Article

IRS resumes group rulings subject to new procedures

Rev. Proc. 2026-8 lifts moratorium and unveils new requirements and transition rules

February 03, 2026

After more than five years, the IRS began accepting new applications for group rulings on Jan. 21, 2026, ending the moratorium that began June 17, 2020. The new 49-page 2026 revenue procedure updates and significantly revises the procedures for obtaining and maintaining group rulings, replacing the 7-page 1980 revenue procedure. Changes include requiring at least five subordinates to apply for a group ruling, retaining at least one subordinate to maintain the group ruling, limiting each central organization to one group ruling, mandating a uniform purpose statement for subordinates, and introducing more robust requirements to ensure central organizations exercise supervision or control over the subordinates.

Limited transition rules apply to group rulings in existence as of Jan. 20, 2026, allowing affected organizations to make any necessary changes until Jan. 22, 2027. Certain grandfather provisions exempt subordinate organizations from some of the new requirements provided that they continuously remain in the same group ruling as of Jan. 20, 2026.

This article addresses these changes as follows:

Applying for a new group ruling

Ongoing requirements for all groups

Transition rules for existing groups

Grandfather provisions for existing subordinates

Background

Group rulings, referred to in the recent guidance as group exemption letters, establish a specialized process by which a single IRS determination letter recognizes the section 501(c) exempt status of a group of related nonprofit organizations (subordinates) that are subject to the general supervision or control of an existing tax-exempt entity (central organization). In practice, a group ruling reduces the burdensome exemption application process by allowing the central organization to extend exemption to subordinate organizations without each subordinate having to separately apply to the IRS. With respect to section 501(c)(3) organizations, the IRS has this authority pursuant to section 508(c)(2)(B) and Reg. sec. 1.508-1(a)(3)(i)(c).

The IRS provided limited group ruling guidance through revenue procedures from 1968 through 1980, with the most recent substantive guidance prior to 2026 being Rev. Proc. 80-27, as modified by Rev. Proc. 96-40. However, in Notice 2020-36, the IRS proposed substantial changes to the long-standing rules and issued a moratorium on new group rulings until the final changes were published in the Internal Revenue Bulletin. This moratorium lasted from June 17, 2020, through Jan. 20, 2026.

Rev. Proc. 2026-8 sets forth these final rules, contains significant changes to the requirements to obtain and maintain a group ruling, and permits the IRS to begin accepting new applications for group exemptions, effective Jan. 21, 2026, via Form 8940 on pay.gov.

Applying for a new group ruling

Central organizations applying for a new group ruling will need to satisfy the following requirements:

Exempt status: The IRS must recognize the central organization’s exempt status in advance of or concurrently with the group ruling application. Therefore, an organization without a formal IRS determination letter must separately submit an exemption application in order to obtain a group ruling.

Only one group: A central organization may maintain only one group ruling.

Minimum number of subordinates: At the time of application, there must be at least five subordinate organizations. The application must include each subordinate’s name, mailing address, EIN, formation date, and, for section 501(c)(3) organizations, foundation classification.

Application method: Electronic filing of Form 8940, Schedule Q, through pay.gov is the sole mechanism to apply for a group ruling. The IRS recently posted revised Form 8940 instructions (rev. December 2025).

Effective date: Upon issuance of the group ruling, each subordinate generally will be exempt as of its date of formation. However, if any subordinate included in the group ruling application were formed more than 27 months before the date of application and did not otherwise have an IRS determination letter, the effective date of exemption for all subordinates included with the application would be the Form 8940 submission date to the IRS.

Affiliation and general supervision or control: Each subordinate must be affiliated with the central organization and subject to its general supervision or control (as further described in Ongoing requirements for all groups).
Matching section 501(c) paragraph: All subordinates must share the same section 501(c) paragraph as each other, but it may differ from the central organization. For example, a section 501(c)(4) organization may maintain a group ruling for section 501(c)(3) organizations, but all subordinates would need to be described in section 501(c)(3).
Uniform subordinate purpose statement: Any subordinates that share the same purpose must have identical, uniform purpose statements in their governing instruments. For example, all schools in the same group should have the same uniform purpose statement, but hospitals in the same group may have a different, but uniform to each other purpose statement.
Authorization to include in group ruling: Each subordinate must provide written authorization to the central organization to include the subordinate in the group ruling. Such authorization must also acknowledge that the central organization has the authority to remove the subordinate from the group ruling with or without cause.
Additional documentation: The application must include non-discrimination policy information for schools, section 501(r) compliance information for hospitals, and an attestation that Forms 8976 were filed for section 501(c)(4) organizations.
Ineligible subordinates: The following organizations are not eligible to be subordinates in a group ruling:
- Foreign organization.
- Private foundation.
- Type III supporting organization (both functionally and non-functionally integrated).
- Section 501(c)(29) qualified nonprofit health insurance issuer.
- Automatically revoked organization that has not had its exempt status reinstated.

Ongoing requirements for all groups

Subject to the Transition rules for existing groups and the Grandfather provisions for existing subordinates described below, the following requirements must be met annually by central organizations to maintain a group ruling and by subordinate organizations to remain included in a group ruling:

Each subordinate organization must be affiliated with the central organization and subject to its general supervision or control.

Affiliated: All subordinates must be affiliated with the central organization. Facts and circumstances demonstrate that a subordinate is affiliated with a central organization by showing that it is a chapter, local post, or unit of the central organization. Examples include filing a group return that includes the subordinate’s information, maintaining an annually updated directory that includes the subordinate organization, or sharing the central organization’s common religious bonds or convictions.
General supervision: If a subordinate is not controlled by the central organization, it must be subject to its general supervision. A subordinate is subject to the central organization’s general supervision if the central organization meets both of the following requirements:
- Data collection: Annually obtains, reviews, and retains information on the subordinate’s finances, activities, and IRS filing compliance. For example, the central organization can obtain a copy of a subordinate’s Form 990 or 990-EZ. However, if the subordinate files a Form 990-N, a different information gathering process will be necessary. Subordinates that do not have a Form 990 filing requirement are not subject to this requirement.
- Education: Annually educates the subordinate on the requirements to maintain its tax-exempt status. This requirement can be met by providing a link to the most recent version of Publication 557, Tax-Exempt Status for Your Organization.
Control: If a subordinate is not subject to the central organization’s general supervision, it must be controlled by it. A subordinate is subject to the central organization’s control if:
- The central organization appoints a majority of the subordinate’s voting directors or officers;
- A majority of the subordinate's voting directors or officers are also directors or officers of the central organization; or
- The central and subordinate organizations enter into a written agreement that provides the central organization with control over the subordinate’s activities and operations (e.g., a management agreement).

A central organization generally must annually submit detailed information about changes to its group ruling to the IRS.

Timing: The SGRI must be submitted at least 30 days and no more than 90 days before the end of the central organization’s annual accounting period. For example, a central organization with a Dec. 31 year end must submit its SGRI no earlier than Oct. 2, but no later than Dec. 1.
Electronic filing: Although the revenue procedure requires organizations to submit the SGRI electronically, there are no procedures to currently do so. In the interim, organizations should mail SGRIs to the address listed in the revenue procedure.
Content: The SGRI must include information regarding all changes in the purposes, character, or method of operation of all subordinate organizations included in the group ruling. In addition, it must report a separate list for each of the following categories:
- Subordinates with name and/or mailing address changes.
- Subordinates no longer in the group ruling.
- Subordinates with exemptions that were automatically revoked.
- Subordinates added to the group ruling, including their date of formation and other statements and representations similar to those applicable for new group rulings.

Each list must include the subordinate’s name, mailing address, and EIN.

No changes: If there are no changes to report, the central organization must meet this requirement by stating that there are no changes.
Church entities: The SGRI requirement does not apply to central organizations that are churches or conventions or associations of churches.

Minimum subordinates: To maintain a group ruling, a central organization must always have at least one subordinate organization.
Annual Form 990-series: The central organization must file its own annual return, and each subordinate not included in a group return must file its own return or notice unless exempt from such filing obligation.
Group returns: A subordinate organization that has the same annual accounting period as the central organization may provide written authorization to be included in a group return filed on its behalf by the central organization. Such authorization must be provided annually.
Removal of a subordinate: A central organization may remove a subordinate with or without cause by providing the subordinate with at least 30 days advance notice and notifying the IRS on its annual SGRI.
Termination of a group ruling: A central organization may voluntarily terminate its group exemption at any time. The IRS may terminate a group exemption letter at its discretion if the central organization’s exemption is revoked or terminated; the central organization fails to submit a timely SGRI; the central organization fails to exercise general supervision or control; or more than half of the subordinates have had their exemptions automatically revoked for failure to file.

Transition rules for existing groups

Central organizations generally have until Jan. 22, 2027, to fully comply with the following new requirements:

One group ruling: A central organization with multiple group rulings must terminate all but one before Jan. 22, 2027.
Affiliation and general supervision or control: As further defined in Ongoing requirements for all groups, the central organization must remove any subordinate that fails to meet the affiliation and general supervision or control requirements no later than Jan. 22, 2027.
Matching section 501(c) paragraph: The central organization must remove any subordinate organization described in a different section 501(c) paragraph than set forth in its group exemption letter.
Minimum subordinates: A central organization must have at least one subordinate organization or terminate the group ruling.

To the extent that the central organization admits new subordinates during the transition period, it must follow the general rules and requirements of Rev. Proc. 2026-8 without regard to these special transition rules.

Grandfather provisions for existing subordinates

Subordinate organizations continuously included in the same group ruling as of Jan. 20, 2026 (“Preexisting Subordinates”) are not subject to the following requirements:

Uniform purpose statement: Preexisting Subordinates do not need to amend their governing instruments to include a uniform purpose statement.
Ineligible subordinates: Preexisting Subordinates classified as Type III supporting organizations or exempt as section 501(c)(29) qualified nonprofit health insurance issuers may continue to be included in the group ruling.
Written authorization for removal: Preexisting Subordinates do not have to provide an updated written authorization that explicitly acknowledges that the central organization can remove them with or without cause.

If a Preexisting Subordinate is removed and added to the group ruling after Jan. 20, 2026, including if its exempt status is automatically revoked for failure to file, it is no longer a Preexisting Subordinate. Therefore, these exceptions do not apply, and the organization must comply with all the requirements identified in the revenue procedure.

RSM US takeaways

The updated group ruling procedures set forth numerous nuanced requirements and exceptions for both new and preexisting groups. RSM US exempt organizations professionals can assist with navigating these requirements, including:

Evaluating the advantages of pursuing or maintaining a group ruling and preparing group exemption applications.
Identifying the extent to which transitional or grandfather rules apply and assisting with necessary organizational and operational changes to comply with the Jan. 22, 2027, transition date.
Assisting with the preparation and review of the annual SGRI, group return, and associated compliance issues.

RSM contributors

Alexandra O. Mitchell

Education Sector Leader, Principal

View full bio >
Brianna Mooty

Senior Manager
Michelle McCarthy

Senior Manager
Lauren Nowakowski

Senior Manager

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Article

IRS resumes group rulings subject to new procedures

Rev. Proc. 2026-8 lifts moratorium and unveils new requirements and transition rules

Background

Applying for a new group ruling

Ongoing requirements for all groups

Transition rules for existing groups

Grandfather provisions for existing subordinates

RSM US takeaways

RSM contributors

Related insights

Tax resources

Subscribe now

Washington National Tax

THE POWER OF BEING UNDERSTOOD