Affirmation Letter No Longer Required for DC Tax-Exempt Renewal Applications
Client Alert
On January 1, 2019, DC’s new tax-exempt renewal rules went into effect. Under these new rules, non-profits who have received tax-exempt status from DC are required to reapply for tax exemption every five (5) years. Many DC non-profits have already received a “Notice of Upcoming Exemption Expiration” from the DC Office of Tax and Revenue (the “OTR”) informing them of this requirement. In order to renew its tax-exempt status, a non-profit must log into its MyTax.DC.com account and complete the online FR-164 tax exemption application. If a non-profit does not renew its tax-exempt exemption it will be reclassified as a fully taxable entity in DC. These new rules affect any non-profit doing business in the District.
One of the most vexing parts of this new renewal process has been obtaining an affirmation letter from the IRS. In order to renew its tax exemption, a non-profit that had a determination letter issued over four (4) years ago was required to obtain an affirmation letter from the IRS confirming its tax-exempt status.
However, earlier this month it was announced that DC would no longer require IRS affirmation letters. Instead, the OTR will confirm a non-profit’s IRS tax-exempt status by performing a Publication 78 data search on the IRS website. While the FR-164 exemption application will still have a section where a non-profit can submit its affirmation letter, it is no longer a required field in the application. This change should streamline the renewal process and make it significantly easier for non-profits to complete the renewal application.
If you have any questions regarding the new DC tax-exempt renewal rules or the FR-164 tax exemption application, please contact Katie Meyer at kmeyer@gkglaw.com.