IRS MAKES CHANGES TO TAX-EXEMPT APPLICATIONS

Washington, D.C. -- The Internal Revenue Service is changing some of the forms and procedures that organizations can use to apply for tax-exempt status as it seeks to emerge from a high-profile scandal last year over how it handled applications from political groups.

The IRS's Exempt Organizations office said in an e-mail in mid-January to charities and nonprofits that it has updated the alternate version of Form 1023, Application for Recognition of Exemption.

The Interactive Form 1023 (i1023) features pop-up information boxes for most lines of the form. These boxes contain explanations and links to related information on IRS.gov and StayExempt. irs.gov, the EO office's educational Web site. Once the application has been completed, applicants will be able to print and mail the form and its attachments, just like the standard Form 1023. According to the IRS, applicants will be able to submit a more complete form, while IRS processing time will be reduced.

The IRS is also changing some of its processes for approving tax-exempt applications. A new revenue procedure, Rev. Proc 2014-9, describes the procedures for issuing determination letters and rulings on the exempt status of organizations under Sections 501 and 521 of the code.

The procedures also apply to the revocation and modification of determination letters or rulings, and provide guidance on the exhaustion of administrative remedies for purposes of declaratory judgment under Section 7428 of the code.

The new revenue procedure supersedes one from last year, Rev. Proc. 2013-9. Another new revenue procedure, Rev. Proc. 2014-10, describes the procedures for issuing determination letters and rulings on private foundation status under Section 509(a) of the Tax Code, operating foundation status under Section 4942(j)(3), and exempt operating foundation status under Section 4940(d)(2) of the code, for organizations that are exempt from federal income tax under Section 501(c)(3).

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