Rev Proc 2011-33, 2011-25 IRB
In a Revenue Procedure, IRS has provided the extent to which contributors may rely on Pub 78 or on the IRS Business Master File (BMF) extract for purposes of deducting contributions under Code Sec. 170 and making grants under Code Sec. 4942, Code Sec. 4945, and Code Sec. 4966, effective June 20, 2011. IRS may give notice of revocation in the Internal Revenue Bulletin (IRB) or on its website. IRS will no longer publishes a paper version of Pub 78.
Background. A charitable contribution deduction is allowed for contributions or gifts made to or for the use of an organization that qualifies as an organization described in Code Sec. 170. In order for contributions to be deductible, the organization must qualify at the time of the contribution. Thus, it is the responsibility of an organization receiving contributions to ensure that its character, purposes, activities, and method of operation satisfy the qualification requirements of Code Sec. 170 in order for grantors and contributors to have the assurance that their contributions at the time made are deductible.
Generally, Pub 78 lists organizations that have received a ruling or determination letter from IRS stating that contributions by grantors or contributors to the listed organization (or to the listed central (or parent) organization and those local (or subordinate) units covered by the group exemption letter) are deductible under Code Sec. 170. IRS no longer publishes a paper version of Pub 78. Grantors and contributors can no longer rely on the paper version of Pub 78 or any paper supplements for current information after the date of publication of Rev Proc 2011-33. Pub 78 now appears solely in electronic format on the IRS website at http://www.irs.gov/app/pub-78. Electronic Pub 78 and its electronic addenda are generally updated at least quarterly.
IRS also makes an extract of certain information on exempt organizations from the BMF available to the public through the Tax Statistics section of the IRS website. The extract of the BMF contains more information, in a slightly different format, than Pub 78. Due to its large size, the BMF extract is available as compressed ASCII Text or Excel spreadsheet files. These files must be downloaded and uncompressed before viewing. The BMF extract and its corresponding instructions are available for download directly from the IRS website at http://www.irs.gov/taxstats/charitablestats/article/0,,id=97186,00.html. Generally, the BMF information is extracted and updated on a monthly basis.
Reg. §1.170A-9T(f)(5)(ii) and Reg. §1.509(a)-3T(e)(2) generally state that grantors and contributors may rely on an organization's ruling that the organization is described in Code Sec. 170(b)(1)(A)(vi) and Code Sec. 509(a)(1) or in Code Sec. 509(a)(2) until IRS publishes notice of a change of status (for example, in the IRB or Pub 78), unless the grantor or contributor was responsible for, or aware of, the act or failure to act that results in the organization's loss of public charity status.
Reliance on Pub 78 and the BMF. Rev Proc 2011-33 provides that where an organization listed in or covered by Pub 78 or the BMF extract ceases to qualify as an organization contributions to which are deductible under Code Sec. 170 and IRS subsequently revokes a ruling or a determination letter previously issued to the organization, grants and contributions made to the organization by persons unaware of the change in status of the organization generally will be considered allowable if made on or before the date of an appropriate public announcement stating that the organization ceases to qualify as an organization contributions to which are deductible under Code Sec. 170.
As a result of loss of exempt status under Code Sec. 6033(j), grants and contributions made to the organization by persons unaware of the change in the status of the organization generally will be considered allowable if made on or before the date of publication of the list of revoked organizations required by Code Sec. 6033(j). (Rev Proc 2011-33, Sec. 3.01)
Publication in either case may be effected in the IRB or on the IRS's website or by such other means designed to put the public on notice of the change in the organization's status.
With regard to an organization's public charity status as a foundation under Code Sec. 509(a)(1), (2), or (3), grantors and contributors may rely on the classification of an organization listed in or covered by Pub 78 or the BMF extract for such purpose to the same extent as provided above for Code Sec. 170 purposes. (Rev Proc 2011-33, Sec. 3.02)
This advance assurance of deductibility and foundation status applies only to grants or contributions made to an organization listed in or covered by Pub 78 or the BMF extract in the organization's official name, its recognized popular name, or a contraction of either of these names that is reasonably identifiable or widely known. It doesn't apply to contributions or grants made nominally to an organization listed in or covered by Pub 78 or the BMF extract but with the understanding or on a condition that they be made available to or for the use of an organization not so listed.
Reliance on BMF information from other sources. A grantor or contributor may rely on information about an organization from the BMF extract that is obtained from a third party, so long as the following requirements are met:
(1) The third party provides a report to the grantor or contributor that includes: (a) the organization's name, EIN, foundation status under Code Sec. 509(a)(1), (2), or (3) (including supporting organization type, if applicable), and whether contributions to such organization are deductible; (b) a statement that the information is from the most current update of the BMF extract and the BMF extract revision date; and (c) the date and time the information was provided to the grantor or contributor; and
(2) The grantor or contributor retains a copy of the report in hard copy or electronically. (Rev Proc 2011-33, Sec. 4)
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