IRS reminds supporting organizations to be responsive

Victoria Judson, associate chief counsel with the IRS Tax Exempt and Government Entities Division, reminded public charities which are “Type III supporting organizations” that they must be officially responsive to the organizations they support.

Speaking yesterday at the American Health Lawyers Association tax conference, Judson reiterated that this requirement, an integral part of proposed regulations published by the agency in February, is intended to ensure that organizations “develop meaningful support and a really close relationship,” rather than supporting many groups, or a list of groups that changes frequently.

Elinor Ramey, an attorney-adviser at the Department of Treasury, also spoke at the event, and said that officials are “open to suggestions” for how to make the proposed regulations function smoothly.

In general, a supporting organization is a charity that carries out its exempt purposes by supporting other exempt organizations, usually other public charities. Type III supporting organizations are typically organized as trusts and must designate in their trust documents the organizations they intend to support. The new regulations, which build on similar rules issued in 2012 and 2015, would require a Type III supporting organization to be responsive to and significantly involved in each of its supported organizations, and offer examples for compliance. Further provisions clarify minimum distribution requirements and modify rules for situations where the supported organization is a government entity.

Source: BNA Daily Tax Report (subscription required)

Types: Blog
Global Topics: Public Policy
Policy Issues: Tax & Fiscal Policy