Group Rulings

A central organization may apply for a group ruling for itself and all its affiliated organizations. Subordinates covered by a group ruling do not have to file an application for recognition of tax exemption. The procedures for obtaining a group ruling are in Revenue Procedures 80-27 .

If a subordinate post, exempt under IRC 501(c)(19), doesn’t meet the membership requirements because of declining membership, can it still be listed on the group ruling?

No. When a post fails to meet the membership requirements, it is obligated to notify its parent and the IRS that it does not qualify for tax exemption and should not be listed in the group exemption roster. The post may continue to maintain its affiliation with the parent, but it may not maintain exemption as a subordinate post under the parent’s group ruling.

May auxiliary units be included in a parent’s group ruling under IRC 501(c)(19)?

Yes. As long as the auxiliaries meet the criteria for exemption under IRC 501(c)(19), they may be included in the group ruling.

May members of one subordinate post use the facilities of another subordinate post without jeopardizing exemption of the host post?

Yes. Members of the various posts exempt under the same group ruling may use the facilities of and participate in activities of the other posts.

May a central veterans’ organization exempt under IRC 501(c)(19) have subordinate posts exempt under IRC 501(c)(4)?

Yes, and vice versa. However, all subordinates under a group ruling must be exempt under the same IRC section. For example, the parent may be exempt under IRC 501(c)(4) and all its subordinate posts exempt under IRC 501(c)(19). The group ruling may not include subordinate organizations exempt under other IRC sections. Those subordinate organizations may apply for tax exemption on their own.

May a central veterans’ organization have subordinates that are not tax exempt?

Yes.

What effect will adding new posts or dropping non-qualifying posts from a group ruling have on the parent’s exempt status?

As long as the parent organization continues to satisfy the legal requirements for exemption, neither adding new posts nor dropping non-qualifying posts from the group ruling will affect that status.

May a subordinate post be included in the parent organization’s consolidated information return?

Yes. A subordinate must have the same fiscal year as the parent organization to be included in the return. Note that, while a parent may file a consolidated Form 990 for subordinate organizations, the parent must also file its own separate Form 990.

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