Rev. Proc. 2026-8 does not include

the suggested revision. Like the rules in section 10 of the proposed revenue procedure, section 10.01 of Rev. Proc. 2026-8 provides that if any subordinate organization included in a group application was formed more than 27 months before the submission of the group application, the effective date of exemption for all subordinate organizations listed in the group application will be the submission date of the group application. However, section 10.01 of Rev. Proc. 2026-8 differs from the corresponding provisions in Rev. Proc. 80-27 and the proposed revenue procedure in that it provides that subordinate organizations recognized as tax-exempt or that are included in another group exemption letter immediately prior to being included in the group application retain their effective date of exemption. This revision provides continuity for those subordinate organizations by clarifying that they retain their effective date of exemption. The Treasury Department and the IRS believe sections 10.01 and 10.02 of Rev. Proc. 2026-8 provide central organizations with sufficient flexibility to achieve the desired effective date of exemption for each subordinate organization, while continuing to facilitate efficient processing of group applications in the same manner as the effective date rules contained in Rev. Proc. 80-27.

.20 Preexisting Subordinate Organiza- tion Rule and Transition Period.

The proposed revenue procedure contained two provisions limiting its applicability to preexisting group exemption letters and preexisting subordinate organizations. ⁶ The first rule provided that certain provisions of the proposed revenue procedure do not apply to preexisting subordinate organizations (PSO rule). The second rule provided that certain provisions of the proposed revenue procedure

do not apply during a one-year transition period.

One commenter said the PSO rule should be expanded to exclude preexisting subordinate organizations from all requirements in the proposed revenue procedure that are not contained in Rev. Proc. 80-27. According to this commenter, the new requirements could cause thousands of organizations to be removed from preexisting group exemption letters and forced to apply for tax-exempt status individually. Alternatively, the commenter recommended several variations of the PSO rule providing a more limited application of the rule regarding the matching, foundation classification, and similar purpose requirements. The Treasury Department and IRS do not adopt any of the commenters’ recommendations because they would essentially require the IRS to operate the group exemption letter program using two vastly different sets of rules and doing so would unduly burden the IRS. Further, the commenter’s suggestions regarding applying the PSO rule with respect to the matching, foundation classification, and similar purpose requirements are not discussed because these requirements have been substantially revised in, or omitted from, Rev. Proc. 2065-8, as explained in sections III.08, III.09, and III.10 of this notice.

A commenter requested that a preexisting subordinate organization that has had its tax-exempt status automatically revoked, but subsequently reinstated, be considered a preexisting subordinate organization for purposes of the PSO rule. This commenter expressed concern that providing otherwise would be unduly burdensome for unsophisticated organizations because they are more likely to have their exemption automatically revoked. Under section 3.10 of Rev. Proc. 20268, a preexisting subordinate organization whose exemption has been automatically revoked also loses its status as a preexisting subordinate organization. Reinstatement of tax-exempt status, whether retroactive or not, will not cause the organization to regain its status as a preexisting subordinate organization. A subordinate

6 A “preexisting group exemption letter” is any group exemption letter in existence on the date Rev. Proc. 2026-8 is published in the Internal Revenue Bulletin. Rev. Proc. 2026-8, § 3.09. A “preexisting subordinate organization” is any subordinate organization included in a preexisting group exemption letter on the date Rev. Proc. 2026-8 is published in the Internal Revenue Bulletin. Id. at § 3.10.

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organization that has its tax-exempt status automatically revoked is removed from a group exemption letter pursuant to section 8.02(1)(a)(iii) of Rev. Proc. 2026-8. If the organization is subsequently added back to the group exemption letter, it will not meet the definition of a preexisting subordinate organization because it is added to the group exemption letter after the publication date of Rev. Proc. 2026-8. While this result may burden some subordinate organizations, it is necessary for proper administration of the group exemption letter program and to ensure that organizations comply with their obligations under Rev. Proc. 2026-8. To illustrate the consequences where a preexisting subordinate organization is removed from a group exemption letter, section 3.10 of Rev. Proc. 2026-8 contains a revised definition of the term preexisting subordinate organization and section 12.03(5) of Rev. Proc. 2026-8 provides an example of the effect of removal.

A commenter requested expansion of the transition period from one year to three years. The Treasury Department and the IRS do not adopt this suggestion because extending the transition period to three years would require the IRS to administer two group exemption letter programs for the duration of the extended period, which would unduly increase the administrative burden and decrease the efficiency of the group exemption letter program. Accordingly, the transition period in section 12.02(2) of Rev. Proc. 2026-8 has not been extended to three years. Instead, section 12.02(2) of Rev. Proc. 2026-8 provides for a transition period ending on January 22, 2027, rather than exactly one year after publication of the revenue procedure. The Treasury Department and the IRS made this revision to ease the administrative burden of the group exemption letter program on the IRS.

Although Rev. Proc. 2026-8 does not include any of the revisions to the PSO rule and transition period specifically requested by commenters, the Treasury Department and the IRS revised these rules after further considering their scope and application. Under the proposed revenue procedure, the general supervision and control standards were not applicable to preexisting subordinate organizations. The Treasury Department and IRS do not

believe preexisting subordinate organizations should be permanently excepted from the new affiliation, supervision, and control provisions contained in the proposed revenue procedure. Instead, it is more appropriate to require preexisting subordinate organizations to comply with the new provisions after the transition period. Accordingly, sections 12.02(2)(a) (iii) and 12.02(2)(d) of Rev. Proc. 2026-8 provide that the general supervision and control provisions are covered by the transition rule and apply to preexisting group exemption letters and preexisting subordinate organizations after a transition period ending on January 22, 2027. This change facilitates uniformity in the administration of the group exemption letter program by limiting the time during which the IRS must administer two different group exemption letter programs. This change also benefits central organizations with preexisting group exemption letters by affording them time to ensure that their relationships with their preexisting subordinate organizations comply with Rev. Proc. 2026-8. In addition, the proposed revenue procedure inadvertently failed to include the affiliation provision in the PSO rule or the transition period. Sections 12.02(2)(a)(iii) and 12.02(2)(d) of Rev. Proc. 2026-8 clarify that the affiliation provision also applies to preexisting group exemption letters and preexisting subordinate organizations after the transition period ending on January 22, 2027.

The PSO rule and transition period in the proposed revenue procedure have also been revised to conform with revisions made to other provisions of the proposed revenue procedure. For example, the foundation classification requirement, similar purpose requirement, and uniform governing instrument requirement have each been removed from the PSO rule, as these requirements were eliminated from the operative rules. In addition, the PSO rule in section 12.02(3)(a) of Rev. Proc. 2026-8 provides that preexisting subordinate organizations need not comply with the uniform purpose statement requirement found in section 4.03(2)(b) of Rev. Proc. 2026-8.

Although it appears that the application of the PSO rule and transition period to the matching requirement has been revised as published in Rev. Proc. 2026

8, the revisions are not substantive. The PSO rule in the proposed revenue procedure provided that the matching requirement did not apply to preexisting subordinate organizations and did not draw a distinction between the requirement that subordinate organizations be described in the same paragraph of § 501(c) as the central organization and the requirement that subordinate organizations be described in the same paragraph of § 501(c) as other subordinate organizations covered by the group exemption letter. However, a subsequent provision of the proposed revenue procedure, separate from the transition period of the proposed revenue procedure, provided that central organizations with a preexisting group exemption letter had the duration of the transition period to ensure that all subordinate organizations were described in the same paragraph of § 501(c). Like the proposed revenue procedure, Rev. Proc. 2026-8 provides that central organizations have the duration of the transition period to comply with the matching requirement obligating all subordinate organizations covered by a group exemption letter to be described in the same paragraph of § 501(c); however, this provision is clearly contained in the transition period in section 12.02(2) of Rev. Proc. 2026-8. As explained above in section III.08 of this notice, the matching requirement in Rev. Proc. 2026-8 does not require subordinate organizations to be described in the same paragraph of § 501(c) as the central organization, so this requirement is not addressed in the PSO rule or transition period provision.

Finally, the proposed revenue procedure inadvertently excluded organizations described in § 501(c)(29) from its PSO rule. Accordingly, section 12.02(3)(c) of Rev. Proc. 2026-8 includes organizations described in § 501(c)(29) in the PSO rule.

.21 Declaratory Judgment Provisions of § 7428.

Section 11 of the proposed revenue procedure explained when the declaratory judgment provisions of § 7428 apply in the context of group exemption letters. The Treasury Department and IRS have determined that it is more appropriate to provide such guidance in a future update to section 10 of Rev. Proc. 2026-5 (or its successor), which explains when and how a declaratory judgment proceeding under

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§ 7428 may be filed in the United States Tax Court, the United States Court of Federal Claims, or the District Court of the United States for the District of Columbia. Section 11 of Rev. Proc. 2026-8 provides information regarding whether a declaratory judgement action under § 7428 must be filed by a controlling organization or a subordinate organization.

.22 Reliance. Section 12 of the proposed revenue procedure, which related to donor reliance on a group exemption letter, explained how donors could verify that contributions to a subordinate organization are deductible under § 170. A commenter suggested several revisions to this provision to address issues that are unique to subordinate organizations. As stated in Notice 2020-36, the reliance section of the proposed revenue procedure was intended to incorporate previously issued guidance rather than propose new policies and procedures. After further consideration, the Treasury Department and the IRS have excluded the donor reliance provisions from Rev. Proc. 2026-8 because the rules governing donor reliance are already published in Rev. Proc. 2018-32, 2018-23 I.R.B. 739. Accordingly, Rev. Proc. 2026-8 does not include the commenter’s suggested revisions.

.23 Annual Filing Requirement / Dis- closure of Group Applications and Group Exemption Letter Requests.

Sections 7 and 13 of the proposed revenue procedure addressed the filing of group returns under § 6033 and the disclosure of group returns, group applications, and supporting documents under § 6104(a) and (d). These sections simply incorporated information located in previously published guidance. After further consideration, the Treasury Department and the IRS have excluded these sections from Rev. Proc. 2026-8.

SECTION IV. DRAFTING INFORMATION

The principal author of this notice is Seth Groman of the Office of Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment

Taxes). For further information regarding this notice contact Seth Groman at (202) 317-5640 (not a toll-free call).

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