Exemption application, section 501(c) organization | KPMG United States
Share with your friends

New exemption application not required for section 501(c) organization’s changes

Exemption application, section 501(c) organization

The IRS today released an advance version of Rev. Proc. 2018-15 providing that new applications for recognition of exemption will not be required of domestic section 501(c) organizations that change their legal form or place of organization.


Related content

With Rev. Proc. 2018-15 [PDF 57 KB], earlier guidance items—specifically, Rev. Rul. 67-390 and Rev. Rul. 77-469—are rendered obsolete.

New procedures

Under prior IRS guidance—Rev. Ruls. 67-390 and 77-469—the IRS typically required new exemption applications in certain cases in which entities generally were not required to obtain a new EIN, such as the incorporation of an exempt association or the reincorporation of an exempt corporation in a different state. 

Rev. Proc. 2018-15 generally eliminates the requirement for domestic business entities classified as corporations to file a new exemption application after a corporate restructuring, if certain conditions are met, to better align the requirements for new exemption applications with the requirements for obtaining new EINs in common restructuring situations. Today’s revenue procedure notes that because the IRS already requires exempt organizations to report significant organizational changes and new program services on their annual Forms 990, requiring a new exemption application after a corporate restructuring often is unnecessary and duplicative.

Rev. Proc. 2018-15 generally provides that in the case of a corporate restructuring of a domestic business entity that is classified as a corporation under Reg. section 301.7701-2(b)(1) or (2) and is recognized as an organization described in section 501(c), the surviving organization will not be required to file a new exemption application if it is: 

  • A domestic business entity
  • Classified as a corporation under Reg. section 301.7701-2(b)(1) or (2), and
  • Carrying out the same purposes as the exempt organization that engaged in the corporate restructuring

The restructuring organization (or all restructuring organizations in the case of a statutory merger) must be in good standing with the state in which it was incorporated or formed. In addition, for organizations described in section 501(c)(3), the surviving organization’s articles of organization must continue to meet the organizational test of Reg. section 1.501(c)(3)-1(b). The revenue procedure does not apply to any corporate restructuring in which (1) the restructuring organization or the surviving organization is a disregarded entity, limited liability company, partnership, or foreign business entity; or (2) the surviving organization obtains a new EIN.

The surviving organization must report the corporate restructuring on any required Form 990 for the applicable tax year. In the case of a domestication or reincorporation in a different state, the surviving organization must also report a change of address as prescribed by the IRS.


For more information, contact a tax professional with KPMG’s Washington National Tax practice:

Preston Quesenberry | +1 202 533 3985 | pquesenberry@kpmg.com 

Randall Thomas | +1 202 533 3786 | randallthomas@kpmg.com

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Request for proposal