Friday, July 3, 2009

IRS Rev. Proc. 2009-32: Reliance Criteria for Supporting Organizations and Donor Advised Funds

The Pension Protection Act of 2006 subjected payments made by private foundations to excise taxes under IRC sections 4942, 4945, and 4966 if the grants are made to certain public charities exempt as supporting organizations. So that private foundations can assure themselves that grants are not subject to these taxes, the IRS this week issued Revenue Procedure 2009-32, allowing for them to rely on documentation of an organization’s status. The Rev. Prov. states that, “In determining whether a public charity is classified under 509(a)(1), (2), or (3) of the Code, a private foundation or a sponsoring organization that maintains a donor advised fund, acting in good faith, may rely on either: (1) the grantee’s current IRS letter recognizing the grantee as exempt from federal income tax and indicating the grantee’s public charity classification under § 509(a)(1), (2), or (3); or (2) information from the BMF [IRS Business Master File].” The complete Rev. Proc. is available here(PDF).

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