10 January 2022 IRS updates exemption application procedures, including electronic filing for Form 1024 As 2022 begins, the IRS has issued two pieces of procedural guidance affecting entities that seek tax-exempt status under the Internal Revenue Code (IRC). Revenue Procedure 2022-5 contains annual guidance revising IRS procedures for issuing tax-exemption determination letters. Changes from the corresponding guidance issued in 2021 (Revenue Procedure 2021-5) focus mainly on electronic filing requirements for Form 1024, Application for Recognition of Exemption Under Section 501(a), and Form 1024-A, Application for Recognition of Exemption Under Section 501(c)(4) of the Internal Revenue Code. These changes:
In Revenue Procedure 2022-08, the IRS modified Revenue Procedure 2022-05 to reflect the new electronic filing requirement for applications on Form 1024, Application for Recognition of Exemption Under Section 501(a) or Section 521 of the Internal Revenue Code, and the new electronic submission process on www.pay.gov. The guidance provides that Form 1024 should be filed electronically beginning January 3, 2022, though it provides a 90-day transition relief period during which the IRS will accept paper Forms 1024 (through April 4, 2022). It also modifies who is authorized to sign a Form 1024: an officer, director, or trustee or other official authorized to sign for the organization. Form 1024 is used to seek tax-exempt status as an entity described in IRC Section 501(c)(2), (c)(5), (c)(6), (c)(7), (c)(8), (c)(9), (c)(10), (c)(11), (c)(12), (c)(13), (c)(14), (c)(15), (c)(16), (c)(17), (c)(18), (c)(19), (c)(21), (c)(22), (c)(23), (c)(25), (c)(26), (c)(27), (c)(28), (c)(29) or 501(d). Note that user fees required to accompany exemption applications on Forms 1023, 1023-EZ, 1024 and 1024-A must be paid through www.pay.gov. When applying for tax exemption under a variety of IRC sections, an organization should be certain that it is filing the correct IRS form and using the correct method of transmission. The IRS already requires Form 1023 to be electronically filed, and now requires Form 1024 and Form 1024-A to be e-filed under the new procedures. The IRS also lists the circumstances under which it will not issue a determination letter, so organizations may wish to check this list before filing an application. For instance, applications for group exemption letters will not be accepted until the IRS publishes a final group exemption revenue procedure. As the IRS continues to digitize its forms following the Taxpayer First Act's e-filing mandates, tax-exempt entities should expect most IRS forms to shift to electronic filing in the coming years. — For more information about EY's Exempt Organization Tax Services group, visit us here.
Document ID: 2022-0039 | |||||||||||