SECTION 8. TERMINATION OF THE

GROUP EXEMPTION LETTER

.01 Termination of the group exemption letter with respect to all subordinate or- ganizations. (1) Termination by the IRS. The IRS may terminate a group exemption letter with respect to all subordinate organizations if—

(a) The central organization notifies the IRS that it is going out of existence;

(b) The IRS determines that the central organization is no longer described in § 501(c) and therefore is not exempt under § 501(a);

(c) The central organization’s exemption is automatically revoked;

(d) The central organization fails to submit a timely SGRI (see section 6 of this revenue procedure);

(e) The central organization has no subordinate organizations (see section 3.01(2) of this revenue procedure); (f) The central organization fails to exercise general supervision (see section 3.02(3) of this revenue procedure) or control (see section 3.02(4) of this revenue procedure) over one or more subordinate organizations;

(g) More than half of the subordinate organizations have had their exemption automatically revoked;

(h) More than half of the subordinate organizations fail to meet the requirements for initial inclusion in or subsequent addition to a group exemption letter (see section 3.03(2) of this revenue procedure); or

(i) The central organization otherwise fails to meet the requirements of this revenue procedure.

(2) Termination by the central organi- zation. The central organization may ter

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minate its group exemption letter at any time by providing the notice described in section 6.02(5) of this revenue procedure.

.02 Termination of the group exemption letter with respect to a particular subor- dinate organization. (1) Removal from the group exemption letter. A subordinate organization will be removed from a group exemption letter if—

(a) The central organization notifies the IRS that the subordinate organization will no longer be included in the group exemption letter (see section 6.02(2)(a)(ii) of this revenue procedure);

(b) The IRS determines that— (i) The subordinate organization is no longer described in § 501(c) and therefore is not exempt under § 501(a); or

(ii) The subordinate organization is an organization not eligible for initial inclusion in or subsequent addition to a group exemption letter because it is an organization described in section 3.04(1) (foreign organization), section 3.04(2) (private foundation), section 3.04(3) (Type III supporting organization), or section 3.04(4) (QNHII) of this revenue procedure;

(c) The subordinate organization’s exemption is automatically revoked (see section 3.04(5) of this revenue procedure); or

(d) The subordinate organization fails to satisfy one or more of the matching, foundation classification, or similar purpose requirements (see sections 3.03(2) (a), 3.03(2)(b), and 3.03(2)(c) of this revenue procedure).

(2) Group exemption letter remains in effect. The group exemption letter will remain in effect with respect to all non-affected subordinate organizations after the removal of one or more subordinate organizations under section 8.02(1) of this revenue procedure unless the IRS has terminated the group exemption letter with respect to all subordinate organizations under section 8.01 of this revenue procedure.

SECTION 9. EFFECT OF NONACCEPTANCE, NON-ISSUANCE, TERMINATION, OR REMOVAL

.01 Effect of non-acceptance or non-is- suance. When the IRS does not accept a group exemption letter request (see section 4.02 of this revenue procedure) or

declines to issue a group exemption letter (see section 4.03 of this revenue procedure), the IRS will not recognize the exemption of any organization initially included in the group exemption letter request as a subordinate organization, unless the IRS previously issued a determination letter to such subordinate organization and that determination letter is still effective (that is, it has not been automatically or otherwise revoked) on the date of non-acceptance or non-issuance, as applicable, except as provided in section 9.04 of this revenue procedure.

.02 Effect of termination. (1) In gener- al. When the IRS or the central organization terminates a group exemption letter with respect to all subordinate organizations (see section 8.01 of this revenue procedure), the IRS will not thereafter recognize the exempt status of any subordinate organization included in the group exemption letter, except as provided in section 9.04 of this revenue procedure. (2) Churches or conventions or associ- ations of churches. Notwithstanding section 9.02(1) of this revenue procedure, the termination of a group exemption letter will not affect the exempt status of subordinate organizations that are churches or conventions or associations of churches, described in § 501(c)(3). See § 508(c). Nonetheless, a subordinate organization that is a church or a convention or association of churches may obtain recognition of its exemption from the IRS by completing one of the actions described in section 9.04(2) of this revenue procedure. .03 Effect of removal. If the IRS or the central organization notifies a particular subordinate organization that it has been removed from a group exemption letter, the IRS will not thereafter recognize the exempt status of the affected subordinate organization, except as provided in section 9.04 of this revenue procedure.

.04 Subsequent recognition of exemp- tion. (1) In general. Notwithstanding sections 9.01, 9.02, and 9.03 of this revenue procedure, an organization may obtain recognition of its exempt status or may declare its exempt status, as applicable, by completing an action described in section 9.04(2) or 9.04(3). (2) Organization required to file an application. An organization required to apply for recognition of exemption under

§ 505 or § 508 may obtain recognition of its exemption by—

(a) Filing an application; (b) Being added to a group exemption letter maintained by another central organization;

(c) Being included by another central organization in a request for a new group exemption letter; or

(d) Being included by the same central organization in a request for a new group exemption letter.

(3) Organization not required to file an application. An organization that is not required to apply for recognition of exemption under § 505 or § 508 may obtain recognition of its exemption in the same manner described in section 9.04(2) of this revenue procedure. Alternatively, such a subordinate organization may declare its exempt status (without obtaining recognition from the IRS) by filing annual information returns or notices (see section 7 of this revenue procedure). In certain circumstances, an organization that intends to operate as an organization described in section 501(c)(4) may be required to file Form 8976 (see section 5.03(3)(c) of this revenue procedure).

(4) Automatic revocation. Notwithstanding section 9.04(3) of this revenue procedure, a subordinate organization must file an application for reinstatement if the subordinate organization was removed from a group exemption letter because its exemption was automatically revoked (see section 8.02(1)(c) of this revenue procedure). A central organization may not add the subordinate organization to a group exemption letter (see section 3.04(5) of this revenue procedure) unless and until the IRS has reinstated the subordinate organization’s exemption.