IRS Finalizes Compliance Rules for Social Welfare Organizations by Adam Cohen, CPA

Posted on October 05, 2016 by Adam Cohen

In following up with the IRS’s requirement under the Protecting Americans from Tax Hikes Act (PATH Act), the agency has finalized how prospective social welfare organizations seeking to operate as 501(c)(4)s may apply to be treated as exempt from income taxes.


Under the final guidelines, a social welfare organization established after July 8, 2016, will have 60 days from the date of its formation to electronically file with the IRS Form 8976, Notice of Intent to Operate Under Section 501(c)(4). Organizations formed before July 8, 2016, that have not applied for IRS determination and those that have filed at least one annual return face a deadline of September 6, 2016.


Information required on Form 8976 includes an organization’s name, address, state of organization, employer identification number and the month in which its accounting period ends. Organizations must also provide detailed information about their missions, purpose and the needs they fulfill in the community. In addition to completing the form, prospective organizations will be required to pay a $50 user fee.


The IRS will acknowledge electronically that it received the prospective 501(c)(4)’s notice within 60 days of the initial filing.


Should a social welfare organization fail to file an initial notice of intent within the required 60 days after it is established, it will be subject to a penalty equal to $20 for each day after the expiration of this time period, up to a maximum of $5,000.


The advisors and accountants with Berkowitz Pollack Brant work extensively with not-for-profit organizations, providing operational and strategic plan consulting services, tax compliance services, financial statement audits and reviews, and employee benefit plan services.


About the Author: Adam Cohen, CPA, is an associate director in the Tax Services practice of Berkowitz Pollack Brant, where he works with closely held businesses and non-profit charities, hospitals and family foundations to maintain tax efficiency and comply with federal and state regulations. He can be reached at the CPA firm’s Ft. Lauderdale office at (954) 712-7000 or via e-mail