2023 annual revenue procedures updates for exempt organizations

TAX ALERT | January 04, 2023

Authored by RSM US LLP

Annual revenue procedures contain limited updates for exempt organizations

The IRS released the 2023 annual revenue procedures (2023-1 through 2023-5), effective Jan. 3, 2023. Changes specifically affecting exempt organizations are limited.

2023 annual revenue procedures

The 2023 annual revenue procedures (IRB 2023-1), effective Jan. 3, 2023, that affect exempt organization for 2023) are as follows:

• Rev. Proc. 2023-1 – Letter rulings, information letters, and determination letters
• Rev. Proc. 2023-2 – Technical advice
• Rev. Proc. 2023-3 – Areas in which rulings will not be issued (domestic)
• Rev. Proc. 2023-4 – Determination letters and letter rulings (tax-exempt and government entities, employee plans)
• Rev. Proc. 2023-5 – Determination letters (exempt organizations)

Highlights include the following:

• Rev. Proc. 2023-1 retains 2022 user fees (typically, $38,000 for private letter ruling requests; reduced fees of $3,000 and $8,500 for certain “small” organizations).
• Rev. Proc. 2023-3 does not contain new “no rule” areas specific to exempt organizations. However, section 5.02 states that the IRS will not issue rulings on any issue involving the application of the Inflation Reduction Act of 2022.
• Rev. Proc. 2023-5 contains three minor changes:
  • Revisions throughout to reflect mandatory e-filing of Form 1024, Application for Recognition of Exemption Under section 501(a) or section 521 of the Internal Revenue Code.
  • A clarification in section 9.02 that an organization may protest/appeal a proposed adverse determination letter on the classification or reclassification of a section 4947(a)(1) non-exempt charitable trust as described in section 509(a)(3).
  • Rev. Proc. 2023-5, section 13.02 has been updated to note that favorable determination letters issued in 2014 and later are available on Tax Exempt Organization Search.