advance Ruling Process . H and r block free state file An organization must describe fully the activities in which it expects to engage. H and r block free state file This includes standards, procedures, or other means adopted or planned by the organization for carrying out its activities, expected sources of funds, and the nature of its contemplated expenses. H and r block free state file When an organization does not supply the information previously mentioned under Application Procedures , or fails to furnish a sufficiently detailed description of its proposed activities to permit a conclusion that it will clearly be exempt, a proposed adverse determination letter or ruling may be issued. H and r block free state file Adverse determination. H and r block free state file   A proposed adverse ruling or determination letter will be issued to an organization that has not provided sufficiently detailed information to establish that it qualifies for exemption or if the information provided establishes that it does not qualify for exemption. H and r block free state file An organization can appeal a proposed adverse ruling or determination letter. H and r block free state file See Appeal Procedures , later. H and r block free state file Effective Date of Exemption A ruling or determination letter recognizing exemption is usually effective as of the date of formation of an organization if, during the period before the date of the ruling or determination letter, its purposes and activities were those required by the law. H and r block free state file (See Application for Recognition of Exemption in chapter 3 for the special rule for organizations applying for recognition of exemption under section 501(c)(3). H and r block free state file ) Upon obtaining recognition of exemption, the organization can file a claim for a refund of income taxes paid for the period for which its exempt status is recognized. H and r block free state file If an organization is required to alter its activities or substantially amend its charter to qualify, the ruling or determination letter recognizing exemption will be effective as of the date specified in the letter. H and r block free state file If a nonsubstantive amendment is made, such as correction of a clerical error in the enabling instrument or the addition of a dissolution clause, exemption will ordinarily be recognized as of the date of formation if the activities of the organization before the ruling or determination are consistent with the exemption requirements. H and r block free state file A ruling or determination letter recognizing exemption cannot be relied on if there is a material change, inconsistent with exemption, in the character, the purpose, or the method of operation of the organization. H and r block free state file Also, a ruling or determination letter cannot be relied on if it is based on any inaccurate material factual representations. H and r block free state file Revocation or Modification of Exemption A ruling or determination letter recognizing exemption may be revoked or modified by: A notice to the organization to which the ruling or determination letter originally was issued, Enactment of legislation or ratification of a tax treaty, A decision of the United States Supreme Court, Issuance of temporary or final regulations, or Issuance of a revenue ruling, a revenue procedure, or other statement published in the Internal Revenue Bulletin or Cumulative Bulletin. H and r block free state file When revocation takes effect. H and r block free state file   If the organization omitted or misstated a material fact, operated in a manner materially different from that originally represented, or, with regard to organizations to which section 503 applies, engaged in a prohibited transaction (such as diverting corpus or income from its exempt purpose), the revocation or modification may be retroactive. H and r block free state file Material change in organization. H and r block free state file   If there is a material change, inconsistent with exemption, in the character, purpose, or method of operation of the organization, revocation or modification will ordinarily take effect as of the date of that material change. H and r block free state file Relief from retroactivity. H and r block free state file   If a ruling or determination letter was issued in error or the IRS changed its position after issuing a letter or ruling, and if section 7805(b) relief is granted, retroactivity of the revocation or modification ordinarily will be limited to a date not earlier than that on which the original ruling or determination letter was modified or revoked. H and r block free state file For more information on requesting section 7805(b) relief, see Revenue Procedure 2013-4, 2013-1 I. H and r block free state file R. H and r block free state file B. H and r block free state file 126, sec. H and r block free state file 13 (or later update). H and r block free state file Foundations. H and r block free state file   The determination of the effective date is the same for the revocation or modification of foundation status or operating foundation status unless the effective date is expressly covered by statute or regulations. H and r block free state file Written notice. H and r block free state file   If an EO area manager concludes, as a result of examining an information return or considering information from any other source, that a ruling or determination letter should be revoked or modified, the organization will be advised in writing of the proposed action and the reasons for it. H and r block free state file   The organization will also be advised of its right to protest the proposed action by requesting Appeals Office consideration. H and r block free state file The appeal procedures are discussed next. H and r block free state file Appeal Procedures If your organization applies for tax-exempt status and EO Determination decides your organization does not qualify, your organization will be advised of its rights to protest the determination by requesting Appeals Office consideration. H and r block free state file This process does not apply to determinations issued by EO Technical. H and r block free state file Your organization must submit a statement of its views fully explaining its reasoning. H and r block free state file The statement must be submitted within 30 days from the date of the adverse determination letter and must state whether it wishes Appeals Office consideration. H and r block free state file Representation. H and r block free state file   A principal officer or trustee can represent an organization at any level of appeal within the IRS. H and r block free state file Also, an attorney, certified public accountant, or individual enrolled to practice before the IRS can represent the organization. H and r block free state file   If the organization's representative attends a conference without a principal officer or trustee, the representative must file a proper power of attorney or a tax information authorization before receiving or inspecting confidential information. H and r block free state file Form 2848 or Form 8821, Tax Information Authorization, as appropriate (or any other properly written power of attorney or authorization), can be used for this purpose. H and r block free state file These forms can be obtained from the IRS. H and r block free state file For more information, see Publication 947, Practice Before the IRS and Power of Attorney. H and r block free state file Appeals Office Consideration EO Determinations will consider the statement protesting and appealing (hereinafter appealing) the adverse determination and decide if the information affects its determination. H and r block free state file If the appeal does not provide a basis to reconsider its adverse determination, it will forward the appeal and case file to the Appeals Office. H and r block free state file For more information about the role of the Appeals Office, see Publication 892, Exempt Organization Appeal Procedures for Unagreed Issues. H and r block free state file The appeal should include the following information. H and r block free state file The organization's name, address, daytime telephone number, and employer identification number. H and r block free state file A statement that the organization wants to protest the determination. H and r block free state file A copy of the letter showing the determination you disagree with, or the date and symbols on the determination letter. H and r block free state file A statement of facts supporting the organization's position in any contested factual issue. H and r block free state file A statement outlining the law or other authority the organization is relying on. H and r block free state file A statement as to whether a conference at the Appeals Office is desired. H and r block free state file The statement of facts in item 4 must be declared true under penalties of perjury. H and r block free state file This may be done by adding to the protest the following signed declaration:   “Under penalties of perjury, I declare that I have examined the statement of facts presented in this protest and in any accompanying schedules and statements and, to the best of my knowledge and belief, it is true, correct, and complete. H and r block free state file ”           Signature. H and r block free state file   If the organization's representative submits the appeal, a substitute declaration must be included, stating: That the representative prepared the appeal and accompanying documents, and Whether the representative knows personally that the statements of fact contained in the appeal and accompanying documents are true and correct. H and r block free state file Be sure the appeal contains all of the information requested. H and r block free state file Incomplete appeals will be returned for completion. H and r block free state file If a conference is requested, it will be held at the Appeals Office, unless the organization requests that the meeting be held at a field office convenient to both parties. H and r block free state file The Appeals Office, after considering the organization's appeal as well as information presented in any conference held, will notify the organization of its decision and issue an appropriate determination letter. H and r block free state file An adverse decision can be appealed to the courts (discussed later). H and r block free state file The Appeals Office must request technical advice from EO Technical on any exempt organization issue concerning qualification for exemption or foundation status for which there is no published precedent or for which there is reason to believe that nonuniformity exists. H and r block free state file If an organization believes that its case involves such an issue, it should ask the Appeals Office to request technical advice. H and r block free state file Any determination letter issued on the basis of technical advice from EO Technical cannot be appealed to the Appeals Office for those issues that were the subject of the technical advice from EO Technical. H and r block free state file EO Technical Consideration If an application is referred to EO Technical for issuance of a ruling and an adverse ruling is issued, the organization will be informed of the basis for the conclusion, its right to file a protest within 30 days, and its right to have a conference with EO Technical. H and r block free state file Administrative Remedies In the case of an application under section 501(c)(3), all of the following actions, called administrative remedies, must be completed by your organization before an unfavorable ruling or determination letter from the IRS can be appealed to the courts. H and r block free state file The filing of a substantially completed application Form 1023 or group exemption request under section 501(c)(3) (described earlier in this chapter) or the filing of a request for a determination of foundation status (see Private Foundations and Public Charities in chapter 3). H and r block free state file In the case of a late-filed application, requesting relief under Regulations section 301. H and r block free state file 9100 regarding applications for extensions of time for making an election or application for relief from tax (see Application for Recognition of Exemption in chapter 3). H and r block free state file The timely submission of all additional information requested to perfect an exemption application or request for determination of private foundation status. H and r block free state file Exhaustion of all administrative appeals available within the IRS, including protest of an adverse ruling issued by EO Technical in the case of an exemption application. H and r block free state file The actions just described will not be considered completed until the IRS has had a reasonable time to act upon the appeal or protest, as the case may be. H and r block free state file An organization will not be considered to have exhausted its administrative remedies before the earlier of: The completion of the steps just listed and the sending by certified or registered mail of a notice of final determination, or The expiration of the 270-day period in which the IRS has not issued a notice of final determination and the organization has taken, in a timely manner, all reasonable steps to secure a ruling or determination. H and r block free state file 270-day period. H and r block free state file   The 270-day period will be considered by the IRS to begin on the date a substantially completed Form 1023 or group exemption request is sent to the IRS. H and r block free state file See Application Procedures , earlier, for information needed to complete Form 1023. H and r block free state file   If the application does not contain all of the required items, it will not be further processed and may be returned to the applicant for completion. H and r block free state file The 270-day period, in this event, will not be considered as starting until the date the application is remailed to the IRS with the requested information, or, if a postmark is not evident, on the date the IRS receives a substantially completed application. H and r block free state file Appeal to Courts If the IRS issues an unfavorable determination letter or ruling to your organization and you have exhausted all the administrative remedies just discussed, your organization can seek judicial remedies. H and r block free state file For example, if your organization has paid the tax resulting from the adverse determination and met all other statutory prerequisites, it can file suit for a refund in a U. H and r block free state file S. H and r block free state file District Court or the U. H and r block free state file S. H and r block free state file Court of Federal Claims. H and r block free state file Or, if your organization elected not to pay the tax deficiency resulting from the adverse determination and met all other statutory prerequisites, it can file suit for a redetermination of the tax deficiencies in the United States Tax Court. H and r block free state file For more information on these types of suits, get Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund. H and r block free state file In certain situations, your organization can file suit for a declaratory judgment in the U. H and r block free state file S. H and r block free state file District Court for the District of Columbia, the U. H and r block free state file S. H and r block free state file Court of Federal Claims, or the U. H and r block free state file S. H and r block free state file Tax Court. H and r block free state file This remedy is available if your organization received an adverse notice of final determination, or if the IRS failed to make a timely determination on your initial or continuing qualification or classification as an exempt organization. H and r block free state file However, your exempt status claim must be as: An organization qualifying under section 501(c)(3), An organization to which a deduction for a contribution is allowed under section 170(c)(2), An organization that is a private foundation under section 509(a), A private operating foundation under section 4942(j)(3), or A cooperative organization that is exempt from tax under section 521. H and r block free state file Adverse notice of final determination. H and r block free state file   The adverse notice of final determination referred to above is a ruling or determination letter sent by certified or registered mail holding that your organization: Is not described in section 501(c)(3) or section 170(c)(2), Is a private foundation as defined in section 4942(j)(3), or Is a public charity described in a part of section 509(a) or section 170(b)(1)(A) other than the part under which your organization requested classification. H and r block free state file Favorable court rulings - IRS procedure. H and r block free state file   If a suit results in a final determination that your organization is exempt from tax, the IRS will issue a favorable ruling or determination letter, provided your organization has filed an application for exemption and submitted a statement that the underlying facts and applicable law are the same as in the period considered by the court. H and r block free state file Group Exemption Letter A group exemption letter is a ruling or determination letter issued to a central organization recognizing on a group basis the exemption under section 501(c) of subordinate organizations on whose behalf the central organization has applied for recognition of exemption. H and r block free state file A central organization is an organization that has one or more subordinates under its general supervision or control. H and r block free state file A subordinate organization is a chapter, local, post, or unit of a central organization. H and r block free state file A central organization may be a subordinate itself, such as a state organization that has subordinate units and is itself affiliated with a national (central) organization. H and r block free state file A subordinate organization may or may not be incorporated, but it must have an organizing document. H and r block free state file A subordinate that is organized and operated in a foreign country cannot be included in a group exemption letter. H and r block free state file A subordinate described in section 501(c)(3) cannot be included in a group exemption letter if it is a private foundation described in section 509(a). H and r block free state file If your organization is a subordinate controlled by a central organization (for example, a church, a veterans' organization, or a fraternal organization), you should check with the central organization to see if it has been issued a group exemption letter that covers your organization. H and r block free state file If it has, you do not have to file a separate application unless your organization no longer wants to be included in the group exemption letter. H and r block free state file If the group exemption letter does not cover your organization, ask your central organization about being included in the next annual group ruling update that it submits to the IRS. H and r block free state file Central Organization Application Procedure If your organization is a central organization with affiliated subordinates under its control, it can apply for a group exemption letter for its subordinates, provided it has obtained recognition of its own exemption before or concurrently with the group exemption. H and r block free state file You should make the application for such subordinates by letter instead of submitting either Form 1023 or 1024. H and r block free state file This procedure relieves each of the subordinates covered by a group exemption letter from filing its own application. H and r block free state file A central organization obtains its own recognition of exemption by sending its application to the IRS address shown on Form 8718 or Form 1023. H and r block free state file If the central organization has previously obtained recognition of its own exemption, it must indicate its employer identification number and the date of the letter recognizing its exemption. H and r block free state file It need not forward documents already submitted. H and r block free state file However, if it has not already done so, the central organization must submit a copy of any amendment to its governing instruments or internal regulations as well as any information about changes in its character, purposes, or method of operation. H and r block free state file Employer identification number. H and r block free state file   The central organization must have an EIN before it submits a completed exemption or group exemption application. H and r block free state file Each subordinate must have its own EIN, even if it has no employees. H and r block free state file When submitting its group exemption application, the central organization must provide an EIN for each subordinate organization. H and r block free state file Information required for subordinate organizations. H and r block free state file   In addition to the information required to obtain recognition of its own exemption, the central organization must submit information for those subordinates to be included in the group exemption letter. H and r block free state file The information should be forwarded in a letter signed by a principal officer of the central organization setting forth or including as attachments the following. H and r block free state file Information verifying that the subordinates: Are affiliated with the central organization at the close of its annual accounting period; Are subject to its general supervision or control; Are all eligible to qualify for exemption under the same paragraph of section 501(c), though not necessarily the paragraph under which the central organization itself is exempt; Are not private foundations if the application for a group exemption letter involves section 501(c)(3); Are all on the same accounting period as the central organization if they are to be included in group returns; and Are organizations that have been formed within the 15-month period preceding the date of submission of the group exemption application if they are claiming section 501(c)(3) status and are subject to the requirements of section 508(a) and wish to be recognized as exempt from their dates of creation (a group exemption letter may be issued covering subordinates, one or more of which have not been organized within the 15-month period preceding the date of submission, if all subordinates are willing to be recognized as exempt only from the date of application). H and r block free state file A detailed description of the purposes and activities of the subordinates, including the sources of receipts and the nature of expenditures. H and r block free state file A sample copy of a uniform governing instrument (such as a charter or articles of association) adopted by the subordinates, or, in its absence, copies of representative instruments. H and r block free state file An affirmation to the effect that, to the best of the officer's knowledge, the purposes and activities of the subordinates are as stated in (2) and (3), above. H and r block free state file A statement that each of the subordinates has provided a written authorization to the central organization, signed by an authorized officer of the subordinate, agreeing to be included in the group exemption (see also New 501(c)(3) organizations that want to be included , later in this section). H and r block free state file A list of subordinates to be included in the group exemption letter to which the IRS has issued an outstanding ruling or determination letter relating to exemption. H and r block free state file If the application for a group exemption letter involves section 501(c)(3) and is subject to the provisions of the Code requiring that it give timely notice that it is not a private foundation (see Private Foundations in chapter 3), an affirmation to the effect that, to the best of the officer's knowledge and belief, no subordinate to be included in the group exemption letter is a private foundation as defined in section 509(a). H and r block free state file For each subordinate that is a school claiming exemption under section 501(c)(3), the information required by Revenue Ruling 71-447, 1971-2 C. H and r block free state file B. H and r block free state file 230 and Revenue Procedure 75-50, 1975-2 C. H and r block free state file B. H and r block free state file 587 (these requirements are fully described in chapter 3, under Private Schools ; see also Schedule B, Form 1023). H and r block free state file For any school affiliated with a church, the information to show that the provisions of Revenue Ruling 75-231, 1975-1 C. H and r block free state file B. H and r block free state file 158, have been met. H and r block free state file A list of the names, mailing addresses, actual addresses if different, and EINs of subordinates to be included in the group exemption letter. H and r block free state file A current directory of subordinates may be furnished instead of the list if it includes the required information and if the subordinates not to be included in the group exemption letter are identified. H and r block free state file New 501(c)(3) organizations that want to be included. H and r block free state file   A new organization, described in section 501(c)(3), that wants to be included in a group exemption letter must submit its authorization (as explained in item number 5, earlier, under Information required for subordinate organizations ) to the central organization before the end of the 15th month after it was formed in order to satisfy the requirement of section 508(a). H and r block free state file The central organization must also include this subordinate in its next annual submission of information, as discussed later, under Information Required Annually . H and r block free state file Keeping the Group Exemption Letter in Force Continued effectiveness of a group exemption letter is based on the following conditions. H and r block free state file The continued existence of the central organization. H and r block free state file The continued qualification of the central organization for exemption under section 501(c). H and r block free state file The submission by the central organization of the information regarding its subordinate organizations that is required annually (described under Information Required Annually). H and r block free state file The annual filing of an information return (Form 990, for example) by the central organization if required. H and r block free state file The continued effectiveness of a group exemption letter as to a particular subordinate is based on these four conditions, as well as on the continued conformity by the subordinate to the requirements for inclusion in a group exemption letter, the authorization for inclusion, and the annual filing of any required information return for the subordinate. H and r block free state file Information Required Annually To maintain a group exemption letter, the central organization must submit annually, at least 90 days before the close of its annual accounting period, all of the following information. H and r block free state file Information about all changes in the purposes, character, or method of operation of the subordinates included in the group exemption letter. H and r block free state file A separate list (that includes the names, mailing addresses, actual addresses if different, and EINs of the affected subordinates) for each of the three following categories. H and r block free state file Subordinates that have changed their names or addresses during the year. H and r block free state file Subordinates no longer to be included in the group exemption letter because they no longer exist or have disaffiliated from or withdrawn their authorization to the central organization. H and r block free state file Subordinates to be added to the group exemption letter because they are newly organized or affiliated or because they have recently authorized the central organization to include them. H and r block free state file An annotated directory of subordinates will not be accepted for this purpose. H and r block free state file If there were none of the above changes, the central organization must submit a statement to that effect. H and r block free state file The same information about new subordinates that was required in the initial application for group exemption. H and r block free state file (This information is listed in items 1 through 10, under Information required for subordinate organizations. H and r block free state file , earlier. H and r block free state file ) If a new subordinate does not differ in any material respects from the subordinates included in the application for group exemption, however, a statement to this effect may be submitted in lieu of detailed information. H and r block free state file The organization should send this information to:   Ogden Service Center  Mail Stop 6271 Ogden, UT 84404-4749 Submitting the required information annually does not relieve the central organization or any of its subordinates of the duty to submit any other information that may be required by an EO area manager to determine whether the conditions for continued exemption are being met. H and r block free state file Events Causing Loss of Group Exemption A group exemption letter no longer has effect, for either a particular subordinate or the group as a whole, when: The central organization notifies the IRS that it is going out of existence, The central organization notifies the IRS, by its annual submission or otherwise, that any of its subordinates will no longer fulfill the conditions for continued effectiveness, explained earlier, or The IRS notifies the central organization or the affected subordinate that the group exemption letter will no longer have effect for some or all of the group because the conditions for continued effectiveness of a group exemption letter have not been fulfilled. H and r block free state file When notice is given under any of these three conditions, the IRS will no longer recognize the exempt status of the affected subordinates until they file separate applications on their own behalf or the central organization files complete supporting information for their reinclusion in the group exemption at the time of its annual submission. H and r block free state file However, when the notice is given by the IRS and the withdrawal of recognition is based on the failure of the organization to comply with the requirements for recognition of tax-exempt status under the particular subsection of section 501(c), the revocation will ordinarily take effect as of the date of that failure. H and r block free state file The notice, however, will be given only after the appeal procedures described earlier in this chapter are completed. H and r block free state file Prev  Up  Next   Home   More Online Publications
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The H And R Block Free State File

H and r block free state file 1. H and r block free state file   Canceled Debts Table of Contents General RulesForm 1099-C Discounts and loan modifications Sales or other dispositions (such as foreclosures and repossessions) Abandonments Stockholder debt This chapter discusses the tax treatment of canceled debts. H and r block free state file General Rules Generally, if a debt for which you are personally liable is forgiven or discharged for less than the full amount owed, the debt is considered canceled in whatever amount it remained unpaid. H and r block free state file There are exceptions to this rule, discussed under Exceptions , later. H and r block free state file Generally, you must include the canceled debt in your income. H and r block free state file However, you may be able to exclude the canceled debt. H and r block free state file See Exclusions , later. H and r block free state file Example. H and r block free state file John owed $1,000 to Mary. H and r block free state file Mary agreed to accept and John paid $400 in satisfaction of the entire debt. H and r block free state file John has canceled debt of $600. H and r block free state file Example. H and r block free state file Margaret owed $1,000 to Henry. H and r block free state file Henry and Margaret agreed that Margaret would provide Henry with services (instead of money) in full satisfaction of the debt. H and r block free state file Margaret does not have canceled debt. H and r block free state file Instead, she has income from services. H and r block free state file A debt includes any indebtedness: For which you are liable, or Subject to which you hold property. H and r block free state file Debt for which you are personally liable is recourse debt. H and r block free state file All other debt is nonrecourse debt. H and r block free state file If you are not personally liable for the debt, you do not have ordinary income from the cancellation of debt unless you retain the collateral and either: The lender offers a discount for the early payment of the debt, or The lender agrees to a loan modification that results in the reduction of the principal balance of the debt. H and r block free state file See Discounts and loan modifications , later. H and r block free state file However, upon the disposition of the property securing a nonrecourse debt, the amount realized includes the entire unpaid amount of the debt, not just the FMV of the property. H and r block free state file As a result, you may realize a gain or loss if the outstanding debt immediately before the disposition is more or less than your adjusted basis in the property. H and r block free state file For more details on figuring your gain or loss, see chapter 2 of this publication or see Publication 544. H and r block free state file There are several exceptions and exclusions that may result in part or all of a canceled debt being nontaxable. H and r block free state file See Exceptions and Exclusions, later. H and r block free state file You must report any taxable canceled debt as ordinary income on: Form 1040 or Form 1040NR, line 21, if the debt is a nonbusiness debt; Schedule C (Form 1040), line 6 (or Schedule C-EZ (Form 1040), line 1), if the debt is related to a nonfarm sole proprietorship; Schedule E (Form 1040), line 3, if the debt is related to nonfarm rental of real property; Form 4835, line 6, if the debt is related to a farm rental activity for which you use Form 4835 to report farm rental income based on crops or livestock produced by a tenant; or Schedule F (Form 1040), line 8, if the debt is farm debt and you are a farmer. H and r block free state file Form 1099-C If you receive a Form 1099-C, that means an applicable entity has reported an identifiable event to the IRS regarding a debt you owe. H and r block free state file The identifiable event may be an actual cancellation of the debt or it may be an event the applicable entity is required, solely for purposes of reporting to the IRS, to treat as a cancellation of debt. H and r block free state file For information on the reasons an applicable entity files Form 1099-C, see Identifiable event codes, later. H and r block free state file Unless you meet one of the exceptions or exclusions discussed later, this canceled debt is ordinary income and must be reported on the appropriate form discussed above. H and r block free state file An applicable entity includes: A federal government agency, A financial institution, A credit union, and Any organization a significant trade or business of which is lending money. H and r block free state file Identifiable event codes. H and r block free state file    Box 6 of Form 1099-C should indicate the reason the creditor filed this form. H and r block free state file The codes shown in box 6 are explained below. H and r block free state file Also see the chart after the explanation for a quick reference guide for the codes used in Box 6. H and r block free state file Note. H and r block free state file Codes A through G and I identify specific occurrences resulting from an actual discharge of indebtedness. H and r block free state file However, Code H, Expiration of nonpayment testing period, does not necessarily identify an actual discharge of indebtedness. H and r block free state file Code A — Bankruptcy. H and r block free state file Code A is used to identify cancellation of debt as a result of a title 11 bankruptcy case. H and r block free state file See Bankruptcy , later. H and r block free state file Code B — Other judicial debt relief. H and r block free state file Code B is used to identify cancellation of debt as a result of a receivership, foreclosure, or similar federal or state court proceeding other than bankruptcy. H and r block free state file Code C — Statute of limitations or expiration of deficiency period. H and r block free state file Code C is used to identify cancellation of debt either when the statute of limitations for collecting the debt expires or when the statutory period for filing a claim or beginning a deficiency judgment proceeding expires. H and r block free state file In the case of the expiration of a statute of limitations, an identifiable event occurs only if and when your affirmative defense of the statute of limitations is upheld in a final judgment or decision in a judicial proceeding, and the period for appealing the judgment or decision has expired. H and r block free state file Code D — Foreclosure election. H and r block free state file Code D is used to identify cancellation of debt when the creditor elects foreclosure remedies that statutorily end or bar the creditor's right to pursue collection of the debt. H and r block free state file This event applies to a mortgage lender or holder who is barred from pursuing debt collection after a power of sale in the mortgage or deed of trust is exercised. H and r block free state file Code E — Debt relief from probate or similar proceeding. H and r block free state file Code E is used to identify cancellation of debt as a result of a probate court or similar legal proceeding. H and r block free state file Code F — By agreement. H and r block free state file Code F is used to identify cancellation of debt as a result of an agreement between the creditor and the debtor to cancel the debt at less than full consideration. H and r block free state file Code G — Decision or policy to discontinue collection. H and r block free state file Code G is used to identify cancellation of debt as a result of a decision or a defined policy of the creditor to discontinue collection activity and cancel the debt. H and r block free state file For purposes of this identifiable event, a defined policy includes both a written policy and the creditor's established business practice. H and r block free state file Code H — Expiration of nonpayment testing period. H and r block free state file Code H is used to indicate that the creditor has not received a payment on the debt during a testing period ending on December 31, 2013. H and r block free state file The testing period is a 36-month period increased by the number of months the creditor was prevented from engaging in collection activity by a stay in bankruptcy or similar bar under state or local law. H and r block free state file This identifiable event applies only for a creditor that is a financial institution or credit union (and certain of their subsidiaries), the Federal Deposit Insurance Corporation (FDIC), Resolution Trust Corporation (RTC), National Credit Union Administration (NCUA), and other Federal executive agencies. H and r block free state file Expiration of the nonpayment testing period does not necessarily result from an actual discharge of indebtedness. H and r block free state file Code I — Other actual discharge before identifiable event. H and r block free state file Code I is used to identify an actual cancellation of debt that occurs before any of the identifiable events described in codes A through H. H and r block free state file Form 1099-C Reference Guide for Box 6 Identifiable Event Codes A Bankruptcy B Other judicial debt relief C Statute of limitations or expiration of deficiency period D Foreclosure election E Debt relief from probate or similar proceeding F By agreement G Decision or policy to discontinue collection H Expiration of nonpayment testing period I Other actual discharge before identifiable event Even if you did not receive a Form 1099-C, you must report canceled debt as gross income on your tax return unless one of the exceptions or exclusions described later applies. H and r block free state file Amount of canceled debt. H and r block free state file    The amount in box 2 of Form 1099-C may represent some or all of the debt that has been canceled or treated as canceled. H and r block free state file The amount in box 2 will include principal and may include interest and other nonprincipal amounts (such as fees or penalties). H and r block free state file Unless you meet one of the exceptions or exclusions discussed later, the amount of the debt that has been canceled is ordinary income and must be reported on the appropriate form as discussed earlier. H and r block free state file Interest included in canceled debt. H and r block free state file    If any interest is included in the amount of canceled debt in box 2, it will be shown in box 3. H and r block free state file Whether the interest portion of the canceled debt must be included in your income depends on whether the interest would be deductible if you paid it. H and r block free state file See Deductible Debt under Exceptions, later. H and r block free state file Persons who each receive a Form 1099-C showing the full amount of debt. H and r block free state file    If you and another person were jointly and severally liable for a canceled debt, each of you may get a Form 1099-C showing the entire amount of the canceled debt. H and r block free state file However, you may not have to report that entire amount as income. H and r block free state file The amount, if any, you must report depends on all the facts and circumstances, including: State law, The amount of debt proceeds each person received, How much of any interest deduction from the debt was claimed by each person, How much of the basis of any co-owned property bought with the debt proceeds was allocated to each co-owner, and Whether the canceled debt qualifies for any of the exceptions or exclusions described in this publication. H and r block free state file See Example 3 under Insolvency, later. H and r block free state file Discounts and loan modifications If a lender discounts (reduces) the principal balance of a loan because you pay it off early, or agrees to a loan modification (a “workout”) that includes a reduction in the principal balance of a loan, the amount of the discount or the amount of principal reduction is canceled debt. H and r block free state file However, if the debt is nonrecourse and you did not retain the collateral, you do not have cancellation of the debt income. H and r block free state file The amount of the canceled debt must be included in income unless one of the exceptions or exclusions described later applies. H and r block free state file For more details, see Exceptions and Exclusions, later. H and r block free state file Sales or other dispositions (such as foreclosures and repossessions) Recourse debt. H and r block free state file   If you owned property that was subject to a recourse debt in excess of the FMV of the property, the lender's foreclosure or repossession of the property is treated as a sale or disposition of the property by you and may result in your realization of gain or loss. H and r block free state file The gain or loss on the disposition of the property is measured by the difference between the FMV of the property at the time of the disposition and your adjusted basis (usually your cost) in the property. H and r block free state file The character of the gain or loss (such as ordinary or capital) is determined by the character of the property. H and r block free state file If the lender forgives all or part of the amount of the debt in excess of the FMV of the property, the cancellation of the excess debt may result in ordinary income. H and r block free state file The ordinary income from the cancellation of debt (the excess of the canceled debt over the FMV of the property) must be included in your gross income reported on your tax return unless one of the exceptions or exclusions described later applies. H and r block free state file For more details, see Exceptions and Exclusions, later. H and r block free state file Nonrecourse debt. H and r block free state file   If you owned property that was subject to a nonrecourse debt in excess of the FMV of the property, the lender's foreclosure on the property does not result in ordinary income from the cancellation of debt. H and r block free state file The entire amount of the nonrecourse debt is treated as an amount realized on the disposition of the property. H and r block free state file The gain or loss on the disposition of the property is measured by the difference between the total amount realized (the entire amount of the nonrecourse debt plus the amount of cash and the FMV of any property received) and your adjusted basis in the property. H and r block free state file The character of the gain or loss is determined by the character of the property. H and r block free state file More information. H and r block free state file    See Publications 523, 544, and 551, and chapter 2 of this publication for more details. H and r block free state file Abandonments Recourse debt. H and r block free state file   If you abandon property that secures a debt for which you are personally liable (recourse debt) and the debt is canceled, you will realize ordinary income equal to the canceled debt. H and r block free state file You must report this income on your tax return unless one of the exceptions or exclusions described later applies. H and r block free state file For more details, see Exceptions and Exclusions, later. H and r block free state file This income is separate from any amount realized from the abandonment of the property. H and r block free state file For more details, see chapter 3. H and r block free state file Nonrecourse debt. H and r block free state file   If you abandon property that secures a debt for which you are not personally liable (nonrecourse debt), you may realize gain or loss but will not have cancellation of indebtedness income. H and r block free state file Stockholder debt If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution. H and r block free state file For more information, see Publication 542, Corporations. H and r block free state file Prev  Up  Next   Home   More Online Publications