Rev. Proc. 2026-8 makes — Internal Revenue Bulletin 2026-4

First, section 7.01 of Rev. Proc. 2026-8 continues to require a central organization to submit its annual SGRI at least 30 days before the close of its annual accounting period but adds that a central organization may not submit its annual SGRI more than 90 days before the close of its annual accounting period. Second, section 7.02(2)(a)(iii) of Rev. Proc. 2026-8 provides that SGRI submissions must include a list of subordinate organizations whose tax-exempt status has been automatically revoked. Third, under section 7.02(4) of Rev. Proc. 2026-8, the IRS may specify additional information to be included in SGRI submissions through published guidance or another form of guidance issued after Rev. Proc. 2026-8 is published. Finally, under section 7.03, SGRI submissions must be made electronically. If the IRS has not published procedures for the electronic submission of SGRI by the publication date of Rev. Proc. 20268, SGRI must be mailed to the address set forth in section 7.03 of Rev. Proc. 2026-8. The IRS may change the address and the procedures for the submission of SGRI through guidance published in the Internal Revenue Bulletin or in forms, instructions, publications, or a posting on irs.gov issued with respect to Rev. Proc. 202-8. These new provisions will increase the efficiency of the group exemption letter program and improve the integrity of data collected for purposes of oversight of the group exemption letter program.

.17 Termination of, or Removal from, the Group Exemption Letter.

Section 8.01 of the proposed revenue procedure provided that the IRS may terminate a group exemption letter with respect to all subordinate organizations for, among other reasons, noncompliance by the central organization with the requirements of the proposed revenue procedure, including lateness

in any SGRI submission and any failure to exercise general supervision or control over one or more subordinate organizations. One commenter claimed that the proposed revenue procedure’s provisions involving IRS termination of a group exemption letter were too strict and may result in “isolated errors” causing the termination of a group exemption letter. The Treasury Department and the IRS do not agree with this comment. The termination provisions contained in the proposed revenue procedure are necessary to ensure that central organizations and subordinate organizations remain in compliance with the requirements of the group exemption letter program. Further, several of the proposed revenue procedure’s requirements have been relaxed in Rev. Proc. 2026-8, easing the burdens on organizations participating in the group exemption letter program and making it less likely that errors resulting in an IRS termination will occur. Additionally, IRS termination under section 8.01(1) of Rev. Proc. 2026-8 is discretionary and the IRS can consider whether an error is isolated when determining whether termination is warranted. Accordingly, Rev. Proc. 2026-8 contains the termination provisions as proposed.

The proposed revenue procedure provided that the IRS can also terminate a group exemption letter with respect to all subordinate organizations if more than half of the subordinate organizations have had their exemptions automatically revoked. A commenter expressed concern about this provision, noting that it is common for small subordinate organizations to rely on volunteers who may not understand their filing responsibilities and that if one or more of the subordinate organizations has their exemption automatically revoked, it puts the group exemption letter at risk of termination. The Treasury Department and the IRS disagree with this comment. If more than half of the subordinate organizations have had their exemptions automatically revoked, it is appropriate to terminate the group exemption letter because the Treasury Department and the IRS do not believe the administrative conveniences afforded by the group exemption letter program should be available when the majority of underlying subordinate organizations fail to satisfy their statutory

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filing requirements. Accordingly, section 8.01(1)(g) of Rev. Proc. 2026-8 retains the IRS’s ability to terminate a group exemption letter if the tax-exempt status of more than half of the subordinate organizations under that group exemption letter is automatically revoked for failure to satisfy annual filing requirements.

Section 8.02 of the proposed revenue procedure provided that a subordinate organization will be removed from a group exemption letter if (i) the central organization notifies the IRS that the subordinate organization will no longer be included in the group exemption letter, (ii) the IRS determines that the subordinate organization is a type of entity disqualified from being a subordinate organization, (iii) the subordinate organization’s exemption is automatically revoked, or (iv) the subordinate organization fails to satisfy certain requirements of the proposed revenue procedure. While commenters did not submit any comments regarding these provisions, Rev. Proc. 2026-8 contains a number of revisions regarding when subordinate organizations may be removed from a group exemption letter.

Section 8.02(1) of Rev. Proc. 2026-8 sets forth the circumstances when a subordinate organization may be removed from a group exemption letter by the IRS. This provision has been revised to remove references to the foundation classification and similar purpose requirements because those requirements have been eliminated and are not contained in Rev. Proc. 20268; however, a new provision contained in section 8.02(1)(b) of Rev. Proc. 2026-8 permits the IRS to remove a subordinate organization from a group exemption letter for any failure to meet the requirements of Rev. Proc. 2026-8 or other published guidance relating to Rev. Proc. 2026-8, other than the bases for removal set forth in section 8.02(1)(a) of Rev. Proc. 2026-8. Unlike removal under section 8.02(1)(a) of Rev. Proc. 2026-8, and the corresponding provisions of the proposed revenue procedure, where removal is mandatory, removal of a subordinate organization from a group exemption letter under section 8.02(1)(b) of Rev. Proc. 2026-8 is discretionary. The Treasury Department and the IRS believe this new provision is appropriate because it provides flexibility in considering the severity of the subor

dinate organization’s failure to meet the requirements under the group rulings program.

Section 8.02(2) of Rev. Proc. 2026-8 governs when a central organization can remove a subordinate organization from a group exemption letter. As is the case under Rev. Proc. 80-27, Rev. Proc. 2026-8 permits a central organization to remove a subordinate organization without action by the IRS. The central organization accomplishes this removal by sending an SGRI submission to the IRS just as required by Rev. Proc. 80-27. Specifically, section 8.02(2) of Rev. Proc. 2026-8 states a subordinate organization ceases to be included in a group exemption letter on the date the central organization notifies the IRS of the removal.

Section 8.02(2) of Rev. Proc. 2026-8 also clarifies that a central organization may remove a subordinate organization from its group exemption letter with or without cause. The proposed revenue procedure was not clear whether a subordinate organization can be removed without cause. The Treasury Department and the IRS believe that a central organization should be able to remove a subordinate organization from its group exemption letter with or without cause, because that ability affords the central organization flexibility in overseeing the composition of its group exemption letter.

Finally, section 8.02(3) of Rev. Proc. 2026-8 provides that a central organization must give a subordinate organization at least 30 days’ notice before the subordinate organization can be removed from a group exemption letter. The Treasury Department and the IRS believe this notice requirement affords subordinate organizations opportunity to prepare for removal from a group exemption letter.

.18 Effect of Non-Acceptance, Non-Is- suance, Termination, or Removal.

Section 9 of the proposed revenue procedure addressed ways that organizations may obtain recognition of tax-exempt status if they are included as a subordinate organization in a group application that is not accepted or for which the IRS declines to issue a group exemption letter. The proposed revenue procedure also addressed ways that organizations may regain recognition of tax-exempt status if their group exemption letter is terminated or if they

are removed from their group exemption letter. Though commenters did not submit any comments regarding these provisions of the proposed revenue procedure, Rev. Proc. 2026-8 reflects two clarifying revisions.

Sections 9.05(2)(b) and (c) of Rev. Proc. 2026-8 clarify that a subordinate organization included in a group application that is not accepted by the IRS, included in a group application where the IRS declines to issue a group exemption letter, or included in a group exemption letter that is terminated, may obtain recognition of its tax-exempt status by being included in a group application by the same central organization. If a subordinate organization is removed from a group exemption letter, it may not be included in a group application by the same central organization because central organizations are only permitted to have one group exemption letter.

Section 9.05(2)(e) of Rev. Proc. 2026-8, which is a provision that was not included in the proposed revenue procedure, clarifies that a subordinate organization may obtain recognition of its exempt status by being added back to a group exemption letter from which it was removed. The proposed revenue procedure did not provide for a subordinate organization to obtain recognition of its tax-exempt status in this manner.

.19 Effective Date of Exemption. Under section 10 of the proposed revenue procedure, a subordinate organization added to a group exemption letter is tax-exempt from the submission date of the SGRI adding the organization to the group exemption letter (unless the organization was already recognized as tax-exempt or included in another group exemption letter, in which case the organization retains its earlier effective date of exemption). The proposed revenue procedure provided that a subordinate organization included in a group application is tax-exempt from the date of its formation if all the subordinate organizations included in the group application were formed within 27 months of the postmark date of the group application. If any of the subordinate organizations included in the group application were formed more than 27 months before the postmark date of the group application and were not previously

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recognized as tax-exempt or included in another group exemption letter, then each subordinate organization would be recognized as tax-exempt from the postmark date of the group application.

Commenters recommended revising the rule regarding subordinate organizations added to a group exemption letter to provide that a newly formed subordinate organization is treated as tax-exempt from its date of formation if the SGRI adding the organization to the group exemption letter was submitted within 27 months of the organization’s date of formation. According to these commenters, the rule in the proposed revenue procedure is unduly burdensome because it requires a central organization to make an SGRI submission immediately upon the formation of each new subordinate organization to avoid any period during which the subordinate organization is not tax-exempt.

The Treasury Department and the IRS agree with this comment. Accordingly, section 10.02 of Rev. Proc. 2026-8 provides that the effective date of exemption for a subordinate organization that was not previously recognized as tax-exempt or included in another group exemption letter and that is added to a group exemption letter within 27 months of its date of formation is the organization’s date of formation. The effective date of exemption for a subordinate organization that was not previously recognized as tax-exempt or included in another group exemption letter and that is added to a group exemption letter more than 27 months after its date of formation will be the submission date of the SGRI adding it to the group exemption letter.

One commenter recommended revising the rule regarding the effective date of exemption of subordinate organizations included in a group application because it penalizes innocent subordinate organizations if only one subordinate organization was formed more than 27 months before the postmark date of the group application and creates a disincentive for organizations to be included in a group application. According to this commenter, any organization formed

within 27 months of the postmark date of the application should be treated as tax-exempt from its date of formation even if there are other subordinate organizations included in the group application that were formed more than 27 months before the postmark date.