In May, the Internal Revenue Service ruled that certain organizations providing down-payment assistance gifts to low-income homebuyers do not qualify for Section 501(c)(3) tax-exempt status.Organizations specifically targeted are those that give a tax-free DA gift to the buyer while requiring the seller to make a non-tax-deductible contribution of the gift amount, plus an additional amount to cover administrative costs.

Unclear in Revenue Ruling 2006-27, however, is whether all such organizations can expect to lose their tax-exempt status, or if the ruling is setting the stage for the IRS to zero in on certain specific organizations.

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