Tuesday, August 16, 2022
The IRS yesterday released final regulations under IRC section 6104(c) relating to how states may obtain non-public tax-exempt organization information from the IRS, including involving final and proposed denials and revocations of tax-exempt status. Only one comment was submitted in response to the 2011 (yes, 11 years ago) proposed regulations, issued in response to statutory changes made by the Pension Protection Protection Act of 2006. According to the Preamble to the final regulations, there is only one clarifying substantive change to the proposed regulations (as well as several non-substantive clarifying changes). The substantive change was to make it clear that the agent-contractor disclosure prohibition applies both to IRS disclosures and to appropriate State officer (ASO) disclosures.
One interesting piece of information from the Preamble is that the IRS now has section 6104(c) information sharing agreements with nine ASOs, all of whom are State tax officers responsible for administering State tax laws. The Preamble also indicates the IRS is hopeful that the issuance of final regulations will facilitate additional such agreements. That said, the requirements states must satisfy under section 6104(c) to access non-public information are relatively strict, and the final regulations necessarily have to reflect the strictness of the statutory scheme.