IRS Updates Procedures for Group Exemption Applications

The Internal Revenue Service (IRS) announced earlier this week it will once again accept new applications for group exemption letters, officially ending a freeze that has been in place since June 2020. The announcement was made through IRS Revenue Procedure 2026-8, published Jan. 20, 2026, which modernizes how central organizations obtain and maintain tax-exempt status for their affiliated chapters.

The pause on group exemption applications was originally implemented to give the IRS time to update the program and strengthen oversight of chapters or affiliates – referred to by the IRS as "subordinate organizations." The new revenue procedure introduces updated standards for "general supervision or control" to improve data integrity and compliance. Under the revised rules, a central organization must have at least five subordinate organizations to qualify for a group exemption.

The guidance also clarifies the central organization’s responsibility to obtain, review and retain information about each subordinate organization. This requirement may be satisfied by collecting a copy of a subordinate’s Form 990 or Form 990-EZ. However, a Form 990-N alone does not meet this requirement; subordinate organizations that file Form 990-N must instead provide other written information on an annual basis.

Finally, the IRS confirmed that all group exemption applications must be submitted electronically via Form 8940 through www.pay.gov, along with all required documentation and supporting materials outlined in the form’s instructions.

This article was provided to OSAP by ASAE's Power of Associations and Inroads.