On January 20, 2026, the IRS published Revenue Procedure 2026-8, which updates and supersedes longstanding guidance on group exemption letters set forth in Revenue Procedure 80-27, and modifies and finalizes the proposed revenue procedure set forth in Notice 2020-36 (see Tax Alert 2020-1256). The new procedure modernizes the rules and procedures for obtaining and maintaining tax-exempt status for group exemption letters covering groups of affiliated organizations under IRC Section 501(c), representing the first comprehensive overhaul of group exemption letters in more than 45 years.

The IRS also published Notice 2026-8, which summarizes the comments received in response to the proposed revenue procedure in Notice 2020-36 and explains the material changes made in Revenue Procedure 2026-8 and the rationale for those changes.

Background

The IRS stated in the proposed revenue procedure that it oversees more than 4,000 group exemptions, which include more than 440,000 subordinates, and that such oversight places a significant administrative burden on the IRS. Its stated goals in updating Revenue Procedure 80-27 were to reduce that burden, increase efficiency, improve the integrity of the data collected, increase transparency, and increase compliance by central and subordinate organizations.

Minimum number of subordinates and maximum number of group exemptions

Under Revenue Procedure 80-27, a central organization of a group exemption must either be described in IRC Section 501(c) or be an instrumentality or agency of a political subdivision. Revenue Procedure 80-27 neither limited the number of group exemptions a central organization may maintain nor established a minimum number of subordinates that must be in a group exemption.

Revenue Procedure 2026-8, consistent with the proposed revenue procedure in Notice 2020-36, requires a central organization to have at least five subordinate organizations to obtain a group exemption and at least one subordinate organization thereafter. It also prohibits central organizations from maintaining more than one group exemption.

Central organization's relationship with subordinate organizations

Consistent with Revenue Procedure 80-27 and Notice 2020-36, Revenue Procedure 2026-8 requires a central organization to establish that each subordinate organization included in the group exemption is affiliated with the central organization and subject to its general supervision or control. Unlike Revenue Procedure 80-27, however, Revenue Procedure 2026-8 defines and requires subordinates to meet (subject to the transition rule — see later) the following specific conditions for affiliation and general supervision or control:

Affiliation

A subordinate organization's affiliation with the central organization must be demonstrated by facts and circumstances showing that it is a chapter, local, post or unit of the central organization. For instance, this affiliation may be demonstrated by the inclusion of the subordinate either in a group return filed by the central organization, in a directory of subordinate organizations updated annually by the central organization, or in the case of a church or convention or association of churches, the sharing of common religious bonds or convictions by the central and subordinate organizations.

General supervision

A subordinate organization is subject to the central organization's general supervision if the central organization annually:

1. Obtains, reviews, and retains information on the subordinate organization's finances, activities, and compliance with annual filing requirements; for instance, by obtaining copies of the organization's annual Form 990-series returns (if the subordinate has annual Form 990-series filing requirements)
2. Transmits written information to (or otherwise educates) the subordinate organization about the requirements to maintain tax-exempt status under the appropriate paragraph of IRC Section 501(c), including annual filing requirements; for instance, by sending each subordinate a copy of IRS Pub. 557, Tax-Exempt Status for Your Organization

Control

A subordinate organization is subject to the central organization's control if:

1. The central organization appoints a majority of the subordinate organization's directors or trustees who possess a majority of the voting power over the subordinate's governance
2. The central organization appoints a majority of the subordinate's officers
3. The majority of the subordinate organization's officers, directors, or trustees who possess a majority of the subordinate's voting power are directors or trustees of the central organization
4. The majority of the subordinate's officers are officers of the central organization
5. The central organization and the subordinate organization enter into a written agreement that evidences the central organization's control over the subordinate organization's activities and operations. The Revenue Procedure does not specify a level of control that must be established by the written agreement; whether the agreement sufficiently establishes control will be judged on the facts and circumstances

Note that a central organization must exercise such general supervision or control over each of its subordinates. It may, but is not required to, exercise both general supervision and control over them.

Changes from proposed revenue procedure

Affiliation

Revenue Procedure 2026-8 includes several examples illustrating how a central organization can demonstrate affiliation with subordinates. It also modifies the "entirety of the information" standard from the proposed revenue procedure with the "facts and circumstances" standard discussed previously.

General supervision

Section 4.02(3)(b) of Revenue Procedure 2026-8 adds that a central organization satisfies the requirement to obtain, review and retain information about a subordinate organization by acquiring a copy of the Form 990 or Form 990-EZ the subordinate filed with the IRS. Obtaining a copy of a subordinate's Form 990-N, however, does not satisfy the requirement and central organizations must obtain information about such subordinates in a different manner, such as by requiring additional annual written information. Section 4.02(3)(c) also includes a separate rule for subordinate organizations that are not required to file an annual information return or notice (e.g., churches or conventions or associations of churches). Additionally, Revenue Procedure 2026-8 clarifies that annual electronic delivery of information on how to maintain tax-exempt status under IRC Section 501(c)(3) from a central organization to a subordinate organization is an acceptable means of demonstrating supervision.

Control

Revenue Procedure 2026-8 adds section 4.02(4)(e), which provides that a written agreement between the central organization and a subordinate organization may evidence control of the subordinate organization by the central organization.

Additional requirements for subordinate organizations

Matching requirement

Revenue Procedure 2026-8 maintains the standard under Revenue Procedure 80-27 that all subordinate organizations included in a group exemption letter request be described in the same paragraph of IRC Section 501(c) (e.g., 501(c)(3), 501(c)(4), 501(c)(6)); however, they are not required to be described in the same paragraph of IRC Section 501(c) as the central organization.

Uniform purpose statement requirement

Subordinate organizations that share a common purpose must include a "uniform purpose statement" in their governing documents. If one or more subordinate organizations included in a group exemption letter have a purpose that is different from other subordinate organizations covered by the same group exemption letter, the subordinate organizations that share such a purpose must include the same uniform purpose statement in their governing instruments, though the rest of their governing instruments do not need to be identical. This modifies the requirement in Revenue Procedure 80-27 that a central organization needed to provide either a uniform governing document or representative instruments adopted by its subordinate organizations to the IRS as part of its group exemption application.

Annual accounting period requirement

Consistent with Revenue Procedure 80-27, subordinate organizations included on a group return filed by a central organization must be on the same annual accounting period as the central organization.

Other changes from proposed revenue procedure (in Notice 2020-36)

Revenue Procedure 2026-8 does not include the foundation classification requirement that was proposed in Notice 2020-36, which would have required all subordinate organizations in a group exemption to be classified under the same paragraph of IRC Section 509(a), sharing the same foundation classification.

Likewise, the similar purpose requirement that was proposed in Notice 2020-36, which would have required all subordinates in a group exemption to share a primary purpose, is not included in Revenue Procedure 2026-8. According to the IRS, the similar purpose requirement as proposed would not facilitate a central organization's exercise of general supervision or control over the subordinates and was therefore removed.

The uniform governing instrument requirement proposed in Notice 2020-36, which would have required all subordinates in a group exemption to adopt a uniform governing instrument, was also removed from Revenue Procedure 2026-8 and replaced with the aforementioned uniform purpose statement requirement. The IRS agreed with commenters that the requirement was untenable due to the varying state law requirements for governing instruments.

Organizations not eligible to be included in a group exemption as subordinate organizations

Revenue Procedure 2026-8 modifies the rule in Revenue Procedure 80-27 that a group exemption may not include a subordinate organization that is organized and operated in a foreign country. The modified rule permits a subordinate organization to operate in a foreign country if it is organized in the United States, but prohibits an entity organized in a foreign country from being a subordinate organization.

Revenue Procedure 2026-8 retains the prohibition in Revenue Procedure 80-27 against private foundations being included as subordinates in group exemption letters. It expands upon Revenue Procedure 80-27 by prohibiting additional types of organizations from being subordinates, because the rules governing them are too complex. Specifically, neither an organization described in IRC Section 501(c)(3) that is classified as a Type III supporting organization under IRC Section 509(a)(3), nor a qualified nonprofit health insurance issuer (QNHII) described in IRC Section 501(c)(29), can be a subordinate organization in a group exemption.

Finally, if an organization's exemption was automatically revoked and has not yet been reinstated by the IRS, the organization cannot be a subordinate organization in a group exemption. Rather, it must first apply for and obtain IRS reinstatement of exemption before it can be added to a group exemption.

Authorization for initial inclusion in or subsequent addition to a group exemption

Revenue Procedure 2026-8, consistent with Revenue Procedure 80-27, requires a subordinate organization to consent in writing to being included in a group exemption, and requires such writing to be signed by an officer of the subordinate organization. Revenue Procedure 2026-8 adds an additional requirement that the subordinate acknowledge in such writing that the central organization may remove a supporting organization from the group exemption with or without cause. Revenue Procedure 2026-8 also clarifies that the central organization must retain the written authorization provided by a subordinate as long as the subordinate is included in the group exemption.

The IRS noted in Notice 2026-8 that if a subordinate organization executed an authorization that does not include an acknowledgement of the central organization's right of removal during the period in which the IRS was not accepting group applications (i.e., between issuance of Notice 2020-36 and January 20, 2026), the central organization must seek a new authorization that includes such acknowledgement. Further, if a central organization cannot locate the required authorization for a subordinate organization, it must obtain a new one.

Applying for a group exemption letter

Revenue Procedure 2026-8 describes the information that a central organization must include about itself and its subordinate organizations in an application to the IRS for a group exemption letter. The group exemption letter application must be submitted electronically, using IRS Form 8940, Request for Miscellaneous Determination.

In an EO Update that the IRS issued on January 20, 2026, the IRS clarified that an applicant for a group exemption letter must submit its Form 8940 application electronically through pay.gov and pay a $3,500 user fee. Payment can be made directly from a bank account or using a credit or debit card.

As of January 20, 2026, the IRS has resumed accepting group exemption applications.

Information required to maintain a group exemption

Revenue Procedure 2026-8 requires a central organization to submit its annual supplemental group ruling information (SGRI) letter that describes any changes to its subordinates' identities, purposes, or activities at least 30 days, but not more than 90 days, before the close of its accounting period. Revenue Procedure 80-27 had required the SGRI letter to be submitted at least 90 days before the close of the accounting period. The central organization can update its SGRI submission at any time.

The SGRI letter must include separate lists of subordinate organizations that (i) have changed their names or mailing addresses during the year, (ii) are no longer included in the group exemption, (iii) had their exemptions automatically revoked, and (iv) have been added to the group exemption. Each list must include the name, mailing address and EIN of each of the affected subordinate organizations. These lists cannot be annotated directories of subordinate organizations. The central organization must also describe any changes in the purposes, character or method of operation of any of its subordinate organizations. If none of these changes have occurred since the central organization's submission of its prior SGRI letter, the central organization must submit a statement in the SGRI letter stating there are no changes.

Revenue Procedure 2026-8 exempts churches or conventions or associations of churches from the SGRI letter filing requirement. Revenue Procedure 80-27 did not include this exemption.

When a central organization adds a subordinate organization to its group exemption, Revenue Procedure 2026-8 requires the central organization to submit the following in its SGRI letter:

1. The date of formation or incorporation of each subordinate organization
2. A statement that the information on which the group exemption was based applies in all material respects to the subordinates being added to the group exemption
3. A statement that the central organization has authorization from the new subordinate for inclusion in the group exemption
4. A statement regarding the accounting period of new subordinate organizations on behalf of which the central organization will file group returns
5. A list of new subordinate organizations with determination letters

If a central organization intends to terminate its group exemption, Revenue Procedure 2026-8 requires the central organization to submit a statement in its SGRI to that effect and notify each subordinate of the termination. The central organization must also provide each subordinate organization with information on how the subordinate organization(s) may apply for or obtain recognition of exemption.

IRS termination of, or removal of subordinates from, a group exemption letter

Revenue Procedure 2026-8 provides that the IRS may terminate a group exemption letter for any of the following reasons:

1. The central organization notifies the IRS that it is going out of existence
2. The IRS determines that the central organization is no longer described in IRC Section 501(c), or the central organization's exemption is automatically revoked for failing to file a Form 990-series return for three consecutive tax years
3. The central organization (other than a church or convention or association of churches) fails to submit a timely and complete SGRI at least 30 days before the end of its tax year
4. The central organization has no subordinates (after the transition period described below)
5. The central organization fails to exercise general supervision or control over one or more of its subordinate organizations
6. More than half of the subordinates have had their exemptions automatically revoked
7. More than half of the subordinate organizations fail to satisfy the matching or uniform purpose statement requirement described above
8. The central organization otherwise fails to satisfy the Revenue Procedure's requirements

Revenue Procedure 2026-8 provides that the IRS may remove a subordinate organization from a group exemption letter for any of the following reasons:

1. The IRS determines that the subordinate organization is no longer described in IRC Section 501(c), or the subordinate organization's exemption is automatically revoked for failing to file a Form 990-series return for three consecutive tax years
2. The IRS determines that the subordinate organization isn't eligible for inclusion in a group exemption because it is a private foundation, foreign organization, Type III supporting organization or qualified nonprofit health insurance issuer
3. The IRS determines that the subordinate organization is described in a different paragraph of IRC Section 501(c) (e.g., 501(c)(3), 501(c)(4), 501(c)(7)) than the paragraph indicated by the central organization in its group exemption letter application

Automatic revocation

IRC Section 6033(j) states that an organization's exempt status will be automatically revoked if it fails to file required Form 990-series returns or notices for three consecutive years.

Clarifying how IRC Section 6033(j) applies to subordinate organizations, Revenue Procedure 2026-8 states that a subordinate organization that has had its exemption automatically revoked cannot be included in or subsequently added to a group exemption until it has applied for and received reinstatement of its exempt status by the IRS. A central organization is required to notify the IRS, when submitting its annual SGRI, of any of its subordinate organizations that have had their exemptions automatically revoked. If more than half of the subordinate organizations have had their exempt status automatically revoked, the IRS may then terminate the entire group exemption.

Notification of intent to operate as an organization described in IRC Section 501(c)(4)

IRC Section 506 requires any entity operating as an IRC Section 501(c)(4) organization to notify the IRS that it is operating as an IRC Section 501(c)(4) organization within 60 days of being established.

Revenue Procedure 2026-8 requires that any subordinate organization described in IRC Section 501(c)(4) must submit an electronic Form 8976, Notice of Intent to Operate Under Section 501(c)(4), or authorize the central organization to submit Form 8976 on the subordinate organization's behalf and receive any communications relating to the submission.

Applicability

Revenue Procedure 2026-8 applies to both new group exemption letters applied for after its publication date of January 20, 2026, and group exemption letters that existed before the publication date (preexisting group exemption letters). Similarly, it applies to both subordinate organizations added to preexisting group exemption letters on or after the publication date and organizations that were already subordinates on that date (preexisting subordinate organizations).

Transition period

Revenue Procedure 2026-8 provides a transition period for preexisting group exemption letters and preexisting subordinate organizations until January 22, 2027, to comply with Revenue Procedure 2026-8.

Before the end of the transition period, a central organization with a preexisting group exemption letter but without at least one subordinate organization must either add at least one subordinate organization to its group exemption letter or terminate the group exemption letter.

A central organization that maintains more than one preexisting group exemption letter must terminate either all or all but one of its preexisting group exemption letters prior to the end of the transition period. The central organization must furnish copies of all its preexisting group exemption letters to the IRS and terminate the preexisting group exemption letters it does not intend to maintain.

Before the expiration of the transition period, a central organization must confirm that each preexisting subordinate organization is affiliated with and subject to its general supervision or control by:

1. Obtaining and reviewing information on each subordinate's activities, finances and compliance with filing requirements (if the subordinate is required to file a Form 990-series return)
2. Providing written information to each subordinate organization about the requirements to maintain tax-exempt status under the appropriate sub-section of IRC Section 501(c)

Alternatively, the central organization can elect to remove a subordinate organization from its group exemption letter. Revenue Procedure 2026-8 clarifies that a central organization has absolute discretion to remove a subordinate organization from its group exemption letter at any time, with or without cause, after providing a 30-day written notice of such removal.

Revenue Procedure 2026-8 exempts preexisting subordinate organizations from several of its requirements that were not included in Revenue Procedure 80-27:

• Requirement that subordinate organizations that share the same purpose must have a uniform purpose statement
• Prohibition on a Type III supporting organization (under IRC Section 509(a)(3)) being a subordinate organization
• Requirement that a subordinate organization's written authorization to be included in a group exemption letter must acknowledge that the central organization may remove it from the group exemption with or without cause

Implications

After nearly six years since issuing proposed guidance to modify Revenue Procedure 80-27 regarding group exemption letter requirements (in Notice 2020-36), the IRS has both finalized that guidance and resumed accepting new applications for group exemption letters. While the modifications to Revenue Procedure 80-27 made by Revenue Procedure 2026-8 are not as extensive as those proposed in Notice 2020-36, they will require all central organizations of group exemptions to make certain changes to how they exercise general supervision or control over their subordinates, and what and how they report to the IRS in their annual SGRI update letters. For instance, a central organization must submit its SGRI update letter electronically at least 30 days but no more than 90 days prior to the end of each tax year.

Revenue Procedure 2026-8 reflects the IRS's intent to make the group exemption process more streamlined and uniform, and to reduce administrative burdens on the agency. Given this purpose, the IRS retains broad discretion both to terminate a group exemption letter and to remove a subordinate organization from a group exemption if the central organization or subordinate does not meet a requirement of Revenue Procedure 2026-8.

Because the Revenue Procedure imposes more specifically defined obligations and limitations on group exemptions, prospective group exemption applicants will have more to consider when determining whether to apply for a group exemption. For instance, with the expanded definition of general supervision or control, a central organization will either need to exercise governance control over each of its subordinate organizations or annually obtain, review and retain information on each of its subordinate organizations' finances, activities and compliance with annual filing requirements and annually educate each of its subordinate organizations about the requirements to maintain tax-exempt status. Although the general supervision or control requirement is not new, central organizations previously had more flexibility in how they met the requirement because "supervision or control" wasn't defined in Revenue Procedure 80-27. Revenue Procedure 2026-8 also requires central organizations to more carefully scrutinize prospective group exemption subordinates to determine whether they meet the new qualification requirements.

Although the Revenue Procedure permits a Type III supporting organization to continue qualifying as a central organization of a group exemption, a Type III supporting organization can no longer qualify to be added as a new subordinate organization to a group exemption.

Central organizations should be mindful of the one-year transition period — through January 22, 2027 — as they must have at least one subordinate organization, maintain only one group exemption letter, and meet the specific requirements for being affiliated with and exercising general supervision or control over each of their subordinate organizations. Thereafter, they could lose their group exemption if they fail to meet one or more of these requirements.

One significant benefit of group exemptions that is not affected by the Revenue Procedure is the ability of a central organization to file a group Form 990 return for two or more of its subordinates. The Revenue Procedure references, but does not modify, the existing group return regulations.

From June 17, 2020, through the issuance of Revenue Procedure 2026-8, the IRS has not accepted any new group exemption letter requests. Effective January 20, 2026, the IRS has resumed accepting new group exemption letter requests, though it retains broad discretion to refuse to issue a group exemption letter if it determines that issuing such a letter would not be "in the interest of sound tax administration"; for instance, if the activities described in the application involve complex facts and circumstances.

Revenue Procedure 2026-8 is the first piece of exempt organization-specific guidance that Treasury and the IRS have issued since they published their 2025–2026 Priority Guidance Plan (PGP) on September 30, 2025, even though they had removed group exemption letters from that PGP (see EY Tax Alert 2025-2004). This underscores that IRS and Treasury may continue to prioritize and work on guidance projects that were included in prior years' PGPs but omitted from the most recent PGP.