IRS reopens group exemption letter program

After a pause that lasted more than five years, the Internal Revenue Service is once again accepting group exemption letter requests effective Jan. 20, 2026. The reopening comes with the issuance of Revenue Procedure 2026-8 and an updated Form 8940, Request for Miscellaneous Determination, signaling a more modern and structured approach to administering the group exemption letter program.

For tax professionals advising exempt organizations, especially national or regional groups with local chapters, this development is significant. Group exemption letters allow a central organization to obtain and maintain tax-exempt status for its subordinate organizations under a single ruling. With the program officially back online, practitioners need to understand the new mechanics and compliance expectations.

Revenue procedure 2026-8 framework

Revenue Procedure 2026-8 establishes the procedures central organizations must follow to request and maintain a group exemption letter. The IRS stopped accepting new applications in June 2020 to address long-standing administrative concerns and review public comments. This new guidance, which replaces rules from the 1980s, reflects a careful balance between administrative efficiency for the IRS and flexibility for exempt organizations.

The IRS incorporated feedback from the nonprofit community and softened or eliminated many of the more burdensome proposals floated in earlier drafts. For example, the final rules do not require subordinate organizations to:

• Have the same foundation classification as the central organization, while noting private foundations are not eligible as subordinates.
• Adopt a uniform governing instrument. Instead, they must only include a uniform purpose statement in their governing documents, a far more flexible standard that accommodates varying state laws. 
• Be described in the same paragraph of §501(c) as the central organization (though they must still be described in the same paragraph as one another)

New flexibility meets clearer oversight

While the rules are more flexible than earlier proposed requirements, the IRS made clear that group exemption status remains a privilege that requires active oversight. Central organizations are expected to supervise their subordinates and ensure ongoing compliance with federal tax-exempt organization rules and annual filing requirements.

The new procedure provides greater clarity on how to meet the "general supervision" standard. For instance, a central organization can satisfy its review requirement by obtaining and retaining a copy of a subordinate’s filed Form 990 or Form 990-EZ. However, obtaining a copy of the Form 990-N e-Postcard is not sufficient.

The procedure also expands the ways a central organization can demonstrate "control" over a subordinate. In addition to appointing officers or directors, control can now be established through a written agreement, a change that provides a practical alternative for many organizations. 

Form 8940 moves to Pay.gov

To implement the new procedures, the IRS updated Form 8940 and its instructions. All group exemption letter requests must now be submitted electronically through Pay.gov using Form 8940, Schedule Q; paper submissions are no longer accepted.

The required user fee for a new group exemption letter request is $3,500. Payment must be made at the time of submission via a bank account or credit/debit card. Tax professionals should prepare clients for both the fee and the electronic submission process.

Transition period and ongoing compliance

The reopening of the program does not mean relaxed oversight. Central organizations must continue to monitor their subordinates, track annual filing compliance and report any changes to the IRS through annual Supplemental Group Ruling Information (SGRI) updates and required oversight (general supervision or control). Widespread noncompliance can jeopardize the entire group exemption, including if a majority of subordinates lose exemption for non-filing or the central organization fails required oversight and reporting.

Recognizing the significance of these changes, the IRS has provided a transition period. Central organizations with a preexisting group exemption letter have until Jan. 22, 2027, to ensure their relationships with their subordinates comply with the new affiliation, supervision and control standards under Rev. Proc. 2026-8.

What this means for tax professionals

For tax professionals, the return and refresh of the group exemption letter program creates new planning opportunities along with expanded compliance responsibilities. Clients with exempt organization affiliated chapters or local units may once again find a group ruling to be an efficient option, but advisers should help clients weigh the administrative benefits against the ongoing oversight, reporting responsibilities and the $3,500 user fee.

Revenue Procedure 2026-8 modernizes a long-standing program, making it more predictable than prior guidance and, in many ways, more practical than earlier proposed requirements. For advisers ready to help clients navigate the new expectations, the group exemption letter can once again be a powerful tool in the tax-exempt organization space.