Notice 2011-44 Application for Reinstatement and Retroactive Reinstatement for Reasonable Cause under Internal Revenue Code Section 6033(j)

•

•

990–EZ, Short Form Return of Organization Exempt from Income Tax) for
taxable years beginning before 2007.
The organization was eligible in each
of its taxable years beginning in 2007,
2008, and 2009 to file a Form 990–N
e-Postcard (rather than an annual information return). Generally organizations (other than private foundations
and most section 509(a)(3) supporting organizations) with annual gross
receipts that were normally not more
than $25,000 in such taxable years
would have been eligible to file a Form
990–N e-Postcard.
On or before December 31, 2012, the
organization submits to the IRS a properly completed and executed application for reinstatement of tax-exempt
status.

An organization’s annual gross receipts
are “normally not more than” $25,000 or
$50,000 in a taxable year if its average annual gross receipts for that taxable year
and the two taxable years immediately preceding it are not more than $25,000 or
$50,000, respectively. See Rev. Proc.
2011–15, 2011–3 I.R.B. 322, section 4.
The IRS will reinstate the tax-exempt
status of a small organization that meets
the above criteria retroactive to the date it
was revoked.
APPLICATION FOR REINSTATEMENT
OF TAX-EXEMPT STATUS
An organization seeking reinstatement of tax-exempt status under section
6033(j)(2) must use the same forms that
are filed by all other applicants for tax-exemption. Thus, an organization seeking
reinstatement of tax-exempt status under
section 501(c)(3) must submit Form 1023,
Application for Recognition of Exemption
Under Section 501(c)(3) of the Internal
Revenue Code. Most other organizations
seeking reinstatement of tax-exempt status must submit Form 1024, Application
for Recognition of Exemption Under Section 501(a). Any organization that seeks
reinstatement of tax-exempt status must
submit the appropriate application regardless of whether the organization was
originally required to apply with the IRS
for recognition of tax-exemption.
A small organization seeking the transitional relief described in this notice must

June 20, 2011

write “Notice 2011–43” on the top of the
form it uses to apply for reinstatement of
tax-exempt status and on the envelope.
A small organization seeking the transitional relief described in this notice must
also attach to its application for reinstatement of tax-exempt status the following
statement:
[Name of Organization] was not required to file annual information returns for taxable years beginning before
2007; was eligible in each of its taxable years beginning in 2007, 2008 and
2009 to file a Form 990–N e-Postcard;
and had annual gross receipts of normally not more than $25,000 in each
of its taxable years beginning in 2007,
2008 and 2009.
Small organizations that are eligible for
the transitional relief described in this notice are also eligible for a reduced user
fee of $100 for the application of reinstatement of tax-exempt status. See Rev.
Proc. 2011–36, this Bulletin, modifying
Rev. Proc. 2011–8, 2011–1 I.R.B. 237,
section 6.07. For information on where
to mail the application for reinstatement of
tax-exempt status, see the Instructions for
Form 1023 or Form 1024 (whichever is applicable).
SUBSEQUENT AUTOMATIC
REVOCATIONS
An organization whose tax-exempt status has been automatically revoked and reinstated may have its tax-exempt status automatically revoked a second time under
section 6033(j)(1) only if it fails to file returns or notices for another three consecutive taxable years, beginning with the taxable year the IRS approves its application
for reinstatement of tax-exempt status. For
example, if an organization reporting on
a calendar year basis has its tax-exempt
status automatically revoked for failing to
file required returns or notices for 2007,
2008, and 2009 and receives a determination letter recognizing the reinstatement of
its tax-exempt status dated September 1,
2011, the organization’s tax-exempt status
will not be automatically revoked a second
time for failing to timely file a return or notice for 2008, 2009, and 2010. However,
the organization’s tax-exempt status will
be automatically revoked a second time if
the organization fails to timely file a return
or notice for 2011, 2012, and 2013.

883

DRAFTING INFORMATION
The principal authors of this notice are Monice Rosenbaum and
Preston Quesenberry of the Office
of Division Counsel/Associate Chief
Counsel (Tax Exempt and Government
Entities) and Matthew Giuliano of the Tax
Exempt and Government Entities Division
of the IRS. However, other personnel
from the IRS and Treasury Department
participated in developing this notice.
For further information regarding this
notice, contact Ms. Rosenbaum at (202)
622–6070, Mr. Quesenberry at (202)
622–1124, or Mr. Giuliano at (202)
283–8917 (not toll-free numbers).

Application for Reinstatement
and Retroactive
Reinstatement for Reasonable
Cause Under Internal Revenue
Code § 6033(j)
Notice 2011–44
SECTION 1. PURPOSE
This notice provides guidance with
respect to applying for reinstatement
of tax-exempt status and requesting
retroactive reinstatement under sections
6033(j)(2) and (3) of the Internal Revenue
Code (“Code”) for an organization that has
had its tax-exempt status automatically
revoked under section 6033(j)(1) of the
Code. The Treasury Department (“Treasury”) and the Internal Revenue Service
(“IRS”) intend to issue regulations under
section 6033(j) that will prescribe rules
relating to the application for reinstatement of tax-exempt status under section
6033(j)(2) and the request for retroactive
reinstatement under section 6033(j)(3). To
assist in the drafting of these regulations,
Treasury and the IRS solicit comments on
the issues addressed in this notice.
In this Bulletin, the IRS has also published Notice 2011–43, which provides
transitional relief for certain small organizations (those that normally have annual
gross receipts of not more than $50,000
in their most recently completed taxable
year) that have lost their tax-exempt status
because they failed to file an annual electronic notice for taxable years beginning

2011–25 I.R.B.

in 2007, 2008, and 2009. Notice 2011–43
sets forth the criteria for qualifying for
the transitional relief and instructions on
how qualifying organizations can apply
for reinstatement of tax-exempt status
retroactive to the date such status was automatically revoked.
SECTION 2. BACKGROUND
In general, section 6033(a)(1) requires
an organization exempt from taxation
under section 501(a) to file an annual
information return, such as a Form 990,
Return of Organization Exempt from Income Tax, a Form 990–EZ, Short Form
Return of Organization Exempt from Income Tax, or a Form 990–PF, Return of
Private Foundation or Section 4947(a)(1)
Nonexempt Charitable Trust Treated as a
Private Foundation. Several categories of
tax-exempt organizations, including most
organizations (other than private foundations or section 509(a)(3) supporting
organizations) whose annual gross receipts are normally not more than $50,000
($25,000 for taxable years beginning before January 1, 2010), are not required
to file an annual information return. See
I.R.C. § 6033(a)(3); Rev. Proc. 2011–15,
2011–3 I.R.B. 322.
The Pension Protection Act of 2006,
Pub. L. No.109–280, 120 Stat. 780,
§ 1223 (2006) (“PPA”), added sections
6033(i) and (j) to the Code, both of which
became effective for taxable years beginning after 2006. Section 6033(i) added
an annual notification requirement for
tax-exempt organizations that, pursuant
to section 6033(a)(3)(A)(ii) or (a)(3)(B),
are not required to file an annual information return under section 6033(a)(1)
because their gross receipts fall below
certain thresholds. An organization satisfies the annual notification requirement
under section 6033(i) by filing an annual
electronic notice, also known as a Form
990–N e-Postcard. The annual notification requirement is also deemed satisfied
if an organization files a complete Form
990 or Form 990–EZ. See Treas. Reg.
§ 1.6033–6(c)(4).
Section 6033(j)(1) automatically revokes the tax-exempt status of any organization described in section 6033(a)(1)
that fails to file a required annual return
for three consecutive years or any organization described in section 6033(i) that

2011–25 I.R.B.

fails to file an annual return or notice for
three consecutive years. Revocation under
section 6033(j)(1) is effective on and after
the date set by the Secretary for the filing
of the third annual return or notice.
Section 6033(j)(1) also requires the
Secretary to publish and maintain a list
of all organizations that have had their
tax-exempt statuses revoked under section
6033(j)(1) (“revocation list”). The IRS is
publishing such a revocation list on the
IRS website (http://www.irs.gov), which it
will update monthly. The IRS is also mailing a letter to the last known address of
each organization on the revocation list to
notify the organization that its tax-exempt
status has been revoked under section
6033(j)(1) (“IRS revocation letter”).
Section 7428(b)(4), as added by the
PPA, provides that an organization may
not bring a declaratory judgment action
challenging automatic revocation under
section 6033(j)(1).
Section 6033(j)(2) provides that any organization that has had its tax-exempt status automatically revoked under section
6033(j)(1) must apply with the IRS in order to obtain reinstatement of its tax-exempt status, regardless of whether the organization was originally required to apply for recognition of its tax exemption. If
the application for reinstatement of tax-exempt status is approved, the effective date
of the organization’s reinstated tax-exempt
status generally will be the date the organization filed its application for reinstatement. However, section 6033(j)(3) provides that if, upon application for reinstatement, an organization “can show to the satisfaction of the Secretary evidence of reasonable cause for the failure described in
[section 6033(j)(1)], the organization’s exempt status may, in the discretion of the
Secretary, be reinstated effective from the
date of the revocation.”
SECTION 3. EFFECTIVE DATE OF
AUTOMATIC REVOCATION
For taxable years beginning after December 31, 2006, the tax-exempt status of
any organization that fails to file an annual
information return required under section
6033(a)(1) or an electronic notice required
under section 6033(i) for three consecutive years is automatically revoked pursuant to section 6033(j)(1) on and after the
date set by regulation for the filing of the

884

third annual return or notice, without regard to any extension of time for filing.
Sections 1.6033–2(e) and 1.6033–6(f) of
the Treasury Regulations generally require
annual returns and notices, respectively, to
be filed on or before the 15th day of the
fifth month following the close of the period for which the return or notice is required to be filed. When the filing deadline falls on a Saturday, Sunday, or legal
holiday the deadline may be timely satisfied if the filing is made on the next business day that is not a Saturday, Sunday, or
a legal holiday. See I.R.C. § 7503. Thus,
for example, in the case of an organization
reporting on a calendar-year basis that did
not file a required annual return or notice
for 2007, 2008, or 2009, the revocation under section 6033(j)(1) would be effective
as of May 17, 2010, given that May 15,
2010 fell on a Saturday.
SECTION 4. APPLICATION FOR
REINSTATEMENT OF TAX-EXEMPT
STATUS
An organization seeking reinstatement
of its tax-exempt status under section
6033(j)(2) must apply using the same
forms that are filed by all other applicants
for tax exemption. Thus, an organization
seeking reinstatement of its tax-exempt
status under section 501(c)(3) must submit
Form 1023, Application for Recognition
of Exemption Under Section 501(c)(3) of
the Internal Revenue Code. Most other
organizations seeking reinstatement of
tax-exempt status must submit Form 1024,
Application for Recognition of Exemption
Under Section 501(a). Any organization
that seeks reinstatement of its tax-exempt
status must submit the appropriate application regardless of whether the organization
was originally required to apply with the
IRS for recognition of tax exemption. For
example, if the tax-exempt status of a subordinate organization included in a group
exemption letter is automatically revoked
under section 6033(j)(1), the subordinate
organization must submit an application
for reinstatement of its tax-exempt status on its own behalf. In addition, all
organizations seeking reinstatement of
tax-exempt status must pay the appropriate user fee. See Rev. Proc. 2011–8,
2011–1 I.R.B. 237, section 6.07 or its successor. (Small tax-exempt organizations
described in Notice 2011–43 are eligible

June 20, 2011

for a reduced user fee described in Rev.
Proc. 2011–36, this Bulletin.)
To facilitate processing of applications
for reinstatement of tax-exempt status,
organizations should write “automatically
revoked” on the top of the application
form and on the envelope. For information on where to mail the application for
reinstatement of tax-exempt status, see the
Instructions for Form 1023 or Form 1024
(whichever is applicable).
SECTION 5. RETROACTIVE
REINSTATEMENT
.01 Request for Retroactive Reinstatement
An organization (other than a small
organization that qualifies for the transitional relief described in Notice 2011–43)
seeking to have its tax-exempt status reinstated effective from the date of automatic
revocation pursuant to section 6033(j)(3)
must submit a request for retroactive
reinstatement with its application for reinstatement of tax-exempt status. The
request for retroactive reinstatement must
include the following:
(1) A written statement setting forth all
of the facts that support its claim for reasonable cause for failing to file a required
return or notice in each of the three consecutive years and over the entire consecutive
three-year period, including a detailed description of all the facts and circumstances
that led to each failure and the continuous
failure, the discovery of the failures, and
the steps taken to avoid or mitigate the failures;
(2) A written statement describing the
safeguards the organization has put into
place to ensure that the organization will
not fail to file returns or notices in the future;
(3) Evidence to substantiate all material
aspects of the written statements described
in paragraphs (1) and (2) of this section;
(4) Properly completed and executed
paper annual information returns (Forms
990, Forms 990–EZ, or Forms 990–PF,
whichever is applicable) for all taxable
years during and after the consecutive
three-year period that the organization
was required, but failed, to file an annual
information return;
(5) Properly completed and executed
Forms 990–EZ for all taxable years during
and after the consecutive three-year period

June 20, 2011

that the organization was eligible to file a
Form 990–N e-Postcard but failed to file
either a Form 990–N e-Postcard or an annual information return; and
(6) An original declaration, dated and
signed under penalties of perjury by an officer, director, trustee, or other official who
is authorized to sign for the organization in
the following form:
I,
(Name),
(Title) declare, under penalties of perjury, that I am authorized to sign this
request for retroactive reinstatement on
behalf of [Name of Organization], and
I further declare that I have examined
this request for retroactive reinstatement, including the written explanation
of all the facts and information pertaining to the claim for reasonable cause
and the evidence to substantiate the
claim for reasonable cause, and to the
best of my knowledge and belief, this
request is true, correct, and complete.
.02 Reasonable Cause Standard
Because the failure described in section
6033(j)(1) involves a repeated and continuous failure to file annual returns or notices for a consecutive three-year period,
an organization seeking retroactive reinstatement under section 6033(j)(3) must
demonstrate that it had reasonable cause
for failing to file a return or notice not only
for each of the three years but also over the
entire three-year period. Thus, for example, showing reasonable cause for failing
to file a required return or notice for the
first of the three years by the date it was
due would be insufficient; an organization
also would have to show reasonable cause
for not filing that return or notice at any
later time during the three-year period and
for not filing required returns or notices for
the second and third years of the three-year
period.
In order to establish reasonable cause
under section 6033(j)(3), an organization
requesting retroactive reinstatement must
provide evidence that it exercised ordinary
business care and prudence in determining
and attempting to comply with its reporting requirements under section 6033 for
each of the three years and over the entire three-year period, but was nevertheless unable to file the required returns or
notices for three consecutive years. In determining whether the organization establishes reasonable cause, the IRS will take
into account all pertinent facts and circum-

885

stances, including, but not limited to, the
following factors that weigh in favor of
finding reasonable cause (with no single
factor being either necessary or determinative):
(1) The organization’s failure was due
to its reasonable, good faith reliance on erroneous written information from the IRS,
stating that the organization was not required to file a return or notice under section 6033, provided the IRS was made
aware of all relevant facts.
(2) The failure to file the returns or notices arose from events beyond the organization’s control (“impediment”) that made
it impossible for the organization to file returns or notices for each of the three years
at issue and over the entire three-year period.
(3) The organization acted in a responsible manner by undertaking significant
steps to avoid or mitigate the failure to file
the required returns or notices and to prevent similar failures in the future, including, but not limited to—
(a) Attempting to prevent an impediment or a failure, if it was foreseeable;
(b) Acting as promptly as possible to remove an impediment or the cause of the
reporting failure, once the failure was discovered; and
(c) After the failure was discovered, implementing sufficient safeguards to ensure
future compliance with the reporting requirements under section 6033.
(4) Aside from the three consecutive
years in which the organization failed to
file returns or notices, the organization has
an established history of complying with
its reporting requirements (if any) under
section 6033 and/or any other applicable
reporting or other requirements under the
Code.
In determining whether reasonable
cause exists, the IRS will only consider a
factor on the above list or any other factor
(such as the fact that substantially all of
an organization’s activities are performed
by volunteers) if the organization shows
to the satisfaction of the IRS evidence to
substantiate the factor.
.03 Timing of Request for Retroactive
Reinstatement
Except for small organizations that
qualify for the transitional relief described
in Notice 2011–43, the IRS will, in exercising the discretion granted under section
6033(j)(3), consider an organization’s re-

2011–25 I.R.B.

quest for retroactive reinstatement only if
it submits such a request, together with a
properly completed and executed application for reinstatement of its tax-exempt
status, within 15 months of the later of
the date of the IRS revocation letter or
the date on which the IRS posts the name
of the organization on the revocation list
available on the IRS website (or otherwise
provides notice of the revocation to the
public).
SECTION 6. SUBSEQUENT
AUTOMATIC REVOCATIONS
An organization whose tax-exempt status has been automatically revoked and reinstated may have its tax-exempt status automatically revoked a second time under
section 6033(j)(1) only if it fails to file returns or notices for another three consecutive taxable years, beginning with the taxable year the IRS approves its application
for reinstatement of tax-exempt status. For
example, if an organization reporting on
a calendar year basis has its tax-exempt
status automatically revoked for failing to
file required returns or notices for 2007,
2008, and 2009 and receives a determination letter recognizing the reinstatement of
its tax-exempt status dated September 1,
2011, the organization’s tax-exempt status
will not be automatically revoked a second
time for failing to timely file a return or notice for 2008, 2009, and 2010. However,
the organization’s tax-exempt status will
be automatically revoked a second time if
the organization fails to timely file a return
or notice for 2011, 2012, and 2013.
SECTION 7. PAPERWORK
REDUCTION ACT
The collection of information contained
in this notice has been submitted to the Office of Management and Budget in accordance with the Paperwork Reduction Act
of 1995 (44 U.S.C. 3507(d)) and approved
under OMB control number 1545–2206.
The collection of information in this notice is in section 5. In order to have its
tax-exempt status retroactively reinstated
under section 6033(j)(3), an organization
must show to the satisfaction of the IRS
evidence that it exercised ordinary business care and prudence in determining and
attempting to comply with its reporting
obligations under section 6033 for each of

2011–25 I.R.B.

the three years (and over the entire threeyear period) that it failed to meet such requirements. This information is necessary
for inspection by the IRS in determining
whether reasonable cause exists. The collection of information is required to meet
the reasonable cause standard under section 6033(j)(3). The likely respondents
providing the information required in section 5 of this notice are tax-exempt organizations that have had their tax-exempt statuses automatically revoked under section
6033(j)(1), have applied for reinstatement
of such status under section 6033(j)(2),
and are seeking that such reinstatement be
made retroactive to the date of revocation
under section 6033(j)(3).
Estimated total annual reporting burden: 2,917 hours.
Estimated average annual burden per
respondent: 1 hour.
Estimated number of respondents over
the next three years: 8,750.
Additional collection of information is
proposed in section 4 of the notice, which
will be reported and approved through
Forms 1023 and 1024 (OMB approval
numbers 1545–0056 and 1545–0057, respectively).
An agency may not conduct or sponsor,
and a person is not required to respond to, a
collection of information unless it displays
a valid control number assigned by the Office of Management and Budget.
SECTION 8. REQUEST FOR
COMMENTS
Treasury and the IRS request comments
regarding this notice and suggestions for
future guidance regarding the provisions
of section 6033(j). Comments should be
submitted on or before August 19, 2011.
Please include “Notice 2011–44” on the
cover page. Comments should be sent to
the following address:
Internal Revenue Service
CC:PA:LPD:PR (Notice 2011–44),
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, D.C. 20224.
Submissions may be hand delivered
Monday through Friday between the hours
of 8 a.m. and 4 p.m. to:

886

Internal Revenue Service
Courier’s Desk,
1111 Constitution Avenue, N.W.
Washington, D.C. 20224
Attn: CC:PA:LPD:PR
(Notice 2011–44)
Submissions may also be sent electronically to the following e-mail address:
[email protected].
Please include “Notice 2011–44” in the
subject line.
All comments will be available for public inspection and copying.
SECTION 9. DRAFTING
INFORMATION
The principal authors of this notice are Monice Rosenbaum and
Preston Quesenberry of the Office
of Division Counsel/Associate Chief
Counsel (Tax Exempt and Government
Entities) and Matthew Giuliano of the Tax
Exempt and Government Entities Division
of the IRS. However, other personnel
from the IRS and Treasury Department
participated in developing this notice.
For further information regarding this
notice, contact Ms. Rosenbaum at (202)
622–6070, Mr. Quesenberry at (202)
622–1124, or Mr. Giuliano at (202)
283–8917 (not toll-free numbers).

Restrictions on Use of the
Term Registered Tax Return
Preparer
Notice 2011–45
The Department of the Treasury and the
IRS are implementing the recommendations contained in Publication 4832, “Return Preparer Review.” As part of this implementation, the Department of the Treasury and the IRS have issued final regulations (T.D. 9527) that include registered
tax return preparers as practitioners under
31 CFR Part 10 (reprinted as Treasury Department Circular 230).
The Department of the Treasury and the
IRS have also published final regulations
under I.R.C. § 6109 (75 FR 60309) providing that attorneys, certified public accountants, enrolled agents, and registered

June 20, 2011

tax return preparers who prepare all or substantially all of a tax return must obtain a
preparer tax identification number (PTIN).
In Notice 2011–6, 2011–3 I.R.B. 315, the
IRS identified two additional groups of
individuals who are eligible to obtain a
PTIN: (1) specified individuals who are
supervised by the attorney, certified public
accountant, enrolled agent, enrolled retirement plan agent, or enrolled actuary who
signs the tax return or claim for refund prepared by the individual, and (2) individuals who certify they do not prepare or assist
in the preparation of all or substantially all
of any tax return or claim for refund covered by a competency examination. Notice 2011–6 further provided that individuals who are not attorneys, certified public accountants, enrolled agents, or registered tax return preparers may obtain a provisional PTIN before the date that the registered tax return preparer competency examination is first offered. After the competency examination is offered, only attorneys, certified public accountants, enrolled agents, registered tax return preparers, or the additional groups of individuals
identified above will be eligible to obtain a
PTIN. The IRS began issuing PTINs at the
end of September 2010.
To become a registered tax return preparer, an applicant must pass a competency
examination and tax compliance and suitability checks. The IRS has selected a vendor to develop and administer the competency examination, but the examination is
not yet available. Additionally, the IRS is
currently in the process of developing the
suitability check. Because the conditions
for becoming a registered tax return preparer are not yet able to be satisfied by
any individual, no individual may represent that he is a registered tax return preparer. An individual with a provisional
PTIN may not represent that he is a registered tax return preparer or has passed
the competency examination. Once the
competency examination is available, only
an individual who has met all of the conditions to becoming a registered tax return preparer, including passing the competency examination and the tax compliance and suitability checks, may represent
that he is a registered tax return preparer.
An individual who becomes a registered tax return preparer must comply
with the applicable rules in Circular 230,
including section 10.30 regarding practi-

June 20, 2011

tioner advertising and solicitation. Section
10.30 will be amended to require a registered tax return preparer using any paid
advertising involving print, television or
radio, in which the individual represents
himself or herself to be a registered tax
return preparer to display or broadcast
the following statement: “The IRS does
not endorse any particular individual tax
return preparer. For more information on
tax return preparers go to IRS.gov.”
The principal author of this notice is
Emily M. Lesniak of the Office of Associate Chief Counsel (Procedure & Administration). For further information regarding this notice, contact Emily M. Lesniak
at (202) 622–4570 (not a toll-free call).

Deferral of Dates Related
to the 2011 Branded
Prescription Drug Fee
Notice 2011–46
Purpose
This notice defers two dates by which
certain actions are to be taken for purposes
of the branded prescription drug fee.

June 1, 2011, in order for a correction
to any claimed error to be considered
by the IRS. Section 5.02(1) of the Rev.
Proc. provides that the IRS will notify
the covered entity in writing of the final
determination with respect to error reports
when the IRS sends the covered entity
the final fee calculation no later than
August 15, 2011.
Reason for change and deferral of dates
The IRS has been told that certain covered entities may have difficulty meeting
the June 1 deadline for submitting these error reports because of the volume of data
they need to review. Accordingly, this notice defers until June 10, 2011, the date
by which error reports under Rev. Proc.
2011–24 must be postmarked in order to
receive IRS consideration.
To preserve the time needed to give appropriate consideration to the error reports,
the IRS will send covered entities their
2011 final fee calculation and, if applicable, notification of the final determination
with respect to error reports by August 24,
2011, instead of August 15, 2011.
Effect on Other Documents
Notice 2011–9 and Rev. Proc. 2011–24
are modified.

Background
An annual fee on covered entities engaged in the business of manufacturing
or importing branded prescription drugs
was enacted by section 9008 of the Patient Protection and Affordable Care Act
(ACA), Public Law 111–148 (124 Stat.
119 (2010)), as amended by section 1404
of the Health Care and Education Reconciliation Act of 2010 (HCERA), Public
Law 111–152 (124 Stat. 1029 (2010)).
Notice 2011–9, 2011–6 I.R.B. 459,
provides guidance for implementing this
fee in 2011. Among other things, Notice
2011–9 states that the IRS will provide
each covered entity with a preliminary fee
calculation by May 16, 2011, and a final
fee calculation by August 15, 2011.
Rev. Proc. 2011–24, 2011–20 I.R.B.
787, provides a dispute resolution process
by which a covered entity may dispute
its preliminary fee calculation before the
IRS sends it a final fee calculation. Section 4.01 of the Rev. Proc. provides that
a covered entity must provide a written
error report to the IRS, postmarked by

887

Drafting Information
The principal author of this notice is
Celia Gabrysh of the Office of Associate
Chief Counsel (Passthroughs & Special Industries). For further information regarding this notice, contact Celia Gabrysh at
(202) 622–3130 (not a toll-free call).

Updated Reliance Rules for
Contributors
Rev. Proc. 2011–33
SECTION 1. PURPOSE
This revenue procedure modifies and
supersedes Revenue Procedure 82–39,
1982–2 C.B. 759, and Revenue Procedure 2009–32, 2009–28 I.R.B. 142, and
provides the extent to which grantors
and contributors (including donors) may
rely on the listing of an organization in

2011–25 I.R.B.

Publication 78, Cumulative List of Organizations described in § 170(c) of the
Internal Revenue Code, or on the IRS
Business Master File (“BMF”) extract, for
purposes of deducting contributions under
§ 170 and making grants under §§ 4942,
4945, and 4966. In addition, this revenue
procedure clarifies that the Internal Revenue Service (“IRS”) may give notice of
revocation, including revocations under
§6033(j), through an appropriate public
announcement, such as publication in the
Internal Revenue Bulletin or on the IRS’s
website at www.irs.gov.
SECTION 2. BACKGROUND
.01 Section 170, with certain limitations, allows deductions for federal income tax purposes of contributions or gifts
made to or for the use of an organization
that qualifies as an organization described
in § 170(c). In order for contributions
to be deductible, the organization must
qualify at the time of the contribution.
Thus, it is the responsibility of an organization receiving contributions to ensure
that its character, purposes, activities, and
method of operation satisfy the qualification requirements of § 170(c) in order
for grantors and contributors to have the
assurance that their contributions at the
time made are deductible.
.02 Treas. Reg. § 1.509(a)–7(a) sets
forth general rules regarding reliance by
grantors and contributors to organizations
described in §§ 509(a)(1), (2), and (3).
This regulation provides that once an organization has received a ruling or determination letter classifying it as an organization described in § 509(a)(1), (2), or (3),
the treatment of contributions and grants,
and the status of grantors and contributors to such organization under §§ 170,
507, 545(b)(2), 642(c), 4942, 4945, 2055,
2106(a)(2), and 2522, will not be affected
by reason of a subsequent revocation by
the IRS of the organization’s classification
as described in § 509(a)(1), (2), or (3) until
the date on which notice of change of status is made to the public.
.03 Generally, Publication 78 lists organizations that have received a ruling or determination letter from the IRS stating that
contributions by grantors or contributors to
the listed organization (or to the listed central (or parent) organization and those local
(or subordinate) units covered by the group

2011–25 I.R.B.

exemption letter) are deductible as provided in § 170. (Note that Publication 78
does not include separate listings for local
organizations included in a group ruling.)
Each ruling or determination letter is based
on a factual showing by the listed organization that its character, purposes, activities,
and method of operation satisfy the statutory requirements for qualification at the
time the ruling or determination letter is issued. If there is a material change in the
character, purposes, activities, or method
of operation of an organization from those
on which the ruling or determination letter was based and the change is such that
the organization ceases, as a matter of law,
to qualify under § 170(c), the ruling or determination letter also immediately ceases
to be applicable (see also Sec. 11.02 of
Rev. Proc. 2011–9, 2011–2 I.R.B. 283).
Where this circumstance occurs, except for
the validation provision of § 7428(c) (see
Sec. 5.02), it is only by exercise of the
authority under § 7805(b) that grantors or
contributors to the organization may be allowed a deduction for grants or contributions made after the organization ceases to
qualify under § 170(c).
.04 Through the use of a “deductibility code,” Publication 78 generally indicates the foundation classification under
§ 509(a) of the listed organizations. This
classification determines the appropriate
limitations for deductibility purposes and
whether private foundations and sponsoring organizations of donor-advised funds
making grants to particular organizations
would be required to exercise expenditure
responsibility. The coding system in Publication 78 does not indicate specifically
whether an organization is described in
§ 509(a)(1), (2), or (3), or a particular subparagraph of § 170(b)(1)(A).
.05 The IRS no longer publishes a paper
version of Publication 78. Grantors and
contributors can no longer rely on the paper version of Publication 78 or any paper
supplements for current information after
the date of publication of this revenue procedure. Publication 78 now appears solely
in electronic format on the IRS website
at http://www.irs.gov/app/pub–78. Electronic Publication 78 and its electronic addenda are generally updated at least quarterly.
.06 The IRS also makes an extract of
certain information on exempt organizations from the BMF available to the public

888

through the Tax Statistics section of the
IRS website. The extract of the BMF contains more information, in a slightly different format, than Publication 78. Among
the data fields provided are an organization’s name and Employer Identification
Number (“EIN”), address, subsection
code (the paragraph under § 501(c) under
which it is recognized as exempt), ruling
date, affiliation code (status as an independent, central, or local organization),
deductibility code, foundation code (indicating whether an organization is a private
foundation, private operating foundation,
or public charity described in § 509(a)(1),
(2), or (3)), and, if applicable, the appropriate subparagraph of § 170(b)(1)(A)),
and other data fields. The IRS plans to
modify the foundation codes in early 2011
to indicate whether a § 509(a)(3) organization is a Type I, Type II, Type III, or
Type III functionally integrated supporting organization. Unlike Publication 78,
the BMF extract contains information on
all organizations that have been recognized by the IRS as tax-exempt, including
organizations not eligible to receive tax
deductible contributions. References to
listing in or reliance on the BMF extract
in this revenue procedure only pertain to
organizations contributions to which have
been determined to be deductible under
§170, as reflected in the deductibility code
in Publication 78 or the BMF extract.
.07 Due to its large size, the BMF extract is available as compressed ASCII
Text or Excel spreadsheet files. These files
must be downloaded and uncompressed
before viewing. The BMF extract and its
corresponding instructions are available
for download directly from the IRS website at http://www.irs.gov/taxstats/charitablestats/article/0,,id=97186,00.html.
Generally, the BMF information is extracted and updated on a monthly basis.
.08
Temporary
Regulations
§§
1.170A–9T(f)(5)(ii)
and
1.509(a)–3T(e)(2), 73 Fed. Reg. 52,528
(Sept. 9, 2008), state generally that
grantors and contributors may rely on an
organization’s ruling that the organization
is described in §§ 170(b)(1)(A)(vi) and
509(a)(1) or in § 509(a)(2) until the IRS
publishes notice of a change of status (for
example, in the Internal Revenue Bulletin
or Publication 78), unless the grantor or
contributor was responsible for, or aware
of, the act or failure to act that results in

June 20, 2011