SECTION 3. ORGANIZATIONS

EXCEPTED FROM FILING

.01 Pursuant to the authority of section 1.6033–2(g)(6) of the Income Tax Regulations, an organization that is either a ‘‘governmental unit’’ or an ‘‘affiliate of a governmental unit,’’ within the meaning of section 4, is not required to file Form 990.

.02 The exception from filing provided in section 3.01 applies to all tax years beginning after December 31, 1969, for which no Form 990 has been filed by the date of publication of this revenue procedure.

.03 This revenue procedure does not affect an organization’s obligation to file Form 990–T, Exempt Organization Business Income Tax Return. Thus, if an organization is required to file Form 990–T, it must continue to file that form, even though it is not required to file Form 990.

SECTION 4. ‘‘GOVERNMENTAL UNIT’’ AND ‘‘AFFILIATE OF A GOVERNMENTAL UNIT’’

.01 For purposes of this revenue procedure, an organization is treated as a ‘‘governmental unit’’ if:

(a) It is a state or local governmental unit as defined in section 1.103–1(b) of the regulations;

(b) It is entitled to receive deductible charitable contributions as an organization described in section 170(c)(1) of the Code; or

(c) It is an Indian tribal government, or a political subdivision thereof, under sections 7701(a)(40) and 7871 of the Code.

.02 For purposes of this revenue procedure, an organization is treated as an ‘‘affiliate of a governmental unit’’ if it is described in section 501(c) of the Code and it meets the requirements of either section 4.02(a) or (b):

(a) It has a ruling or determination from the Service that:

(i) Its income, derived from activities constituting the basis for its exemption under section 501(c) of the Code, is excluded from gross income under section 115;

(ii) It is entitled to receive deductible charitable contributions under section 170(c)(1) of the Code, on the basis that contributions to it are ‘‘for the use of’’ governmental units; or

(iii) It is a wholly owned instrumentality of a state or a political subdivision thereof, for employment tax purposes ( see sections 3121(b)(7) and 3306(c)(7) of the Code); or (b) The organization does not have a ruling or determination described in section 4.02(a) but:

(i) It is either ‘‘operated, supervised, or controlled by’’ governmental units, or by organizations that are affiliates of governmental units, within the meaning of section 1.509(a)–4(g)(1)(i) of the regulations, or the members of the organization’s governing body are elected by the public at large, pursuant to local statute or ordinance;

(ii) It possesses two or more of the affiliation factors listed in section 4.03; and

(iii) Its filing of Form 990 is not otherwise necessary to the efficient administration of the internal revenue laws.

.03 The following affiliation factors will be considered under paragraph (b)(ii) of section 4.02:

(a) The organization was created by one or more governmental units, organizations that are affiliates of governmental units, or public officials acting in their official capacity.

(b) The organization’s support is received principally from taxes, tolls, fines, government appropriations, or fees collected pursuant to statutory authority. Amounts received as government grants or other contract payments are not qualifying support under this paragraph.

(c) The organization is financially accountable to one or more governmental units. This factor is present if the organization is (i) required to report to governmental unit(s), at least annually, information comparable to that required by Form 990; and (ii) is subject to financial audit by the governmental unit(s) to which it reports. A report submitted voluntarily by the organization does not satisfy clause (i). Also, reports and audits pursuant to government grants or other contracts do not alone satisfy this paragraph (c).

(d) One or more governmental units, or organizations that are affiliates of governmental units, exercise control over, or oversee, some or all of the organization’s expenditures (although it is not financially accountable to governmental units as described in paragraph (c) of this section).

(e) If the organization is dissolved, its assets will (by reason of a provision in its articles of organization or by operation of law) be distributed to one or more governmental units, or organizations that are affiliates of governmental units within the meaning of section 4 of this revenue procedure. .04 In making a ruling or determination whether the organization’s filing of Form 990 is otherwise necessary to the efficient administration of the internal revenue laws under section 4.02(b)(iii), all relevant facts and circumstances shall be considered. Relevant facts and circumstances suggesting that filing is necessary for efficient tax administration include the extent to which the organization has taxable subsidiaries or participates in joint ventures with nonexempt entities; whether it engages in substantial public fund-raising efforts; and whether its activities provide significant benefits to private interests.