For nearly four decades, IRS Revenue Procedure 80-27 governed how denominations and other central organizations obtained and maintained group exemption rulings. That changed in January, when the IRS issued Revenue Procedure 2026-8—formally reopening the application process after a five-year pause and replacing key parts of the old framework.
The new rules mostly affect new group exemptions, but one key change also affects group exemptions.
While the guidance applies broadly to all tax-exempt groups, churches and conventions or associations of churches receive some meaningful accommodations based on their religious natures.
Here’s what matters most.
Group Structure and Eligibility
Under Revenue Procedure 2026-8, a central organization must already be recognized as tax-exempt—or apply for recognition at the same time it seeks a group exemption. If the central organization loses its exemption, all subordinate organizations lose coverage under the group ruling.
New group exemptions must include at least five subordinate organizations. Existing groups must maintain at least one subordinate to keep their ruling. A central organization may hold only one group exemption letter, though transition relief applies to certain existing arrangements.
Each subordinate must:
- Be a separate legal entity with its own governing instrument
- Have its own employer identification number (EIN)
- Qualify under the same paragraph of Section 501(c)
Type III supporting organizations and private foundations are not eligible for inclusion.
Affiliation and Supervision
For churches and church associations, affiliation is satisfied by “the sharing of common religious bonds or convictions.” Importantly, hierarchical control over local churches is not required. Inclusion in a denominational directory may help demonstrate affiliation.
Subordinates must also be subject to either general supervision or control by the central organization.
Supervision generally requires the central organization to:
- Annually obtain information about subordinates’ activities and compliance
- Annually communicate information about maintaining tax-exempt status
However, churches receive significant relief. Because churches are not required to file Form 990, central organizations are not required to collect annual financial data from subordinate churches. This accommodation substantially reduces administrative burdens.
