Overview
On August 15, Treasury and the IRS released Treasury Decision 9964 containing final regulations under section 6104(c). The regulations provide guidance to states regarding the process by which they may obtain or inspect some returns and return information (including information about final and proposed denials and revocations of tax-exempt status) for the purpose of administering state laws governing tax-exempt organizations and their activities.
The final regulations amend existing regulations to reflect changes made by the Pension Protection Act of 2006 (the PPA). The PPA added sections 6104(c)(2) through (6), which expanded the IRS’s ability to disclose information to appropriate state officers (ASOs). Regulations were proposed in 2011, and this Treasury decision adopts those proposed rules with certain clarifications. Although a commenter was concerned that the requirements for the protection of the information provided were onerous, and reduced the number of states that could take advantage of the increased disclosure, the final regulations do not alter those requirements. In view of the current participation in the section 6104(c) disclosure program, and considering the potential for increased participation by other ASOs, the Treasury Department and the IRS consider the publication of final regulations important in fulfilling the mandate under section 6104(c) to facilitate the enforcement of State law regarding exempt organizations consistent with statutory security, confidentiality and use restrictions. The final regulations will become effective on the date of publication in the Federal Register, scheduled for August 16.
