Louis E. Michelson, A Professional Corporation

Social welfare organization must provide a notification to the IRS of their intent to operate.  This notification requirement is found in new Section 506, which was added to Internal Revenue Code by the Protecting Americans from Tax Hikes Act of 2015 (the “PATH Act”) which was enacted on December 18, 2015.

Under the PATH Act:

• New social welfare organizations are required to notify the IRS no later than 60 days after the organizations are established.

• For certain existing social welfare organizations, the notification is due no later than June 15, 2016.

The IRS issued Notice 2016-09 on January 19, 2016 which extended the notification requirement because the Treasury Department and the IRS intend to issue temporary regulations prescribing the manner in which social welfare organizations must notify the IRS of their intent to operate.

Under Notice 2016-09:

• Social welfare organizations are now required to notify the IRS at least 60 days from the date that the temporary regulations are issued.

• Social welfare organizations should wait to submit information until the regulations are issued.

• No penalties under section 6652(c)(4) will apply to a 501(c)(4) organization that provides the section 506 notification by the due date provided in the regulations.

• The IRS is required to acknowledge receipt of the section 506 notification, but this receipt is not a determination by the IRS that the organization qualifies for section 501(c)(4) status.

• Organizations that seek IRS recognition of tax-exempt status under section 501(c)(4) should continue to use IRS Form 1024. The filing of Form 1024 (which is optional) does not relieve an organization of its section 506 filing requirement.

• The full text of Notice 2016-19 is found at the following link.