SECTION 11. EFFECT OF

DETERMINATION LETTER OR RULING RECOGNIZING EXEMPTION

Effective date of exemption .01 A determination letter or ruling recognizing exemption of an organization described in § 501(c), other than § 501(c)(29), is usually effective as of the date of formation of an organization if: (1) its purposes and activities prior to the date of the determination letter or ruling have been consistent with the requirements for exemption; (2) it has not failed to file required Form 990 series returns or notices for three consecutive years; and (3) it has filed an application for recognition of exemption within 27 months from the end of the month in which it was organized. Special rules may apply to an organization applying for exemption under §§ 501(c)(3), (9) or (17). See §§ 505 and 508, and Treas. Reg. §§ 1.508–1(a)(2), 1.508–1(b)(7), and 301.9100–2(a)(2)(iii)–(iv). In addition, special rules apply with respect to organizations described in § 501(c)(29). See Rev. Proc. 2012–11, 2012–7 I.R.B. 368.

(1) If the Service requires the organization to alter its activities or make substantive amendments to its enabling instrument, the exemption will be effective as of the date specified in a determination letter or ruling.

(2) If the Service requires the organization to make a nonsubstantive amendment, exemption will ordinarily be recognized as of the date of formation. Examples of nonsubstantive amendments include correction of a clerical error in the enabling instrument or the addition of a dissolution clause where the activities of the organization prior to the determination letter or ruling are consistent with the requirements for exemption.

(3) An organization that otherwise meets the requirements for tax-exempt status and the issuance of a determination letter or ruling that does not meet the requirements for recognition from date of formation will generally be recognized from the postmark date of its application.

(4) Organizations that claim exempt status under § 501(c) generally must file annual Form 990 series returns or notices, even if they have not yet received their determination letter or ruling recognizing exemption. If an organization fails to file required Form 990 series returns or notices for three consecutive years, its exemption will be automatically revoked by operation of § 6033(j). Such an organization may apply for reinstatement of its exempt status, and such recognition may be granted retroactively, only in accordance with the procedure described in Notice 2011–44, 2011–25 I.R.B. 883.

Reliance on determination letter or ruling