Readers may be familiar with the ability of wholly owned subsidiaries of charitable organizations to inherit the tax exempt status of their parent. The IRS’s group exemption process provides a means for multiple affiliated organizations to qualify for exemption under a single determination letter issued to a central organization, even outside of the parent-child relationship. In June 2020, the process was suspended while the IRS updated the relevant procedures. The new procedures were released on January 16, 2026 and the group exemption process has resumed as of January 20, 2026. Common uses for group exemptions include national scale fraternities, religious organizations, and health care organizations.

The updated procedures—which grew from 7 pages to 49—significantly increase clarity for the group exemption process, including reporting requirements and eligibility thresholds. As a result, organizations are better positioned to evaluate when and how pursuing group exemption aligns with their goals. 

The new group exemption process is primarily targeted at larger conglomerates, and the framework remains a limited fit for most small organizations. However there may be benefits even for groups at the minimum threshold seeking to centralize or pool complex administration.