IRS letter ruling - Subordinate organizations treated as members for section 501(h) purposes 

December 2:  The IRS ruled that communications between the central organization in a group exemption ruling and the affiliated subordinate organizations constitute communications with “members” of the central organization for purposes of the exception to lobbying under section 4911(d)(2). PLR 201347024 (release date November 22, 2013; and dated August 28, 2013).

Read the letter ruling: PLR 201347024 [PDF 251 KB]


A section 501(c)(3) tax-exempt organization (Central Organization) holds a group exemption letter for 123 subordinate organizations (Affiliates) that are required to distribute to the Central Organization at least 25% of their net annual revenue.

The Central Organization and Affiliates conduct direct and grassroots lobbying to encourage legislation at the federal and state levels that would further the organizations’ exempt purposes.

The Central Organization and the Affiliates have elected to have their lobbying activities measured under section 501(h) (“electing organizations”).

Under section 4911 and the related regulations, lobbying does not include communications between an electing public charity and its members with respect to legislation of direct interest to the organization and its members. For this purpose, a member of an electing public charity includes a person who (1) pays dues or makes a contribution of more than a nominal amount, or (2) makes a contribution of more than a nominal amount of time.

IRS ruling

Because the Affiliates provide substantial support to the Central Organization in terms of both time and money, the IRS ruled that the Affiliates constitute members of the Central Organization.

Furthermore, because corporations act through their agents and employees, the IRS ruled that any individual that fills specific, defined roles (e.g., president, vice president, director) with respect to an Affiliate, and acting in their capacities as an agent or employee, will be treated as a member of the Central Organization.

For more information, contact:

Rick Speizman, Partner-in-Charge of KPMG's Washington National Tax Exempt Organizations Tax group

+1 (202) 533-3084

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