The Internal Revenue Service and the Treasury Department have issued new regulations that will make it easier for charities to gain tax-exempt status.
The new regulations eliminate "advance rulings" that granted public charity status for an initial five-year period but required exempt organizations to show that they received a substantial part of their support from public sources in order to receive a final determination letter. Over the years, approximately 95 percent of exempt organizations that received advance rulings were later recognized as publicly supported charities at the end of the five-year period.
The IRS was able to eliminate the advance rulings process because of the recent redesign of the Form 990 return. "The revised Form 990 enhances transparency for exempt organizations and makes it easier for them to show that they are 'publicly supported' charities, rather than private foundations," said IRS Commissioner Doug Shulman (pictured) in a statement.
Organizations that have already received an advance ruling under the old regime, but are still in their first five years of existence, can use their advance-ruling letter as their final determination letter.