Louis E. Michelson, A Professional Corporation

Legislation enacted at the end of 2015 added Internal Revenue Code Section 506, which requires an organization to notify the IRS of its intent to operate as a Section 501(c)(4) organization. The IRS has developed a new form, Form 8976, that organizations should use to provide this notification.

Who is required to file?  This notification requirement only applies to organizations intending to operate under Section 501(c)(4) (“social welfare organizations”). Organizations operating under any other 501(c) section, should not file this notice.  A social welfare organization must notify the IRS that it is operating as a Section 501(c)(4) organization within 60 days of its formation.  An organization that fails to submit a completed Form 8976 by the due date must pay a penalty of $20 for each day during which such failure continues, up to a maximum penalty of $5,000.

Which social welfare organizations are not required to file the notification?  The final and temporary regulations provide that a social welfare organization is not required to submit the notification if it applied for a Determination Letter that recognizes the organization as described in section 501(c)(4) (using Form 1024) or filed a Form 990 (or, if eligible, Form 990-EZ or Form 990-N) after December 18, 2015, but on or before July 8, 2016. For organizations that do not qualify for this relief, the temporary regulations also provide a transition rule that extends the due date of the notification until September 6, 2016.

How to File Form 8976.

• Form 8976 may only be completed and submitted electronically. There is no paper form.
• This is a one-time notification.
• One must use the Form 8976 Electronic Notice Registration System.
• A user fee of $50 must be submitted to Pay.gov to complete the notification.
• One does not need special software to submit a notification; however, one needs to have an email address to activate a login ID and password.

Acknowledgement by IRS.

If a complete and accurate notification is submitted to the IRS, one can expect to receive an acknowledgement from the IRS within 60 days of submitting the notification.  Submission of the Form 8976 does not constitute a request for a Determination Letter that recognizes the social welfare organization as a section 501(c)(4) organization.  Also a social welfare organization must file applicable annual information returns or notices separate from and without regard to its submission of Form 8976.

For more information see the following links to a page on the IRS website, Rev. Proc. 2016-41 and the IRS Regulations.