[Federal Register Volume 64, Number 68 (Friday, April 9, 1999)]
[Rules and Regulations]
[Pages 17279-17291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8638]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 301 and 602
[TD 8818]
RIN 1545-AV13
Public Disclosure of Material Relating to Tax-Exempt
Organizations
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
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SUMMARY: This document contains final regulations relating to the
public disclosure requirements of section 6104(d) of the Internal
Revenue Code (Code), as amended by the Tax and Trade Relief Extension
Act of 1998. These final regulations apply only to tax-exempt
organizations (organizations described in sections 501(c) or (d) and
exempt under section 501(a)) other than private foundations. These
final regulations provide guidance for tax-exempt organizations (other
than private foundations) required to make their applications for tax
exemption and annual information returns available for public
inspection. In particular, these regulations provide guidance for tax-
exempt organizations required to comply with requests made in person or
in writing from individuals who seek a copy of those documents. These
regulations describe how a tax-exempt organization can make those
documents widely available and, therefore, not be required to provide
copies in response to individual requests. These regulations also
address the standards that apply in determining whether a tax-exempt
organization is the subject of a harassment campaign and provide
guidance on the applicable procedures for obtaining relief from the
requirement that copies of documents be provided in response to
requests.
DATES: These regulations are effective June 8, 1999.
FOR FURTHER INFORMATION CONTACT: Michael B. Blumenfeld, (202) 622-6070
(not toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collections of information contained in these final regulations
have been reviewed and approved by the Office of Management and Budget
in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under
control number 1545-1560. Responses to these collections of information
are mandatory.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid control number.
The estimated annual burden per respondent/recordkeeper varies from
0 hours to 55 hours, depending on individual circumstances with an
estimated average of 30 minutes.
Comments on the accuracy of this burden estimate and suggestions
for reducing the burden should be sent to the Internal Revenue Service,
Attn: IRS Reports Clearance Officer, OP:FS:FP, Washington, DC 20224,
and to the Office of Management and Budget, Attn: Desk Officer for the
Department of the Treasury, Office of Information and Regulatory
Affairs, Washington, DC 20503.
Books or records relating to this collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by 26 U.S.C. 6103.
Background
This document contains amendments to the Procedure and
Administration Regulations (26 CFR part 301) relating to the section
6104(d) public disclosure requirements applicable to tax-exempt
organizations (organizations described in sections 501(c) or (d) and
exempt from taxation under section 501(a)). Section 6104(d), as amended
by section 14(b) of the Tax and Trade Relief Extension Act of 1998
(Division J of H.R. 4328, the Omnibus Consolidated and Emergency
Supplemental Appropriations Act, 1999) (Public Law 105-277, 112 Stat.
2681) (Tax and Trade Relief Extension Act of 1998), will apply to
requests made to all tax-exempt organizations (other than private
foundations) after June 8, 1999. Until such date, all tax-exempt
organizations continue to be subject to the requirements of section
6104(e) as currently in effect, without regard to the Tax and Trade
Relief Extension Act of 1998.
Although the Tax and Trade Relief Extension Act of 1998 extended
fully to private foundations the public disclosure requirements that
apply to other tax-exempt organizations, those requirements do not go
into effect with respect to private foundations until the 60th day
after the Secretary of the Treasury issues final regulations under
section 6104(d) that apply to private foundations. In the meantime,
private foundations continue to be subject to the public disclosure
requirements under sections 6104(d) and (e) of the Internal Revenue
Code, as in effect prior to the Tax and Trade Relief Extension Act of
1998.
Description of Current Law Section 6104(e)
Section 10702 of the Omnibus Budget Reconciliation Act of 1987
(OBRA '87) added subsection (e) to section 6104. Section 6104(e)
requires each tax-exempt organization, including one that is a private
foundation, to allow public inspection of the organization's
application for recognition of tax exemption. Section 6104(e) also
requires each tax-exempt organization, other than one that is a private
foundation, to allow public inspection at the organization's principal
office (and certain regional or district offices) of its three most
recent annual information returns. (Section 6104(e) does not apply to
private foundation annual information returns, which are subject to
public disclosure under section 6104(d), as in effect prior to the Tax
and Trade Relief Extension Act of 1998.) Under section 6104(e), each
annual information return must be made available for a 3-year period
beginning on the date the return is required to be filed or is actually
filed, whichever is later. In Notice 88-120 (1988-2 C.B. 454), the IRS
provided tax-exempt organizations with guidance for complying with the
public inspection requirements.
The Taxpayer Bill of Rights 2 (TBOR2), enacted on July 30, 1996,
amended section 6104(e) by adding additional public disclosure
requirements. As amended, section 6104(e) requires each tax-exempt
organization, including one that is a private foundation, to comply
with requests, made either in person or in writing, for copies of the
organization's application for recognition of tax exemption. Section
6104(e) also requires each tax-exempt organization, other
[[Page 17280]]
than one that is a private foundation, to comply with requests, made
either in person or in writing, for copies of the organization's three
most recent annual information returns. The organization must fulfill
these requests without charge, other than a reasonable fee for
reproduction and postage. If the request for copies is made in person,
the organization generally must provide the requested copies
immediately. If the request for copies is made in writing, the
organization must provide the copies within 30 days. Section 6104(e)
also provides that an organization is relieved of its obligation to
provide copies upon request if, in accordance with regulations
promulgated by the Secretary of the Treasury, (1) the organization has
made the requested documents widely available, or (2) the Secretary of
the Treasury determines, upon application by the organization, that the
organization is subject to a harassment campaign such that a waiver of
the obligation to provide copies would be in the public interest.
Issuance of Proposed Regulations Under Section 6104(e)
In Notice 96-48 (1996-2 C.B. 214), the IRS invited comments on the
changes made by TBOR2. Twenty-two comments were received and considered
in the drafting of a notice of proposed rulemaking (REG-246250-96),
published in the Federal Register (62 FR 50533) on September 26, 1997.
The IRS received twenty written comments on the proposed regulations
and held a public hearing on February 4, 1998. After consideration of
all the written comments regarding the proposed regulations, and the
amendments made by the Tax and Trade Relief Extension Act of 1998,
described below, those regulations are adopted as revised by this
Treasury decision.
Amendments Made by the Tax and Trade Relief Extension Act of 1998
The Tax and Trade Relief Extension Act of 1998, which was enacted
on October 21, 1998, amended section 6104(e) of the Internal Revenue
Code to subject private foundations to the same rules regarding public
disclosure of annual information returns that apply to other tax-exempt
organizations. In addition, the Tax and Trade Relief Extension Act of
1998 repealed existing section 6104(d), and redesignated section
6104(e), as amended, as new section 6104(d). (Unless otherwise noted,
all references in these final regulations to section 6104(d) are to
section 6104(d) as amended by the Tax and Trade Relief Extension Act of
1998.)
The Tax and Trade Relief Extension Act of 1998 amendments apply to
requests made after the later of December 31, 1998 or the 60th day
after the Secretary of the Treasury issues regulations referred to in
section 6104(d)(4) (relating to when documents are made widely
available and when a particular request is considered part of a
harassment campaign). This Treasury decision adopts final regulations
under section 6104(d)(4) that are applicable to tax-exempt
organizations other than private foundations. Accordingly, amendments
to section 6104(d) will become applicable with respect to requests made
to tax-exempt organizations other than private foundations after June
8, 1999.
Future Regulations Will Apply to Private Foundations
The IRS and the Treasury Department intend to issue shortly a
notice of proposed rulemaking relating to the public disclosure
requirements of section 6104(d) as those requirements apply to private
foundations. Until 60 days after final regulations are issued, private
foundations continue to be subject to sections 6104(d) and (e), as in
effect prior to the Tax and Trade Relief Extension Act of 1998. For
that reason, existing Sec. 301.6104(d)-1, relating to public inspection
of private foundation annual returns, is not affected by this Treasury
decision.
Explanation of Provisions
Overview
The final regulations provide guidance concerning the application
for tax exemption and annual information returns a tax-exempt
organization, other than a private foundation, must make available for
public inspection and must supply in response to requests for copies.
The final regulations also provide guidance on (1) the place and time
the organization must make these documents available for public
inspection, (2) conditions the organization may place on requests for
copies of the documents, and (3) the amount, form and time of payment
of any fees the organization may charge. The final regulations also
prescribe how an organization can make its application for tax
exemption and annual information returns widely available. Finally, the
final regulations provide guidance on the standards that apply in
determining whether an organization is the subject of a harassment
campaign and on the applicable procedures for obtaining relief from the
general requirement that copies of documents be provided in response to
requests.
Application for Tax Exemption
A tax-exempt organization, other than one that is a private
foundation, must make its application for tax exemption available
pursuant to these final regulations. An application for tax exemption
includes the application form (such as Form 1023 or Form 1024) and any
supporting documents filed by, or on behalf of, the organization in
connection with its application. It also includes any letter or
document issued by the IRS in connection with the application.
Consistent with the guidance provided in Notice 88-120, if an
organization filed its application before July 15, 1987, the final
regulations provide that the organization is required to make available
a copy of its application only if it had a copy of the application on
July 15, 1987.
Annual Information Returns
A tax-exempt organization, other than one that is a private
foundation, must make its three most recent annual information returns
available pursuant to these final regulations. Generally, an annual
information return includes Forms 990, 990-EZ, 990-BL, and Form 1065.
It also includes, generally, all schedules and attachments filed with
the IRS. An organization is not required, however, to disclose the
parts of the return that identify names and addresses of contributors
to the organization, nor is it required to disclose Form 990-T.
A few commentators asked that the final regulations exempt certain
items reported on an application for tax exemption or an annual
information return from disclosure. For example, one commentator
observed that only an organization described in section 501(c)(3) is
required by statute (section 6033) to report certain compensation
information. By contrast, it is the regulations under section 6033 that
require tax-exempt organizations described in other parts of section
501(c) or section 501(d) to report certain compensation information.
Accordingly, the commentator asked that the final regulations require
public disclosure of the compensation section of Form 990 only when it
is a statutory requirement, as opposed to a regulatory requirement, to
report such information. Because section 6104(d) requires, except for
specific exceptions, disclosure of all the information reported on an
application or return, the IRS and the Treasury Department decided that
requiring public disclosure of compensation information required to be
reported on an annual information return either by
[[Page 17281]]
statute or regulation is consistent with section 6104(d).
One commentator requested that final regulations require an
organization that has not been determined by the IRS to be exempt from
taxation under section 501(a) to make its application for tax exemption
available for public inspection and to provide copies upon request.
Section 301.6104(e)-1(b)(3) of the proposed regulations provided that
an organization is not required to disclose its application for tax
exemption until the IRS determines it is exempt from taxation. Section
6104(d)(1) requires an organization to disclose its application for tax
exemption only where it is exempt under section 501(a). Thus, the
statute does not require an organization to disclose its application
for tax exemption while the application is pending or in a case where
the IRS issues an adverse determination. Accordingly, the IRS and the
Treasury Department continue to believe that the rule of the proposed
regulation is consistent with the statute and have decided not to
change this provision.
One commentator proposed that a special rule be included in the
final regulations so that a religious or apostolic organization
described in section 501(d) would not be required to publicly disclose
a Schedule K-1 of Form 1065 because it contains taxpayer information
with respect to the distributees (i.e., the ratable portions of the net
income and expenses of the individual members of the organization).
After the submission of this comment, the Internal Revenue Service
Restructuring and Reform Act of 1998, Public Law 105-206 (112 Stat.
685) was enacted. Section 6019 of this Act amended Code sections
6104(b) and 6104(e) to provide specifically that organizations
described in section 501(d) are not required to publicly disclose a
Schedule K-1 filed by the organization. Consistent with this statutory
modification of section 6104, the final regulations eliminate the
requirement that a religious or apostolic organization described in
section 501(d) disclose a Schedule K-1.
Place and Time Documents Must Be Available for Public Inspection
Section 6104(d) requires a tax-exempt organization to make its
documents available for public inspection, and provide copies upon
request, at its principal office and at certain regional or district
offices. Under Notice 88-120, certain sites where services are provided
(such as day care or health care) are not treated as regional or
district offices for purposes of the public inspection requirements,
provided that such sites do ``not serve as offices of management staff
(other than managers involved solely in managing the specific service
of that service provider office).'' The IRS and the Treasury Department
recognize that many tax-exempt organizations maintain sites where their
employees or volunteers solely provide services that further exempt
purposes, including services provided directly to the public, but do
not maintain administrative or management staff at such sites necessary
to respond to public disclosure requests. Accordingly, the proposed
regulations expanded the ``service provider exception'' of Notice 88-
120 slightly. Under the proposed regulations, sites where the only
services provided further exempt purposes (such as day care, health
care or scientific or medical research) were excluded from the
definition of a regional or district office. Thus, under the proposed
regulations, a research organization that maintains a laboratory used
solely by individuals conducting scientific research on behalf of the
organization would not have to respond to public disclosure requests
made at the laboratory even though the researchers are not providing
direct services to the public. However, a research organization would
have a public disclosure obligation at a laboratory if the organization
also uses space at that location as offices for some of its management
staff (other than those involved solely in managing the exempt function
activities at the laboratory).
Several comments were received on this topic. One commentator
expressed the view that the definition of regional or district office
in the proposed regulations was reasonably well balanced. Other
commentators, however, expressed concern that this definition would
reduce the number of sites from which the documents could be obtained.
One of these commentators expressed the view that exempting
organizations from complying with public disclosure requests made at
sites where employees engage solely in providing exempt services would
unnecessarily complicate the determination whether an organization is
required to respond to public disclosure requests at a particular site.
This commentator suggested that the final regulations treat any site
with 3 or more employees as a regional or district office where an
organization must respond to requests for public inspection or copies.
Another commentator expressed the view that the exception for sites
dedicated solely to providing exempt services was reasonable, but
suggested that the final regulations clarify what activities would
constitute management activities that would require an organization to
respond to public disclosure requests at the site.
The IRS and the Treasury Department believe that the ``regional and
district office'' rule of section 6104(d) was intended to enhance the
availability of documents in the case of an organization that maintains
management staff at one or more offices in addition to its principal
office. However, Congress explicitly recognized that the burden to an
organization of complying with requests for public inspection or copies
made at small regional or district offices (those with fewer than 3
employees) would outweigh the public benefit of increased availability
of the documents. This rationale applies equally as well to certain
sites of a tax-exempt organization where its employees and volunteers
engage solely in providing services that further exempt purposes and
which do not serve as an office for management staff. The IRS and the
Treasury Department believe the rule expressed in the proposed
regulations is consistent with the intent of the statute and prior IRS
guidance, particularly in light of the new provisions that allow copies
to be obtained by mail. Therefore, the rule of the proposed regulations
is followed in the final regulations.
The proposed regulations prescribed how an organization that does
not maintain a permanent office or whose office has very limited hours
during certain times of the year can comply with the public inspection
requirements. The proposed regulations also provided rules concerning
the conditions the organization may impose on public inspections that
are consistent with Notice 88-120. In this regard, the final
regulations follow the proposed regulations.
The proposed regulations permitted a principal, regional, or
district office of an organization to use an agent to process requests
for copies. One commentator asked that the final regulations also allow
a tax-exempt organization to retain a local agent to satisfy the
organization's public inspection obligation. After careful
consideration of this comment, the IRS and the Treasury Department have
concluded that, to avoid potential inconvenience to members of the
public, it is important that tax-exempt organizations make their
applications and returns available for inspection at their offices.
Therefore, the IRS and the Treasury Department did not adopt this
comment.
[[Page 17282]]
Another commentator asked that the final regulations clarify that
an organization may apply the same security measures to individuals
that request inspection or copies that it applies to the public in
general. The IRS and the Treasury Department have determined that the
proposed regulations would not preclude a tax-exempt organization from
implementing its normal security measures. Thus, no change is reflected
in the final regulations.
Requirement to Furnish Copy to a Requester
The proposed regulations generally required that a tax-exempt
organization accept requests for copies made in person at the same
place and time that the specified documents must be available for
public inspection. In general, the proposed regulations required that
the copies be provided on the day of the request. However, the proposed
regulations provided that, in unusual circumstances, an organization
may provide the requested copies on the next business day. Some
commentators expressed concern that a one-day delay may not be
sufficient. In response to these comments, the final regulations
provide that an organization must comply with requests for copies made
in person by providing copies no later than the next business day
following the day the unusual circumstances cease to exist. However, in
no event may the period of delay exceed five business days. In response
to another comment, the final regulations clarify that unusual
circumstances include times when the organization's managerial staff
capable of fulfilling the request attends an off-site meeting or
convention.
When a request for copies is made in writing, the proposed
regulations required that a tax-exempt organization mail the copies
within 30 days from the date it receives the request. However, the
proposed regulations provided that, if an organization requires advance
payment of a reasonable fee for copying and postage, it may provide the
copies within 30 days from the date it receives payment, rather than
from the date of the initial request. In addition, the proposed
regulations provided guidance as to what constitutes a request, when a
request is considered received, and when copies are deemed provided.
The final regulations follow the rules in the proposed regulations.
The proposed regulations provided that individuals may request a
specific part of an application for tax exemption or annual information
return. One commentator expressed concern that requiring a tax-exempt
organization to provide a copy of only part of a document may create a
significant burden on the tax-exempt organization because the
organization would have to identify the particular information
requested. In order to minimize this potential burden, without
requiring the requester to pay for a copy of parts of a document that
the requester has no interest in obtaining, the final regulations
permit a requester to request a copy of any specifically identified
part or schedule of an application or a return (except for information
which is not subject to public disclosure under section 6104(d)(3)).
For example, a requester may request a copy of Part V (List of
Officers, Directors, Trustees and Key Employees) of Form 990.
Reasonable Fee for Providing Copies
Section 6104(d)(1)(B) permits an organization to charge a
reasonable fee for the cost of copying and mailing documents in
response to requests for copies. The proposed regulations stated that a
fee was reasonable only if it did not exceed the fees the IRS charges
for copies of tax-exempt organization tax returns and related
documents. This fee is currently $1.00 for the first page and $.15 for
each subsequent page. In addition, the proposed regulations allowed a
charge for actual postage costs. Some commentators requested that the
reasonable fee be greater than the amount stated in the proposed
regulations. One commentator suggested that the final regulations allow
organizations to consider personnel costs and not limit the fee to the
IRS charge. The IRS and the Treasury Department are concerned that
permitting organizations to charge a higher fee could hinder the
public's ability to receive a copy of an application or return.
Consequently, it was decided that, on balance, the reasonable fee set
forth in the proposed regulations is appropriate. Thus, the final
regulations adopt the reasonable fee provision of the proposed
regulations.
The proposed regulations permitted an organization to collect
payment in advance of providing the requested copies. Under the
proposed regulations, if an organization receives a written request for
copies with no payment enclosed, and the organization requires payment
in advance, the organization must request payment within 7 days from
the date it receives the request. The proposed regulations required an
organization to accept payment made by cash or money order and, when
the request is made in writing, also accept payment made by personal
check. An organization is permitted to accept other forms of payment.
One commentator asked for the elimination of the requirement to accept
a personal check because an organization could be liable for bank
charges if there are insufficient funds to cover the personal check.
The final regulations generally follow the proposed regulations, except
that the final regulations provide that a tax-exempt organization that
accepts payment by credit card is not required to accept personal
checks.
Consistent with the proposed regulations, the final regulations
protect requesters from unexpected fees where a tax-exempt organization
does not require prepayment and where a requester does not enclose
prepayment with a request, by requiring that an organization must
receive consent from a requester before providing copies for which the
fee charged for copying and postage is in excess of $20.
Local and Subordinate Organizations
Some commentators stated that the proposed regulations were overly
burdensome with respect to local or subordinate organizations
recognized as tax-exempt under a group exemption letter or that file a
group return pursuant to Sec. 1.6033-2(d) and Rev. Proc. 80-27 (1980-1
C.B. 677). Specifically, they objected to the requirement that a local
or subordinate organization make available copies of documents
submitted by the central or parent organization to the IRS to include
the local or subordinate organization in the group ruling, which often
consists of lengthy lists or directories of names and addresses of
affiliated organizations. In addition, one commentator expressed the
view that the annual filing under Rev. Proc. 80-27 that a central or
parent organization submits to the IRS to cover a local or subordinate
organization under its group exemption letter does not constitute an
application for tax exemption within the meaning of section
6104(d)(2)(A). In response to these comments, the final regulations
reduce the burden on local and subordinate organizations. Under the
final regulations, a local or subordinate organization that receives a
request made in person for inspection or for a copy of its application
for tax exemption is required to acquire, and make available within a
reasonable amount of time (normally not more than two weeks), the
application for a group exemption letter (if any) filed by the central
or parent organization. In addition, a local or subordinate
organization must also make available any documents submitted by the
central or parent organization to the IRS to include the subordinate
organization in
[[Page 17283]]
the group ruling. However, if the central or parent organization
submits a list or directory of organizations covered by the group
exemption letter, the local or subordinate organization need only
provide the application for group exemption and those pages of the list
or directory that refer to it. If a local or subordinate organization
that does not file its own annual information return but is covered
under a group return receives a request made in person for inspection
or for a copy of its annual information return, the local or
subordinate organization must make its group return available for
inspection or provide copies within a reasonable amount of time
(normally not more than two weeks). However, if the group return
includes separate schedules with respect to each local or subordinate
organization included in the group return, the local or subordinate
organization receiving the request may omit any schedules relating only
to other organizations included in the group return.
If the requester seeks inspection of an application for tax
exemption or an annual information return, the local or subordinate
organization may mail a copy of the applicable document to the
requester within a reasonable amount of time (normally not more than
two weeks) in lieu of allowing an inspection. In such a case, the local
or subordinate organization may not charge for the copies without the
consent of the requester. A local or subordinate organization must
comply with written requests for copies in accordance with the general
rules for written requests discussed above.
The final regulations also clarify, consistent with Notice 88-120,
the obligation of the central or parent organization to comply, at its
principal office, with requests for inspection or copies of documents
relating to its local and subordinate organizations.
Making Applications and Information Returns Widely Available
The final regulations provide that a tax-exempt organization is not
required to comply with requests for copies if the organization has
made the requested documents widely available. The final regulations
specify that an organization can make its application for tax exemption
and/or its annual information returns widely available by posting the
applicable document on the organization's World Wide Web page on the
Internet or by having the applicable document posted on another
organization's World Wide Web page as part of a database of similar
materials, provided that the documents are posted in a format which
meets the criteria set forth in the final regulations. An organization
that makes its application for tax exemption and/or its annual
information returns widely available must provide the individuals who
request copies with the World Wide Web address where the documents are
available.
The proposed regulations provided that an organization must post
its documents on its World Wide Web page in a format that the IRS uses
to post forms and publications. Unlike the proposed regulations, the
final regulations do not enumerate one or more particular formats that
must be used. Instead, the final regulations provide that the documents
must be posted in a format that meets the following criteria. First,
any individual with access to the Internet must be able to access,
download, view and print the posted document in a format which exactly
reproduces the image of the original document filed with the IRS,
except for any information permitted to be withheld from public
disclosure under section 6104(d). The final regulations require an
exact reproduction because a format that does not exactly reproduce the
image of the original document may raise questions about the accuracy
or authenticity of the posted document. Second, the format must allow
any individual with access to the Internet to access, download, view
and print the posted document without payment of a fee to either the
tax-exempt organization or the entity maintaining the World Wide Web
page and without special computer hardware or software required for
that format, other than software that is readily available to members
of the public free of charge.
The IRS and the Treasury Department understand that some of the
formats that the IRS itself uses to post forms and publications on the
IRS World Wide Web page may not satisfy the criteria specified in the
final regulations. For example, some of these formats could require
users to have access to special hardware or software that is not
commonly used by the public to access, download, view and print
documents. The final regulations provide a one-year transition rule for
any tax-exempt organization that posted its documents on the Internet
on or before April 9, 1999 in a manner consistent with the proposed
regulations. Until June 8, 2000 such an organization will be treated as
having made its documents ``widely available'' for purposes of the
final regulations even if the format used does not currently satisfy
all of the criteria set forth in the final regulations.
Some commentators suggested that the final regulations permit an
organization to post its documents on the Internet in HTML format. As
discussed above, the approach of the final regulations is to identify
the criteria that an Internet format must satisfy. The IRS and the
Treasury Department understand that, currently, when a heavily
formatted document, such as a tax return, is posted in HTML format, it
may not exactly reproduce the image of the original document.
One format that currently satisfies the criteria set forth in the
final regulations is Portable Document Format (PDF). PDF is designed to
reproduce the image of the original document exactly. In addition,
documents in the PDF format can be viewed, navigated and printed by
anyone using the freely available reader software. Of course, there may
be other formats that currently satisfy the criteria set forth in the
final regulations. The IRS and the Treasury Department refer to PDF
only for the purpose of illustrating an acceptable format. No inference
should be drawn that the IRS and the Treasury Department view PDF as an
especially or singularly qualified format, that IRS and the Treasury
Department endorse or warrant a specific document format (or software
used in connection with a format), or that use or failure to use a
specific document format (or software used in connection with a format)
will result in any preferential treatment from the IRS or the Treasury
Department. The IRS and the Treasury Department note that a specific
format that currently satisfies the ``widely available'' criteria set
forth in the final regulations may be altered such that it no longer
satisfies the ``widely available'' criteria in the future. Conversely,
a specific format that does not currently satisfy the ``widely
available'' criteria may be refined to satisfy the ``widely available''
criteria in the future.
As technology advances, the IRS and the Treasury Department
anticipate that an increasing number of formats will meet the criteria
set forth in the final regulations. Accordingly, the IRS and the
Treasury Department do not intend to limit technologies that
organizations may use to post their documents as long as the posted
document is readily and freely accessible and appears, whether viewed
on screen or in print, exactly as the original.
The IRS and the Treasury Department will continue to consider other
additional methods by which applications and returns could be made
widely available. Accordingly, the final regulations provide that the
Commissioner may prescribe, by
[[Page 17284]]
revenue procedure or other guidance, additional methods that an
organization can use to make its application for tax exemption and/or
its annual information returns widely available.
Harassment Campaigns
The proposed regulations provided guidance in determining whether a
tax-exempt organization is the subject of a harassment campaign such
that requiring compliance with requests for copies that are part of the
harassment campaign would not be in the public interest. Generally, the
proposed regulations provided that a harassment campaign exists where
the relevant facts and circumstances show that the purpose of a group
of requests was to disrupt the operations of the tax-exempt
organization rather than to obtain information. The proposed
regulations also contained examples that evaluated whether particular
situations constituted a harassment campaign and whether an
organization had a reasonable basis for believing that a request was
part of the harassment campaign. The final regulations retain this rule
and the examples set forth in the proposed regulations.
The proposed regulations provided that an organization may suspend
compliance with a request if the organization reasonably believes that
the request is part of a harassment campaign. Commentators expressed
concern that, if there is a delay in the issuance of an IRS
determination as to whether the organization's belief is reasonable,
the organization could be subject to significant penalties for the
intervening period. The final regulations do not limit the penalties
that may be retroactively imposed in cases where an organization is
subsequently determined to have lacked a reasonable belief for
suspending compliance. However, the IRS and the Treasury Department
recognize that it may be appropriate to mitigate penalties in certain
circumstances, especially where a delay in the issuance of a
determination is completely outside the control of the organization
requesting the determination. The IRS intends to publish a revenue
procedure that will provide additional detail concerning harassment
campaign determinations procedures and may prescribe rules concerning
the imposition and mitigation of penalties.
The proposed regulations required an organization to file an
application for a harassment campaign determination within 5 days after
suspending compliance with a request that the organization believes to
be part of such harassment campaign. One commentator asked that the
time period for filing an application be expanded to either 10 or 15
business days. Another commentator observed, however, that such an
extension of time would further delay compliance with requests for
copies that an organization reasonably believes, but are determined not
to be, part of a harassment campaign. The final regulations require an
organization to file an application for a harassment determination
within 10 business days after suspending compliance. The IRS and the
Treasury Department believe that this time period strikes an
appropriate balance by providing organizations sufficient time to
prepare and file an application without substantially delaying access
to copies of the documents. In addition, the final regulations allow an
organization, without submitting an application, to disregard requests
for copies in excess of two per month or four per year made by a single
individual or sent from a single address.
Some commentators asked for clarification concerning the period
that an organization may continue not to comply with requests for
copies that are part of a harassment campaign once it has received such
a determination. The IRS and the Treasury Department believe that the
district director for the key district in which the organization's
principal office is located (or such other person as the Commissioner
may designate) should exercise reasonable discretion, based on the
facts and circumstances of each case, in deciding the exact terms and
conditions of a harassment campaign determination. Consequently, the
final regulations do not change this provision of the proposed
regulations.
Various comments concerned the examples of harassment campaigns and
requests from members of the news media. In this regard, example 4 has
been modified to better illustrate that a request made by a member of
the news media is a strong factor tending to indicate that the request
is not part of a harassment campaign.
Other Matters
The proposed regulations provided that an individual denied
inspection, or a copy, of an application for tax exemption or an annual
information return could seek assistance from the IRS by providing to
the Director of the Exempt Organizations Division a statement that
describes the request and the reason for the individual's belief that
the denial was in violation of the legal requirements. The final
regulations provide instead that such individuals should send their
statements directly to the district director for the key district in
which the principal office of the tax-exempt organization is located
(or such other person as the Commissioner may designate). Finally,
various comments raised questions regarding the availability of an
administrative appeal of a harassment campaign determination and
whether harassment campaign applications and determinations are
publicly available. Whether an administrative appeal is available and
whether a harassment campaign determination is publicly available are
matters beyond the scope of these regulations, but may be addressed in
subsequent guidance.
Effective Date
The final regulations are effective June 8, 1999.
Special Analyses
It is hereby certified that the collections of information in these
regulations will not have a significant economic impact on a
substantial number of small entities. This certification is based on
the fact that the average time required to maintain and disclose the
information required under these regulations is estimated to be 30
minutes for each tax-exempt organization. This estimate is based on the
assumption that, on average, a tax-exempt organization will receive one
request per year to inspect or provide copies of its application for
tax exemption and its annual information returns. Less than 0.001
percent of the tax-exempt organizations affected by these regulations
will be subject to the reporting requirements contained in the
regulations. It is estimated that annually, approximately 1,000 tax-
exempt organizations will make their documents widely available by
posting them on the Internet. In addition, it is estimated that
annually, approximately 50 tax-exempt organizations will file an
application for a determination that they are the subject of a
harassment campaign such that a waiver of the obligation to provide
copies of their applications for tax exemption and their annual
information returns is in the public interest. The average time
required to complete, assemble and file an application describing a
harassment campaign is expected to be 5 hours. Because applications for
a harassment campaign determination will be filed so infrequently, they
will have no effect on the average time needed to comply with the
requirements in these regulations. In addition, a tax-exempt
organization is allowed in these regulations to charge a reasonable fee
for providing copies to requesters. Therefore, it is estimated
[[Page 17285]]
that on average it will cost tax-exempt organizations less than $10 per
year to comply with these regulations, which is not a significant
economic impact. Therefore, a Regulatory Flexibility Analysis under the
Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.
Pursuant to section 7805(f) of the Internal Revenue Code, the notice of
proposed rulemaking preceding these regulations was submitted to Small
Business Administration for comment on its impact on small business.
Drafting information. The principal author of these regulations is
Michael B. Blumenfeld, Office of Associate Chief Counsel (Employee
Benefits and Exempt Organizations), IRS. Other personnel from the IRS
and the Treasury Department also participated in their development.
List of Subjects
26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
26 CFR Part 602
Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR Parts 301 and 602 are amended as follows:
PART 301--PROCEDURE AND ADMINISTRATION
Paragraph 1. The authority citation for part 301 is amended by
adding entries in numerical order to read as follows:
Authority: 26 U.S.C. 7805 * * *
Section 301.6104(d)-4 also issued under 26 U.S.C. 6104(e)(3);
Section 301.6104(d)-5 also issued under 26 U.S.C. 6104(e)(3); *
* *
Par. 2. Sections 301.6104(d)-2 through 301.6104(d)-5 are added to
read as follows:
Sec. 301.6104(d)-2 Table of contents.
This section lists captions contained in Secs. 301.6104(d)-3
through 301.6104(d)-5.
Sec. 301.6104(d)-3 Public inspection and distribution of
applications for tax exemption and annual information returns of
tax-exempt organizations (other than private foundations).
(a) In general.
(b) Definitions.
(1) Tax-exempt organization.
(2) Private foundation.
(3) Application for tax exemption.
(i) In general.
(ii) No prescribed application form.
(iii) Exceptions.
(iv) Local or subordinate organizations.
(4) Annual information return.
(i) In general.
(ii) Exceptions.
(iii) Returns more than 3 years old.
(iv) Local or subordinate organizations.
(5) Regional or district offices.
(i) In general.
(ii) Site not considered a regional or district office.
(c) Special rules relating to public inspection.
(1) Permissible conditions on public inspection.
(2) Organizations that do not maintain permanent offices.
(d) Special rules relating to copies.
(1) Time and place for providing copies in response to requests
made in person.
(i) In general.
(ii) Unusual circumstances.
(iii) Agents for providing copies.
(2) Request for copies in writing.
(i) In general.
(ii) Time and manner of fulfilling written requests.
(A) In general.
(B) Request for a copy of parts of document.
(C) Agents for providing copies.
(3) Fees for copies.
(i) In general.
(ii) Form of payment.
(A) Request made in person.
(B) Request made in writing.
(iii) Avoidance of unexpected fees.
(iv) Responding to inquiries of fees charged.
(e) Documents to be provided by regional and district offices.
(f) Documents to be provided by local and subordinate
organizations.
(1) Applications for tax exemption.
(2) Annual information returns.
(3) Failure to comply.
(g) Failure to comply with public inspection or copying
requirements.
(h) Effective date.
Sec. 301.6104(d)-4 Making applications and returns widely
available.
(a) In general.
(b) Widely available.
(1) In general.
(2) Internet posting.
(i) In general.
(ii) Transition rule.
(iii) Reliability and accuracy.
(c) Discretion to prescribe other methods for making documents
widely available.
(d) Notice requirement.
(e) Effective date.
Sec. 301.6104(d)-5 Tax-exempt organization subject to harassment
campaign.
(a) In general.
(b) Harassment.
(c) Special rule for multiple requests from a single individual
or address.
(d) Harassment determination procedure.
(e) Effect of a harassment determination.
(f) Examples.
(g) Effective date.
Sec. 301.6104(d)-3 Public inspection and distribution of applications
for tax exemption and annual information returns of tax-exempt
organizations (other than private foundations).
(a) In general. Except as otherwise provided in this section, if a
tax-exempt organization (as defined in paragraph (b)(1) of this
section), other than a private foundation (as defined in paragraph
(b)(2) of this section), filed an application for recognition of
exemption under section 501, it shall make its application for tax
exemption (as defined in paragraph (b)(3) of this section) available
for public inspection without charge at its principal, regional and
district offices during regular business hours. Except as otherwise
provided in this section, a tax-exempt organization, other than a
private foundation, shall make its annual information returns (as
defined in paragraph (b)(4) of this section) available for public
inspection without charge in the same offices during regular business
hours. Each annual information return shall be made available for a
period of three years beginning on the date the return is required to
be filed (determined with regard to any extension of time for filing)
or is actually filed, whichever is later. In addition, except as
provided in Secs. 301.6104(d)-4 and 301.6104(d)-5, an organization
shall provide a copy without charge, other than a reasonable fee for
reproduction and actual postage costs, of all or any part of any
application or return required to be made available for public
inspection under this paragraph to any individual who makes a request
for such copy in person or in writing. See paragraph (d)(3) of this
section for rules relating to fees for copies.
(b) Definitions. For purposes of applying the provisions of section
6104(d), this section and Secs. 301.6104(d)-4 and 301.6104(d)-5, the
following definitions apply:
(1) Tax-exempt organization. The term tax-exempt organization means
any organization that is described in section 501(c) or section 501(d)
and is exempt from taxation under section 501(a).
(2) Private foundation. The term private foundation means a private
foundation as defined in section 509(a).
(3) Application for tax exemption--(i) In general. Except as
described in paragraph (b)(3)(iii) of this section, the term
application for tax exemption includes any prescribed application form
(such as Form 1023 or Form 1024), all documents and statements the
Internal Revenue Service requires an applicant to file with the form,
any
[[Page 17286]]
statement or other supporting document submitted by an organization in
support of its application, and any letter or other document issued by
the Internal Revenue Service concerning the application (such as a
favorable determination letter or a list of questions from the Internal
Revenue Service about the application). For example, a legal brief
submitted in support of an application, or a response to questions from
the Internal Revenue Service during the application process, is part of
an application for tax exemption.
(ii) No prescribed application form. If no form is prescribed for
an organization's application for tax exemption, the application for
tax exemption includes--
(A) The application letter and copy of the articles of
incorporation, declaration of trust, or other similar instrument that
sets forth the permitted powers or activities of the organization;
(B) The organization's bylaws or other code of regulations;
(C) The organization's latest financial statements showing assets,
liabilities, receipts and disbursements;
(D) Statements describing the character of the organization, the
purpose for which it was organized, and its actual activities;
(E) Statements showing the sources of the organization's income and
receipts and their disposition; and
(F) Any other statements or documents the Internal Revenue Service
required the organization to file with, or that the organization
submitted in support of, the application letter.
(iii) Exceptions. The term application for tax exemption does not
include--
(A) Any application for tax exemption filed by an organization that
the Internal Revenue Service has not yet recognized, on the basis of
the application, as exempt from taxation under section 501 for any
taxable year;
(B) Any application for tax exemption filed before July 15, 1987,
unless the organization filing the application had a copy of the
application on July 15, 1987; or
(C) Any material, including the material listed in
Sec. 301.6104(a)-1(i) and information that the Secretary would be
required to withhold from public inspection, that is not available for
public inspection under section 6104.
(iv) Local or subordinate organizations. For rules relating to
applications for tax exemption of local or subordinate organizations,
see paragraph (f)(1) of this section.
(4) Annual information return--(i) In general. Except as described
in paragraph (b)(4)(ii) of this section, the term annual information
return includes an exact copy of any return filed by a tax-exempt
organization pursuant to section 6033. It also includes any amended
return the organization files with the Internal Revenue Service after
the date the original return is filed. The copy must include all
information furnished to the Internal Revenue Service on Form 990,
Return of Organization Exempt From Income Tax, or any version of Form
990 (such as Forms 990-EZ or 990-BL except Form 990-T) and Form 1065,
as well as all schedules, attachments and supporting documents, except
for the name and address of any contributor to the organization. For
example, the annual information return includes Schedule A of Form 990
(containing supplementary information on section 501(c)(3)
organizations), and those parts of the return that show compensation
paid to specific persons (currently, Part V of Form 990 and Parts I and
II of Schedule A of Form 990).
(ii) Exceptions. The term annual information return does not
include Schedule A of Form 990-BL, Form 990-T, Exempt Organization
Business Income Tax Return, Schedule K-1 of Form 1065 or Form 1120-POL,
U.S. Income Tax Return For Certain Political Organizations, and the
return of a private foundation. See Sec. 301.6104(d)-1 for requirements
relating to public disclosure of private foundation annual returns.
(iii) Returns more than 3 years old. The term annual information
return does not include any return after the expiration of 3 years from
the date the return is required to be filed (including any extension of
time that has been granted for filing such return) or is actually
filed, whichever is later. If an organization files an amended return,
however, the amended return must be made available for a period of 3
years beginning on the date it is filed with the Internal Revenue
Service.
(iv) Local or subordinate organizations. For rules relating to
annual information returns of local or subordinate organizations, see
paragraph (f)(2) of this section.
(5) Regional or district offices--(i) In general. A regional or
district office is any office of a tax-exempt organization, other than
its principal office, that has paid employees, whether part-time or
full-time, whose aggregate number of paid hours a week are normally at
least 120.
(ii) Site not considered a regional or district office. A site is
not considered a regional or district office, however, if--
(A) The only services provided at the site further exempt purposes
(such as day care, health care or scientific or medical research); and
(B) The site does not serve as an office for management staff,
other than managers who are involved solely in managing the exempt
function activities at the site.
(c) Special rules relating to public inspection--(1) Permissible
conditions on public inspection. A tax-exempt organization may have an
employee present in the room during an inspection. The organization,
however, must allow the individual conducting the inspection to take
notes freely during the inspection. If the individual provides
photocopying equipment at the place of inspection, the organization
must allow the individual to photocopy the document at no charge.
(2) Organizations that do not maintain permanent offices. If a tax-
exempt organization does not maintain a permanent office, the
organization shall comply with the public inspection requirements of
paragraph (a) of this section by making its application for tax
exemption and its annual information returns, as applicable, available
for inspection at a reasonable location of its choice. Such an
organization shall permit public inspection within a reasonable amount
of time after receiving a request for inspection (normally not more
than 2 weeks) and at a reasonable time of day. At the organization's
option, it may mail, within 2 weeks of receiving the request, a copy of
its application for tax exemption and annual information returns to the
requester in lieu of allowing an inspection. The organization may
charge the requester for copying and actual postage costs only if the
requester consents to the charge. An organization that has a permanent
office, but has no office hours or very limited hours during certain
times of the year, shall make its documents available during those
periods when office hours are limited or not available as though it
were an organization without a permanent office.
(d) Special rules relating to copies--(1) Time and place for
providing copies in response to requests made in-person--(i) In
general. Except as provided in paragraph (d)(1)(iii) of this section, a
tax-exempt organization shall provide copies of the documents it is
required to provide under section 6104(d) in response to a request made
in person at its principal, regional and district offices during
regular business hours. Except as provided in paragraph (d)(1)(ii) of
this section, an organization
[[Page 17287]]
shall provide such copies to a requester on the day the request is
made.
(ii) Unusual circumstances. In the case of an in-person request,
where unusual circumstances exist such that fulfilling the request on
the same business day places an unreasonable burden on the tax-exempt
organization, the organization must provide the copies no later than
the next business day following the day that the unusual circumstances
cease to exist or the fifth business day after the date of the request,
whichever occurs first. Unusual circumstances include, but are not
limited to, receipt of a volume of requests that exceeds the
organization's daily capacity to make copies; requests received shortly
before the end of regular business hours that require an extensive
amount of copying; or requests received on a day when the
organization's managerial staff capable of fulfilling the request is
conducting special duties, such as student registration or attending an
off-site meeting or convention, rather than its regular administrative
duties.
(iii) Agents for providing copies. A principal, regional or
district office of a tax-exempt organization subject to the
requirements of this section may retain a local agent to process
requests made in person for copies of its documents. A local agent must
be located within reasonable proximity of the applicable office. A
local agent that receives a request made in person for copies must
provide the copies within the time limits and under the conditions that
apply to the organization itself. For example, a local agent generally
must provide a copy to a requester on the day the agent receives the
request. When a principal, regional or district office of a tax-exempt
organization using a local agent receives a request made in person for
a copy, it must immediately provide the name, address and telephone
number of the local agent to the requester. An organization that
provides this information is not required to respond further to the
requester. However, the penalty provisions of sections 6652(c)(1)(C),
6652(c)(1)(D), and 6685 continue to apply to the tax-exempt
organization if the organization's local agent fails to provide the
documents as required under section 6104(d).
(2) Request for copies in writing--(i) In general. A tax-exempt
organization must honor a written request for a copy of documents (or
the requested part) that the organization is required to provide under
section 6104(d) if the request--
(A) Is addressed to, and delivered by mail, electronic mail,
facsimile, or a private delivery service as defined in section 7502(f)
to a principal, regional or district office of the organization; and
(B) Sets forth the address to which the copy of the documents
should be sent.
(ii) Time and manner of fulfilling written requests--(A) In
general. A tax-exempt organization receiving a written request for a
copy shall mail the copy of the requested documents (or the requested
parts of documents) within 30 days from the date it receives the
request. However, if a tax-exempt organization requires payment in
advance, it is only required to provide the copies within 30 days from
the date it receives payment. For rules relating to payment, see
paragraph (d)(3) of this section. In the absence of evidence to the
contrary, a request or payment that is mailed shall be deemed to be
received by an organization 7 days after the date of the postmark. A
request that is transmitted to the organization by electronic mail or
facsimile shall be deemed received the day the request is transmitted
successfully. If an organization requiring payment in advance receives
a written request without payment or with an insufficient payment, the
organization must, within 7 days from the date it receives the request,
notify the requester of its prepayment policy and the amount due. A
copy is deemed provided on the date of the postmark or private delivery
mark (or if sent by certified or registered mail, the date of
registration or the date of the postmark on the sender's receipt). If
an individual making a request consents, a tax-exempt organization may
provide a copy of the requested document exclusively by electronic
mail. In such case, the material is provided on the date the
organization successfully transmits the electronic mail.
(B) Request for a copy of parts of document. A tax-exempt
organization must fulfill a request for a copy of the organization's
entire application for tax exemption or annual information return or
any specific part or schedule of its application or return. A request
for a copy of less than the entire application or less than the entire
return must specifically identify the requested part or schedule.
(C) Agents for providing copies. A tax-exempt organization subject
to the requirements of this section may retain an agent to process
written requests for copies of its documents. The agent shall provide
the copies within the time limits and under the conditions that apply
to the organization itself. For example, if the organization received
the request first (e.g., before the agent), the deadline for providing
a copy in response to a request shall be determined by reference to
when the organization received the request, not when the agent received
the request. An organization that transfers a request for a copy to
such an agent is not required to respond further to the request. If the
organization's agent fails to provide the documents as required under
section 6104(d), however, the penalty provisions of sections
6652(c)(1)(C), 6652(c)(1)(D), and 6685 continue to apply to the tax-
exempt organization.
(3) Fees for copies--(i) In general. A tax-exempt organization may
charge a reasonable fee for providing copies. A fee is reasonable only
if it is no more than the per-page copying charge stated in
Sec. 601.702(f)(5)(iv)(B) of this chapter (fee charged by the Internal
Revenue Service for providing copies to a requester), plus no more than
the actual postage costs incurred by the organization to provide the
copies. Before the organization provides the documents, it may require
that the individual requesting copies of the documents pay the fee. If
the organization has provided an individual making a request with
notice of the fee, and the individual does not pay the fee within 30
days, or if the individual pays the fee by check and the check does not
clear upon deposit, the organization may disregard the request.
(ii) Form of payment--(A) Request made in person. If a tax-exempt
organization charges a fee for copying (as permitted under paragraph
(d)(3)(i) of this section), it shall accept payment by cash and money
order for requests made in person. The organization may accept other
forms of payment, such as credit cards and personal checks.
(B) Request made in writing. If a tax-exempt organization charges a
fee for copying and postage (as permitted under paragraph (d)(3)(i) of
this section), it shall accept payment by certified check, money order,
and either personal check or credit card for requests made in writing.
The organization may accept other forms of payment.
(iii) Avoidance of unexpected fees. Where a tax-exempt organization
does not require prepayment and a requester does not enclose payment
with a request, an organization must receive consent from a requester
before providing copies for which the fee charged for copying and
postage exceeds $20.
(iv) Responding to inquiries of fees charged. In order to
facilitate a requester's ability to receive copies promptly, a tax-
exempt organization shall respond to any questions from potential
requesters concerning its fees for copying and postage. For example,
[[Page 17288]]
the organization shall inform the requester of its charge for copying
and mailing its application for exemption and each annual information
return, with and without attachments, so that a requester may include
payment with the request for copies.
(e) Documents to be provided by regional and district offices.
Except as otherwise provided, a regional or district office of a tax-
exempt organization must satisfy the same rules as the principal office
with respect to allowing public inspection and providing copies of its
application for tax exemption and annual information returns. A
regional or district office is not required, however, to make its
annual information return available for inspection or to provide copies
until 30 days after the date the return is required to be filed
(including any extension of time that is granted for filing such
return) or is actually filed, whichever is later.
(f) Documents to be provided by local and subordinate
organizations--(1) Applications for tax exemption. Except as otherwise
provided, a tax-exempt organization that did not file its own
application for tax exemption (because it is a local or subordinate
organization covered by a group exemption letter referred to in
Sec. 1.508-1 of this chapter) must, upon request, make available for
public inspection, or provide copies of, the application submitted to
the Internal Revenue Service by the central or parent organization to
obtain the group exemption letter and those documents which were
submitted by the central or parent organization to include the local or
subordinate organization in the group exemption letter. However, if the
central or parent organization submits to the Internal Revenue Service
a list or directory of local or subordinate organizations covered by
the group exemption letter, the local or subordinate organization is
required to provide only the application for the group exemption ruling
and the pages of the list or directory that specifically refer to it.
The local or subordinate organization shall permit public inspection,
or comply with a request for copies made in person, within a reasonable
amount of time (normally not more than 2 weeks) after receiving a
request made in person for public inspection or copies and at a
reasonable time of day. In a case where the requester seeks inspection,
the local or subordinate organization may mail a copy of the applicable
documents to the requester within the same time period in lieu of
allowing an inspection. In such a case, the organization may charge the
requester for copying and actual postage costs only if the requester
consents to the charge. If the local or subordinate organization
receives a written request for a copy of its application for tax
exemption, it must fulfill the request in the time and manner specified
in paragraph (d)(2) of this section. The requester has the option of
requesting from the central or parent organization, at its principal
office, inspection or copies of the application for group exemption and
the material submitted by the central or parent organization to include
a local or subordinate organization in the group ruling. If the central
or parent organization submits to the Internal Revenue Service a list
or directory of local or subordinate organizations covered by the group
exemption letter, it must make such list or directory available for
public inspection, but it is required to provide copies only of those
pages of the list or directory that refer to particular local or
subordinate organizations specified by the requester. The central or
parent organization must fulfill such requests in the time and manner
specified in paragraphs (c) and (d) of this section.
(2) Annual information returns. A local or subordinate organization
that does not file its own annual information return (because it is
affiliated with a central or parent organization that files a group
return pursuant to Sec. 1.6033-2(d) of this chapter) must, upon
request, make available for public inspection, or provide copies of,
the group returns filed by the central or parent organization. However,
if the group return includes separate schedules with respect to each
local or subordinate organization included in the group return, the
local or subordinate organization receiving the request may omit any
schedules relating only to other organizations included in the group
return. The local or subordinate organization shall permit public
inspection, or comply with a request for copies made in person, within
a reasonable amount of time (normally not more than 2 weeks) after
receiving a request made in person for public inspection or copies and
at a reasonable time of day. In a case where the requester seeks
inspection, the local or subordinate organization may mail a copy of
the applicable documents to the requester within the same time period
in lieu of allowing an inspection. In such a case, the organization may
charge the requester for copying and actual postage costs only if the
requester consents to the charge. If the local or subordinate
organization receives a written request for a copy of its annual
information return, it must fulfill the request by providing a copy of
the group return in the time and manner specified in paragraph (d)(2)
of this section. The requester has the option of requesting from the
central or parent organization, at its principal office, inspection or
copies of group returns filed by the central or parent organization.
The central or parent organization must fulfill such requests in the
time and manner specified in paragraphs (c) and (d) of this section.
(3) Failure to comply. If an organization fails to comply with the
requirements specified in this paragraph, the penalty provisions of
sections 6652(c)(1)(C), 6652(c)(1)(D), and 6685 apply.
(g) Failure to comply with public inspection or copying
requirements. If a tax-exempt organization denies an individual's
request for inspection or a copy of an application for tax exemption or
an annual information return as required under this section, and the
individual wants to alert the Internal Revenue Service to the possible
need for enforcement action, the individual may provide a statement to
the district director for the key district in which the applicable tax-
exempt organization's principal office is located (or such other person
as the Commissioner may designate) that describes the reason why the
individual believes the denial was in violation of the requirements of
section 6104(d).
(h) Effective date. This section is effective June 8, 1999.
Sec. 301.6104(d)-4 Making applications and returns widely available.
(a) In general. A tax-exempt organization is not required to comply
with a request for a copy of its application for tax exemption or an
annual information return pursuant to Sec. 301.6104(d)-3(a) if the
organization has made the requested document widely available in
accordance with paragraph (b) of this section. An organization that
makes its application for tax exemption and/or annual information
return widely available must nevertheless make the document available
for public inspection as required under Sec. 301.6104(d)-3(a), as
applicable.
(b) Widely available--(1) In general. A tax-exempt organization
makes its application for tax exemption and/or an annual information
return widely available if the organization complies with the
requirements specified in paragraph (b)(2) of this section, and if the
organization satisfies the requirements of paragraph (d) of this
section.
[[Page 17289]]
(2) Internet posting--(i) In general. A tax-exempt organization can
make its application for tax exemption and/or an annual information
return widely available by posting the document on a World Wide Web
page that the tax-exempt organization establishes and maintains or by
having the document posted, as part of a database of similar documents
of other tax-exempt organizations, on a World Wide Web page established
and maintained by another entity. The document will be considered
widely available only if--
(A) the World Wide Web page through which it is available clearly
informs readers that the document is available and provides
instructions for downloading it;
(B) the document is posted in a format that, when accessed,
downloaded, viewed and printed in hard copy, exactly reproduces the
image of the application for tax exemption or annual information return
as it was originally filed with the Internal Revenue Service, except
for any information permitted by statute to be withheld from public
disclosure. (See section 6104(d)(3) and Sec. 301.6104(d)-3(b)(3) and
(4)); and
(C) any individual with access to the Internet can access,
download, view and print the document without special computer hardware
or software required for that format (other than software that is
readily available to members of the public without payment of any fee)
and without payment of a fee to the tax-exempt organization or to
another entity maintaining the World Wide Web page.
(ii) Transition rule. A tax-exempt organization that posted its
application for tax exemption or its annual information returns on a
World Wide Web page on or before April 9, 1999 in a manner consistent
with regulation project REG-246250-96 (1997 C.B. 627) (See
Sec. 601.601(d)(2) of this chapter.) will be treated as satisfying the
requirements of paragraphs (b)(2)(i)(B) & (C) of this section until
June 8, 2000 provided that an individual can access, download, view and
print the document without payment of a fee to the tax-exempt
organization or to another entity maintaining the World Wide Web page.
(iii) Reliability and accuracy. In order for the document to be
widely available through an Internet posting, the entity maintaining
the World Wide Web page must have procedures for ensuring the
reliability and accuracy of the document that it posts on the page and
must take reasonable precautions to prevent alteration, destruction or
accidental loss of the document when posted on its page. In the event
that a posted document is altered, destroyed or lost, the entity must
correct or replace the document.
(c) Discretion to prescribe other methods for making documents
widely available. The Commissioner, from time to time, may prescribe
additional methods, other than an Internet posting meeting the
requirements of paragraph (b)(2) of this section, that a tax-exempt
organization may use to make its documents widely available.
(d) Notice requirement. If a tax-exempt organization has made its
application for tax exemption and/or an annual information return
widely available it must notify any individual requesting a copy where
the documents are available (including the address on the World Wide
Web, if applicable). If the request is made in person, the organization
shall provide such notice to the individual immediately. If the request
is made in writing, the notice shall be provided within 7 days of
receiving the request.
(e) Effective date. This section is effective June 8, 1999.
Sec. 301.6104(d)-5 Tax-exempt organization subject to harassment
campaign.
(a) In general. If the district director for the key district in
which the organization's principal office is located (or such other
person as the Commissioner may designate) determines that the
organization is the subject of a harassment campaign and compliance
with the requests that are part of the harassment campaign would not be
in the public interest, a tax-exempt organization is not required to
fulfill a request for a copy (as otherwise required by
Sec. 301.6104(d)-3(a)) that it reasonably believes is part of the
campaign.
(b) Harassment. A group of requests for an organization's
application for tax exemption or annual information returns is
indicative of a harassment campaign if the requests are part of a
single coordinated effort to disrupt the operations of a tax-exempt
organization, rather than to collect information about the
organization. Whether a group of requests constitutes such a harassment
campaign depends on the relevant facts and circumstances. Facts and
circumstances that indicate the organization is the subject of a
harassment campaign include: a sudden increase in the number of
requests; an extraordinary number of requests made through form letters
or similarly worded correspondence; evidence of a purpose to deter
significantly the organization's employees or volunteers from pursuing
the organization's exempt purpose; requests that contain language
hostile to the organization; direct evidence of bad faith by organizers
of the purported harassment campaign; evidence that the organization
has already provided the requested documents to a member of the
purported harassing group; and a demonstration by the tax-exempt
organization that it routinely provides copies of its documents upon
request.
(c) Special rule for multiple requests from a single individual or
address. A tax-exempt organization may disregard any request for copies
of all or part of any document beyond the first two received within any
30-day-period or the first four received within any one-year-period
from the same individual or the same address, regardless of whether the
district director for the applicable key district (or such other person
as the Commissioner may designate) has determined that the organization
is subject to a harassment campaign.
(d) Harassment determination procedure. A tax-exempt organization
may apply for a determination that it is the subject of a harassment
campaign and that compliance with requests that are part of the
campaign would not be in the public interest by submitting a signed
application to the district director for the key district where the
organization's principal office is located (or such other person as the
Commissioner may designate). The application shall consist of a written
statement giving the organization's name, address, employer
identification number, and the name, address and telephone number of
the person to contact regarding the application. The application must
describe in detail the facts and circumstances that the organization
believes support a determination that the organization is subject to a
harassment campaign. The organization may suspend compliance with
respect to any request for a copy of its documents based on its
reasonable belief that such request is part of a harassment campaign,
provided that the organization files an application for a determination
within 10 business days from the day the organization first suspends
compliance with respect to a request that is part of the alleged
campaign. In addition, the organization may suspend compliance with any
request it reasonably believes to be part of the harassment campaign
until it receives a response to its application for a harassment
campaign determination.
(e) Effect of a harassment determination. If the appropriate
district director (or such other person as the Commissioner may
designate) determines that a tax-exempt organization is the subject of
a harassment campaign and it is not in the public interest to comply
with requests
[[Page 17290]]
that are part of the campaign, such organization is not required to
comply with any request for copies that it reasonably believes is part
of the campaign. This determination may be subject to other terms and
conditions set forth by the district director (or such other person as
the Commissioner may designate). A person (as defined in section
6652(c)(4)(C)) shall not be liable for any penalty under sections
6652(c)(1)(C), 6652(c)(1)(D) or 6685 for failing to timely provide a
copy of documents in response to a request covered in a request for a
harassment determination if the organization fulfills the request
within 30 days of receiving a determination from the district director
(or such other person as the Commissioner may designate) that the
organization is not subject to a harassment campaign. Notwithstanding
the preceding sentence, if the district director (or such other person
as the Commissioner may designate) further determines that the
organization did not have a reasonable basis for requesting a
determination that it was subject to a harassment campaign or
reasonable belief that a request was part of the campaign, the person
(as defined in section 6652(c)(4)(C)) remains liable for any penalties
that result from not providing the copies in a timely fashion.
(f) Examples. The provisions of this section are illustrated by the
following examples:
Example 1. V, a tax-exempt organization, receives an average of
25 requests per month for copies of its three most recent
information returns. In the last week of May, V is mentioned in a
national news magazine story that discusses information contained in
V's 1996 information return. From June 1 through June 30, 1997 V
receives 200 requests for a copy of its documents. Other than the
sudden increase in the number of requests for copies, there is no
other evidence to suggest that the requests are part of an organized
campaign to disrupt V's operations. Although fulfilling the requests
will place a burden on V, the facts and circumstances do not show
that V is subject to a harassment campaign. Therefore, V must
respond timely to each of the 200 requests it receives in June.
Example 2. Y is a tax-exempt organization that receives an
average of 10 requests a month for copies of its annual information
returns. From March 1, 1997 to March 31, 1997, Y receives 25
requests for copies of its documents. Fifteen of the requests come
from individuals Y knows to be active members of the board of
organization X. In the past X has opposed most of the positions and
policies that Y advocates. None of the requesters have asked for
copies of documents from Y during the past year. Y has no other
information about the requesters. Although the facts and
circumstances show that some of the individuals making requests are
hostile to Y, they do not show that the individuals have organized a
campaign that will place enough of a burden on Y to disrupt its
activities. Therefore, Y must respond to each of the 25 requests it
receives in March.
Example 3. The facts are the same as in Example 2, except that
during March 1997, Y receives 100 requests. In addition to the
fifteen requests from members of organization X's board, 75 of the
requests are similarly worded form letters. Y discovers that several
individuals associated with X have urged the X's members and
supporters, via the Internet, to submit as many requests for a copy
of Y's annual information returns as they can. The message
circulated on the Internet provides a form letter that can be used
to make the request. Both the appeal via the Internet and the
requests for copies received by Y contain hostile language. During
the same year but before the 100 requests were received, Y provided
copies of its annual information returns to the headquarters of X.
The facts and circumstances show that the 75 form letter requests
are coordinated for the purpose of disrupting Y's operations, and
not to collect information that has already been provided to an
association representing the requesters' interests. Thus, the fact
and circumstances show that Y is the subject of an organized
harassment campaign. To confirm that it may disregard the 90
requests that constitute the harassment campaign, Y must apply to
the applicable district director (or such other person as the
Commissioner may designate) for a determination. Y may disregard the
90 requests while the application is pending and after the
determination is received. However, it must respond within the
applicable time limits to the 10 requests it received in March that
were not part of the harassment campaign.
Example 4. The facts are the same as in Example 3, except that Y
receives 5 additional requests from 5 different representatives of
the news media who in the past have published articles about Y. Some
of these articles were hostile to Y. Normally, the Internal Revenue
Service will not consider a tax-exempt organization to have a
reasonable belief that a request from a member of the news media is
part of a harassment campaign absent additional facts that
demonstrate that the organization could reasonably believe the
particular requests from the news media to be part of a harassment
campaign. Thus, absent such additional facts, Y must respond within
the applicable time limits to the 5 requests that it received from
representatives of the news media.
(g) Effective date. This section is effective June 8, 1999.
PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
Paragraph 3. The authority for part 602 continues to read as
follows:
Authority: 26 U.S.C. 7805.
Par. 4. In Sec. 602.101, paragraph (b) is amended by adding the
following entries in numerical order to the table to read as follows:
Sec. 602.101 OMB Control numbers.
* * * * *
(b) * * *
------------------------------------------------------------------------
Current OMB
CFR part or section where identified and described control No.
------------------------------------------------------------------------
* * * *
* * *
301.6104(d)-3........................................... 1545-1560
301.6104(d)-4........................................... 1545-1560
301.6104(d)-5........................................... 1545-1560
* * * *
* * *
------------------------------------------------------------------------
[[Page 17291]]
Approved: March 25, 1999.
Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
Donald C. Lubick,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 99-8638 Filed 4-8-99; 8:45 am]
BILLING CODE 4830-01-U
