IRC 501 CODE

The Notice states that Treasury and the IRS will construe the code and regulations under IRC Section 501(c)(3) as permitting the IRS to issue a favorable determination letter to an LLC that submits a Form 1023 after Octoif, in addition to the general requirements under IRC Section 501(c)(3), the LLC satisfies the following additional requirements. In contemplation of this new guidance, the IRS and Treasury reviewed state laws governing not-for-profit (or nonstock) corporations and charitable trusts, finding that LLC laws (1) in a few states 'may not allow an LLC to be organized and operated exclusively for charitable purposes' and (2) in most states include default provisions giving LLC members 'certain economic rights that would be inconsistent with Section 501(c)(3) requirements if the members were 'private shareholders or individuals' within the meaning of 1.501(a)-1(c).' 'Historically,' the Notice explains, 'the standards that the IRS has applied for purposes of issuing determination letters have generally included a requirement that all the members of an LLC must themselves be Section 501(c)(3) organizations, governmental units, or wholly owned instrumentalities of a state or political subdivision thereof.' Section 1.501(c)(3)-1(b) does not specifically address LLCs, and that the IRS and Treasury have never issued formal guidance explaining how LLCs can qualify as IRC Section 501(c)(3) entities. The Notice points out that the organizational test under Treas. The IRS notes that these new requirements will not affect the IRC Section 501(c)(3) status of current tax-exempt entities, and requests public comments on a detailed list of specific issues.

In Notice 2021-56 (the Notice), the IRS has established standards that a limited liability company (LLC) must satisfy to be recognized as a tax-exempt organization described in IRC Section 501(c)(3). IRS establishes standards for LLCs to receive exemption under IRC Section 501(c)(3)

Irc 501