Exempt Organizations Advisory - IRS Provides Procedures for Supporting Organizations to Change Public Charity Classification

Catherine W. Wilkinson (cwilkinson@steptoe.com)
Suzanne Ross McDowell (smcdowell@steptoe.com)

On August 10, the IRS published Announcement 2009-62 which provides procedures for supporting organizations to request a change in their public charity classification.  In response to the Pension Protection Act of 2006 which changed the tax laws with respect to supporting organizations described in section 509(a)(3), the IRS published Announcement 2006-93 to provide procedures for supporting organizations to request reclassification as public charities under section 509(a)(1) or section 509(a)(2).  Yesterday’s announcement supersedes Announcement 2006-93 and provides procedures that are consistent with the redesigned Form 990 and temporary regulations issued on Sept. 9, 2008 which changed the public support computation period and the method of accounting for computing public support.  The announcement also eliminates the expedited process for these requests unless the request meets the general criteria for expedited determinations found in Rev. Proc. 2009-4, 2009-1 I.R.B. 118.  Requests previously submitted for reclassification under the earlier Announcement will be processed under those procedures and do not need to be resubmitted.