Group Exemption Letter
Encyclopedia
A Group Exemption Letter or (GEL) is a special letter that is issued by the United States
Internal Revenue Service
(IRS). A GEL pertains to organizations that have been recognized by the IRS as tax exempt organizations.
Many organizations in the United States maintain a GEL and obtaining one can be of benefit to an organization.
on whose behalf the central organization
has applied for recognition of exemption.
To obtain a GEL, the central organization
must have first applied for and received its own 501(c)(3) Exemption Determination Letter recognizing its 501(c)(3) Tax Exemption status. Once the central organization has received its determination letter and has at least one subordinate wishing to operate under its exemption, then it is time to file for the GEL.
Each year, the central organization submits a list of subordinate organizations
to be included in the next years GEL.
By being included in the Group Exemption Letter, the subordinates do not have to file an application for exemption and can accept donations that are tax-deductible under the law. A major benefit is that a subordinate does not have to pay the fees to obtain an exemption letter and the four year wait period.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
(IRS). A GEL pertains to organizations that have been recognized by the IRS as tax exempt organizations.
Many organizations in the United States maintain a GEL and obtaining one can be of benefit to an organization.
Overview
According to the IRS, a Group Exemption Letter, is a ruling or determination letter that is issued to a central organization recognizing, on a group basis, the exemption under of subordinate organizationsSubordinate organizations
A subordinate organization is one that is under control of the central organization.According to the United States IRS Publication 557 , Tax-Exempt Status for Your Organization this is the definition for a subordinate organization:...
on whose behalf the central organization
Central organization
A central organization is the main body of a group of organizations.Also, "central organization" refers to something with an aesthetic center, such as a flower. The aesthetic make-up draws the viewer's eye towards the center....
has applied for recognition of exemption.
To obtain a GEL, the central organization
Central organization
A central organization is the main body of a group of organizations.Also, "central organization" refers to something with an aesthetic center, such as a flower. The aesthetic make-up draws the viewer's eye towards the center....
must have first applied for and received its own 501(c)(3) Exemption Determination Letter recognizing its 501(c)(3) Tax Exemption status. Once the central organization has received its determination letter and has at least one subordinate wishing to operate under its exemption, then it is time to file for the GEL.
Each year, the central organization submits a list of subordinate organizations
Subordinate organizations
A subordinate organization is one that is under control of the central organization.According to the United States IRS Publication 557 , Tax-Exempt Status for Your Organization this is the definition for a subordinate organization:...
to be included in the next years GEL.
Benefits
By obtaining a Group Exemption Letter, the central organization is able to pass along, to its subordinates, its tax exemption status thus making them eligible to be claimed as a 501(c)(3) organization under the same status as the central organization. If the central organization is recognized as a 501(c)(3), then all the subordinates are also considered 501(c)(3), as long as they follow the required guidelines set by the central organization.By being included in the Group Exemption Letter, the subordinates do not have to file an application for exemption and can accept donations that are tax-deductible under the law. A major benefit is that a subordinate does not have to pay the fees to obtain an exemption letter and the four year wait period.