A group exemption letter is a ruling or determi­nation letter issued to a central organization recognizing on a group basis the exemption under section 501(c) of subordinate organiza­tions on whose behalf the central organization has applied for recognition of exemption.

A central organization is an organization that has one or more subordinates under its general supervision or control.

A subordinate organization is a chapter, local, post, or unit of a central organization. A central organization may be a subordinate itself, such as a state organization that has subordinate units and is itself affiliated with a national (central) organization.

A subordinate organization may or may not be incorporated, but it must have an organizing document. A subordinate that is organized and operated in a foreign country may not be in­ cluded in a group exemption letter. A subordinate described in section 501(c)(3) may not be included in a group exemption letter if it is a private foundation described in section 509(a).

If your organization is a subordinate one con­ trolled by a central organization (for example, a church, the Boy Scouts, or a fraternal organiza­ tion), you should check with the central organi­zation to see if it has been issued a group exemption letter that covers yourorganization . If it has, you do not have to file a separate applica­ tion unless your organization no longer wants to be included in the group exemption letter.

If the group exemption letter does not cover your organization, ask your central organization about being included in the next annual group ruling update that it submits to the IRS.

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Central Organization Application Procedure

If yourorganization is a central organization with affiliated subordinates under its control, it may apply fora group exemption letter for its subordi­ nates, provided it has obtained recognition of its own exemption. You should make the applica­tion for such subordinates by letter instead of submitting either Form 1023 or 1024. This pro­cedure relieves each of the subordinates cov­ered by a group exemption letter from filing its own application. A central organization obtains its own recognition of exemption by sending its application to the IRS address shown on Form 8718 for the area in which the central organization's principal place of business or principal office is located.

If the central organization has previously ob­tained recognition of its own exemption, it must indicate its employer identification number, the date of the letter recognizing its exemption, and the IRS office that issued it. It need not forward documents already submitted. However, if it has not already done so, the central organization must submit a copy of any amendment to its

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Application, Approval, and Appeal Procedures

Governing instruments or internai reguiations as weil as any information about changes in its character, purposes, or method of operation.

Employer identification number. If the cen-trai organization does not have an employer identification number (EIN), it must send a com- pieted Form SS-4 with its exemption applica-tion . Each subordinate must have its own EIN even if it has no empioyees . The centrai organi­zation must send with the group exemption ap­plication a completed Form SS-4 on behalf of each subordinate not having an EIN.

Information required for subordinate organizations. In addition to the information required to obtain recognition of its own exemp­tion, the central organization must submit infor­mation for those subordinates to be included in the group exemption letter. The information should be forwarded in a letter signed by a principal officer of the central organization set­ting forth or including as attachments the follow­ ing.

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1. Information verifying that the subordinates:
1. Are affiliated with the central organiza­ tion,
2. Are subject to its general supervision or control,
3. Are all eligible to qualify for exemption under the same paragraph of section 501 (c), though not necessarily the para­graph under which the centrai organiza­ tion is exempt,
4. Are not private foundations if the appli­cation for a group exemption letter in­volves section 501(c){3),
5. Are all on the same accounting period as the centrai organization if they are to be included in group returns, and

Are organizations that have been formed within the 15-month period pre­ceding the date of submission of the group exemption application if they are claiming section 501{c){3) status and are subject to the requirements of sec­tion 508(a) and wish to be recognized as exempt from their dates of creation (a group exemption letter may be is­sued covering subordinates, one or more of which have not been organized within the 15-rnonth period preceding the date of submission, if all subordi­ nates are willing to be recognized as exempt only from the date of application.

2. A detailed description of the purposes and activities of the subordinates, including the sources of receipts and the nature of ex­ penditures.

3. A sample copy of a uniform governing in­strument (such as a charter or articles of association) adopted by the subordinates, or, in its absence, copies of representative instruments.

4. An affirmation to the effect that, to the best of the officer's knowledge, the purposes and activities of the subordinates are as stated in (2) and (3), above.

5. A statement that each subordinate to be included in the group exemption letter has given written authorization to that effect, signed by an authorized officer of the subordinate, to the central organization (see also New 501 (c)(3) organizations that want to be included, later in this section).

6. A list of subordinates to be included in the group exemption letter to which the IRS has issued an outstanding ruling or deter­mination letter relating to exemption.

7. If the application for a group exemption letter involves section 501(c){3) and is sub­ject to the provisions of the Code requiring that it give timely notice that it is not a private foundation (see Private Founda­tions ), an affirmation to the effect that, to the best of the officer's knowledge and belief, no subordinate to be included in the group exemption letter is a private foundation as defined in section 509(a).

8. For each subordinate that is a school claiming exemption under section 501(c)(3), the information required by Rev­enue Ruling 71 -447 and Revenue Proce­dure 75-50 (these requirements are fully described in chapters, under Private Schools', see also Schedule B, Form 1023).

9. For any school affiliated with a church, the information to show that the provisions of Revenue Ruling 75-231 have been met.

10. A list of the names, mailing addresses, ac­tual addresses if different, and EINs of subordinates to be included in the group exemption letter. A current directory of subordinates may be furnished instead of the list if it includes the required informa­tion and if the subordinates not to be in­cluded in the group exemption letter are identified.

New 501{c){3) organizations that want to be included. A new organization, described in section 501(c)(3), that wants to be included in a group exemption letter, must submit its authori­zation (as explained in item number 5 above, under Information required for subordinate orga­ nizations) to the central organization before the end of the 15th month after it was formed in order to satisfy the requirement of section 508{a). The central organization must also in­clude this subordinate in its nextannuai submis­sion of information as discussed below under Information Required Annually.