IRS Releases New Guidelines for Form 1023

On July 31, 2008, the Internal Revenue Service (IRS) released a memorandum to explain the new guidelines for processing Form 1023 applications for exemption under IRC Section 501(c)(3) submitted by sponsoring organizations that maintain donor advised funds. These organizations must now refer to the Donor Advised Funds Guide Sheet and Donor Advised Funds Guide Sheet Explanation.

The guide sheet accounts for the changes made by the Pension Protection Act of 1996 and asks for more information on past, present, and planned activities. Prior to the Pension Protection Act, there was no definition for “donor advised funds” in the Code of Regulations. The Act intended to improve the accountability of donor-advised funds by enacting several provisions and defining terms such as donor-advised funds and sponsoring organization. The relevant provisions and defined terms of the Act as well as explanations to the guide sheet questions are listed in the Donor Advised Funds Guide Sheet Explanation.

These guidelines will be incorporated into the yet to be released IRM 7.20.8, Exempt Organizations Determination Letter Processing, Special Determination Issues.

– Emily Chan