As we’ve previously noted on this blog, a homeowners’ association generally meets the requirements to qualify as a social welfare organization under Section 501(c)(4). As a result, homeowners’ associations, and all other social welfare and community benefit organizations (e.g., employee organizations and other organizations that promote social community goals) recognized under Section 501(c)(4) should be aware of new notification requirements enacted by Congress. Regardless of whether you intend to become a 501(c)(4) organization or if you were such an organization prior to December 19, 2015, these new requirements will be important for your compliance.
After they’ve been established, social welfare or community benefit organizations that intend to operate under section 501(c)(4) will have sixty (60) days from the date of establishment to notify the Internal Revenue Service (IRS) that they are operating as a 501(c)(4) organization. However, it’s important to note that these new requirements direct the IRS to issue regulations in order to implement the notification procedures and, until such regulations are issued, organizations need not submit any notification. Once the new regulations are issued by the IRS, the organizations will have at least sixty (60) days to comply with the new procedures.
If the 501(c)(4) organization was already in existence as of December 19, 2015, the new notification requirements call for the organization to notify the IRS of their operations within one hundred and eighty (180) days, unless if they already submitted the: (1) Form 1024 or (2) Form 990, 990-EZ, 990-PF, or 990-N. Further transition rules are expected in the forthcoming regulations and will be important for all pre-existing 501(c)(4) organizations.
L. Sue Loftin is the Founder and Shareholder of The Loftin Firm. For questions relating to this blog or any other California real estate, corporate governance, land use, or estate planning matter, contact Ms. Loftin at 760-814-9649.