2025 annual revenue procedures for exempt organizations

ARTICLE | January 02, 2025

Authored by RSM US LLP

Executive summary

The 2025 annual revenue procedures, effective Dec. 30, 2024, contain fees and processes governing exempt organizations, including clarifications regarding Form 1023-EZ eligibility and the continued application of section 4958 to certain organizations that change their section 501(c) classification. Although EO-specific user fees generally remain unchanged from 2024, exempt organizations requesting private letter rulings after Feb. 1, 2025, will have increased user fees.

Summary of exempt organization revenue procedures

The annual revenue procedures that affect exempt organizations are as follows:

• Rev. Proc. 2025-1 – Letter rulings, information letters, and determination letters
• Rev. Proc. 2025-2 – Technical advice
• Rev. Proc. 2025-3 – Areas in which rulings will not be issued (domestic)
• Rev. Proc. 2025-5 – Determination letters (exempt organizations)

Read more in last year’s summary.

User fees governing private letter rulings (PLRs) and technical advice memoranda (TAMs), set forth in Rev. Proc. 2025-1, increase for requests submitted after Feb. 1, 2025:

• Private letter ruling requests increase from $38,000 to $43,700
• Reduced fees for certain “small” organizations increase from $3,000 to $3,450 and from $8,500 to $9,775.
• Most requests for 9100 relief (i.e., extensions of time to make certain elections) increase from $12,600 to $14,500.
• Substantially identical requests increase from $3,800 to $4,370.

Donors of highly valued artwork may obtain a statement of value from the IRS for $8,400 for up to three items (an increase from $7,500). Additional items are $800 each (an increase from $400). More information about statements of value is available in Rev. Proc. 96-15.

Reduced eligibility for Form 1023-EZ

Rev. Proc. 2025-5, section 6.05(2) adds four additional types of organizations that are ineligible to apply for recognition of exemption under section 501(c)(3) using Form 1023-EZ, Streamlined Application for Recognition of Exemption:

• Organizations previously denied exemption.
• Organizations previously determined to be ineligible to use Form 1023-EZ.
• Organizations conducting activities that involve controlled substances that are prohibited by federal law.
• Organizations engaged in exchanging, creating, or distributing digital assets.

In addition, the revenue procedure appears to clarify that automatically revoked public charities (i.e., organizations that failed to file required Form 990-series returns or notices for three consecutive years) that are otherwise eligible to file Form 1023-EZ may do so even if they are changing their foundation classification. However, automatically revoked private foundations may not use Form 1023-EZ if they are seeking to convert to public charities.

Clarifications for reclassifying section 501(c)(3) organizations

Rev. Proc. 2025-5, section 3.01(1), which permits certain section 501(c)(3) organizations to seek reclassification under a different paragraph of section 501(c), includes two important clarifications:

• Private foundations must also terminate their private foundation status under section 507.
• Section 4958, regarding excess benefit transactions, continues to apply to any reclassified section 501(c)(3) organization for five years after its reclassification. See section 4958(e) and Treas. Reg. 53.4958-2(a)(2).