Proposed Regulations Expand IRS Authority to Disclose Charitable Organization Information to State Officials

by Proskauer - Not for Profit/Exempt Organizations

            On March 15, 2011, the Treasury published proposed regulations providing guidance on the IRS’s expanded authority to disclose information to appropriate state officers (“ASOs”) under Section 6104(c) of the Code, as amended by the Pension Protection Act of 2006 (the “Act”).  Section 6104(c) of the Code governs when the IRS may disclose certain information to an ASO about Section 501(c)(3) organizations (“charitable organizations”), organizations that have applied for recognition as charitable organizations (“applicants”), and certain other exempt organizations. Prior to the Act’s enactment, the IRS was only permitted to disclose a final determination denying an applicant exempt status, a final determination revoking a charitable organization’s exempt status, the issuance of a notice of deficiency of tax under Section 507 (the termination tax) or chapter 41 or 42 (which relate to excise taxes on prohibited activities), and, upon request of an ASO, returns and other information relating to any of these aforementioned disclosures.           

            The Act amended Section 6104(c) of the Code to expand the scope of information that the IRS may disclose to ASOs. Specifically, the amended provision permits the IRS to disclose the following additional information:

  • The issuance of certain proposed refusals to grant an applicant exempt status and proposed revocations of exempt status prior to administrative appeal and a final denial or revocation;
  • The issuance of a letter of proposed deficiency of tax under Section 507 or chapter 41 or 42;
  • The names, addresses and taxpayer identification numbers of organizations that have applied for exempt status under Section 501(c)(3); and
  • Returns and return information related to the proposed determinations and the identifying information of applicants noted above.

            Generally, the IRS is only permitted to make these expanded disclosures upon written request from an ASO and only as necessary to administer state laws regulating charitable organizations. In contrast, the previously permitted disclosures relating to final determinations and notices of deficiency were automatic. However, the Act made the disclosure of returns and return information under Section 6104(c) of the Code subject to the disclosure, recordkeeping, and safeguard provisions of Section 6103 of the Code, which are designed to protect the confidentiality of such information. The proposed regulations provide that the IRS will not give automatic notification of any determinations or other information that may be disclosed under Section 6104(c) unless the disclosure, recordkeeping and safeguard provisions of Section 6103 of the Code have been met by the requesting ASO. The proposed regulations also state that the IRS may require an ASO to execute a disclosure agreement or similar document specifying the procedures, terms, and conditions for the disclosure or inspection of information, and provide that such an agreement will satisfy the written request requirement. 

            There is an exception from the written request requirement under Section 6104(c) of the Code, as amended by the Act, which permits the IRS to disclose returns and return information to an ASO on its own initiative if the IRS determines that such information might constitute evidence of noncompliance under the laws within the jurisdiction of the ASO. The proposed regulations take an expansive view of the IRS’s authority to disclose this information on its own initiative and without an ASO request and clarify that these discretionary disclosures may be made before the IRS issues a proposed determination (i.e. denial of recognition, revocation, or notice of deficiency), or takes other action. However, the proposed regulations limit the IRS’s ability to make these voluntary disclosures to an organization’s potential noncompliance with state laws that specifically regulate charitable organizations, rather than an organization’s potential noncompliance with more general state laws, and also require the IRS to determine when state laws may have been violated. 

            The proposed regulations also define key terms for purposes of Section 6104(c) of the Code, including “appropriate state officer”, “return”, “return information”, and “taxable person.” The IRS and the Treasury Department have requested general comments on the clarity of the proposed regulations, and have made a specific request for comments on whether the description in the proposed regulations of organizations to which these disclosures will apply lists all the organizations with respect to which ASOs might legitimately need information. 


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Proskauer - Not for Profit/Exempt Organizations | Attorney Advertising

Written by:

Proskauer - Not for Profit/Exempt Organizations

Proskauer - Not for Profit/Exempt Organizations on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.