IRS Announces Procedures for Supporting Organizations Desiring to Change Their Public Charity Classification

On November 7, 2006, the IRS published a formal announcement outlining steps that a supporting organization may take to change its public charity status in light of one or more of the new legal restrictions imposed on supporting organizations by the Pension Protection Act of 2006 (the "Pension Act"). The Pension Act includes provisions that effectively prohibit grants from private foundations to certain types of supporting organizations and that prevent all supporting organizations from taking advantage of the legislation's new favorable individual retirement account charitable distribution provisions. 

As a result of these and other restrictions, many supporting organizations already have submitted requests to the IRS seeking to be reclassified as a different type of public charity, such as a publicly supported organization. IRS Announcement 2006-93 streamlines the procedures for processing these and future reclassification requests by requiring that (1) supporting organizations seeking this type of relief follow specific filing steps and direct their requests to a particular "Adjustments Unit" of the IRS, and (2) supporting organizations with pending reclassification requests submitted before the release of Announcement 2006-93 notify the IRS if their requests are related to the Pension Act.

IRS Announcement 2006-93 is available at http://www.irs.gov/pub/irs-drop/a-06-93.pdf.