Recent IRS Private Letter Rulings of Interest to Tax-Exempt Organizations

The U.S. Internal Revenue Service recently released the following private letter rulings of interest to tax-exempt organizations.

PLR 201137012: Approval of 501(c)(3) organization’s plan to conduct nonpartisan voter registration activities in more than five states based on demographic concentration of individuals who historically have shown low levels of voter participation. Pursuant to Internal Revenue Code Section 4945(f), the organization sought and obtained a ruling that grants to it by private foundations would not be treated as taxable expenditures pursuant to Section 4945(d)(2). As described in the ruling, the organization will enter into agreements with local entities to carry out the registration activities in accordance with a field manual and a quality control manual that emphasize the nonpartisan nature of the activities. The organization’s plan specifically describes the actions it will take upon a discovery that canvassers have engaged in activities favoring one party or candidate. Those actions range from disciplinary actions by the local office to withholding of funds and immediate termination of the local entity’s agreement.

PLR 201136028: Approval of a private foundation’s college scholarship program. The foundation sought and obtained the IRS’s determination that awards made pursuant to the program would not result in taxable expenditures pursuant to IRC Section 4945(d)(3), and that the awards would be excludable from the recipients’ gross income to the extent allowed by IRC Section 116. Among other salient features of the program described in the ruling are–

  • requirements for scholarship recipients’ residency, academic achievement, and financial need;
  • the composition of an award advisory committee;
  • provisions for disqualification of insiders and related persons from participation in the program;
  • detailed recordkeeping requirements;
  • provision for payment of the award jointly to the educational institution and the recipient;
  • provision for return of excess funds to the scholarship program; and
  • criteria for termination of an award.

PLR 201136027: Approval of 501(c)(5) agricultural organization’s plan upon dissolution to distribute its assets to another 501(c)(5) organization.

Private letter rulings are binding only as between the IRS and the taxpayer who requested the ruling, and have no precedential effect in other cases.

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