(a) In general—(1) Charitable organizations and applicants. Subject to the disclosure, recordkeeping, and safeguard provisions of section 6103 of the Internal Revenue Code (Code), and only as necessary to administer State laws regulating charitable organizations, upon written request by an appropriate State officer (ASO, as defined in paragraph (i)(1) of this section), the Internal Revenue Service (IRS) may, under section 6104(c)(1) and (2), disclose or make available to the ASO (or to a person designated by the ASO as provided in paragraph (f)(1)(ii) of this section) the returns and return information described in paragraph (c) of this section with respect to—

(i) Any organization described or formerly described in section 501(c)(3) and exempt or formerly exempt from taxation under section 501(a) (a charitable organization); or

(ii) Any organization that has applied for recognition as an organization described in section 501(c)(3) (an applicant).

(2) Section 501(c) organizations not described in section 501(c)(1) or (3). Subject to the disclosure, recordkeeping, and safeguard provisions of section 6103, and upon written request by an ASO, the IRS may disclose or make available to the ASO (or to a person designated by the ASO as provided in paragraph (f)(1)(ii) of this section) under section 6104(c)(3) returns and return information regarding any organization described or formerly described in section 501(c) other than section 501(c)(1) or (3). Such information will be disclosed or made available only as necessary to administer State laws regulating the solicitation or administration of the charitable funds or charitable assets of these organizations.

(b) Disclosure agreement. The IRS may require an ASO to execute a disclosure agreement or similar document specifying the procedures, terms, and conditions for the disclosure or inspection of information under section 6104(c), including compliance with the safeguards prescribed by section 6103(p)(4), as well as specifying the information to be disclosed. Such an agreement or similar document constitutes the request for disclosure required by section 6104(c)(1)(C), as well as the written request required by section 6104(c)(2)(C)(i) and (c)(3).

(c) Disclosures regarding charitable organizations and applicants—(1) In general. With respect to any organization described in paragraph (d) of this section, the IRS may disclose or make available for inspection under section 6104(c)(1) and (2) and paragraph (a)(1) of this section to an ASO the following returns and return information with respect to a charitable organization or applicant:

(i) A refusal or proposed refusal to recognize an organization's exemption as a charitable organization (a final or proposed denial letter).

(ii) Return information regarding a grant of exemption following a proposed denial.

(iii) A revocation of exemption as a charitable organization (a final revocation letter), including a notice of termination or dissolution.

(iv) A proposed revocation of recognition of exemption as a charitable organization (a proposed revocation letter).

(v) Return information regarding the final disposition of a proposed revocation of recognition other than by final revocation.

(vi) A notice of deficiency or proposed notice of deficiency of tax imposed under section 507 or chapter 41 or 42 of the Code on the organization or on a taxable person (as described in paragraph (i)(4) of this section).

(vii) Returns and return information regarding the final disposition of a proposed notice of deficiency of tax imposed under section 507 or chapter 41 or 42 of the Code on the organization other than by issuance of a notice of deficiency.

(viii) The names, addresses, and taxpayer identification numbers of applicants for charitable status, provided on an applicant-by-applicant basis or by periodic lists of applicants. Under this paragraph (c)(1)(viii), the IRS may respond to inquiries from an ASO as to whether a particular organization has applied for recognition of exemption as a charitable organization.

(ix) Return information regarding the final disposition of an application for recognition of exemption where no proposed denial letter is issued, including whether the application was withdrawn or whether the applicant failed to establish its exemption.

(x) Returns and return information relating to the return information described in paragraph (c)(1) of this section, except for returns and return information relating to proposed notices of deficiency described in paragraph (c)(1)(vi) of this section with respect to taxable persons.

(2) Disclosure of evidence of noncompliance with certain State laws. With respect to any organization described in paragraph (d) of this section, the IRS may disclose to the ASO or make available for the ASO's inspection under section 6104(c)(1) and (2) and paragraph (a)(1) of this section the returns and return information of a charitable organization or applicant, as listed in paragraph (c)(1) of this section, if the IRS determines that such information might constitute evidence of noncompliance with the laws under the jurisdiction of the ASO regulating charitable organizations and applicants. Such information may be disclosed on the IRS's own initiative, subject to the disclosure, recordkeeping, and safeguard provisions of section 6103. Disclosures under this paragraph (c)(2) may be made before the IRS issues a proposed determination (denial of recognition, revocation, or notice of deficiency) or any other action by the IRS described in this section.

(d) Organizations to which disclosure applies. Regarding the information described in paragraphs (a)(1) and (2) of this section, the IRS will disclose or make available for inspection to an ASO such information only with respect to—

(1) An organization formed under the laws of the ASO's State;

(2) An organization, the principal office of which is located in the ASO's State;

(3) An organization that, as determined by the IRS, is or might be subject to the laws of the ASO's State regulating charitable organizations or the solicitation or administration of charitable funds or charitable assets; or

(4) A private foundation required by § 1.6033-2(a)(iv) of this chapter to list the ASO's State on any of the foundation's returns filed for its last five taxable years.

(e) Disclosure limitations. Notwithstanding any other provision of this section, the IRS will not disclose or make available for inspection under section 6104(c) any information, the disclosure of which it determines would seriously impair Federal tax administration, including, but not limited to—

(1) Identification of a confidential informant or interference with a civil or criminal tax investigation; and

(2) Information obtained pursuant to a tax convention, as defined in section 6105(c)(2), between the United States and a foreign government.

(f) Disclosure recipients—(1) In general. The IRS may disclose returns and return information under section 6104(c) to, or make it available for inspection by—

(i) An ASO, as defined in paragraph (i)(1) of this section, or

(ii) A person other than an ASO, but only if that person is a State officer or employee (which excludes an agent or contractor) designated by the ASO to receive information under section 6104(c) on behalf of the ASO, as specified in paragraph (f)(2) of this section.

(2) Designation by ASO. An ASO may designate State officers or employees to receive information under section 6104(c) on the ASO's behalf by specifying in writing each person's name and job title, and the name and address of the person's office. The ASO must promptly notify the IRS in writing of any additions, deletions, or other changes to the list of designated persons.

(g) Redisclosure—(1) In general. An ASO to whom a return or return information has been disclosed may thereafter disclose such information to another State officer or employee (which excludes an agent or contractor) only as necessary to administer State laws governing charitable organizations or State laws regulating the solicitation or administration of charitable funds or charitable assets of noncharitable exempt organizations.

(2) Civil administrative or judicial proceedings. Except as provided in paragraph (h) of this section, an ASO to whom a return or return information has been disclosed may thereafter disclose such information to another State officer or employee (which excludes an agent or contractor) who is personally and directly preparing for a civil proceeding before a State administrative body or court in a matter involving the enforcement of State laws regulating organizations with respect to which information can be disclosed under this section, solely for use in such a proceeding, but only if—

(i) The organization or a taxable person is a party to the proceeding, or the proceeding arose out of, or in connection with, determining the civil liability of the organization or a taxable person, or collecting such civil liability, under State laws governing organizations with respect to which information can be disclosed under this subsection;

(ii) The treatment of an item reflected on such a return is directly related to the resolution of an issue in the proceeding; or

(iii) The return or return information directly relates to a transactional relationship between the organization or a taxable person and a person who is a party to the proceeding that directly affects the resolution of an issue in the proceeding.

(h) Redisclosure limitation. Before disclosing any return or return information received under section 6104(c) in a proceeding described in paragraph (g)(2) of this section, the ASO must notify the IRS of the intention to make such a disclosure. No State officer or employee may make such a disclosure except in accordance with any conditions the IRS might impose in response to the ASO's notice of intent. No such disclosure may be made if the IRS determines that the disclosure would seriously impair Federal tax administration.

(i) Definitions. For purposes of section 6104(c) and this section—

(1) Appropriate State officer or ASO means—

(i) The State attorney general;

(ii) The State tax officer;

(iii) With respect to a charitable organization or applicant, any State officer other than the attorney general or tax officer charged with overseeing charitable organizations, provided that the officer shows the IRS that the officer is an ASO by presenting a letter from the State attorney general describing the functions and authority of the officer under State law, with sufficient facts for the IRS to determine that the officer is an ASO; and

(iv) With respect to a section 501(c) organization that is not described in section 501(c)(1) or (c)(3), the head of the agency designated by the State attorney general as having primary responsibility for overseeing the solicitation of funds for charitable purposes, provided that the officer shows the IRS that the officer is an ASO by presenting a letter from the State attorney general describing the functions and authority of the officer under State law, with sufficient facts for the IRS to determine that the officer is an ASO.

(2) Return has the same meaning as in section 6103(b)(1).

(3) Return information has the same meaning as in section 6103(b)(2).

(4) Taxable person means any person who is liable or potentially liable for excise taxes under chapter 41 or 42 of the Code. Such a person includes—

(i) A disqualified person described in section 4946(a)(1), 4951(e)(4), or 4958(f);

(ii) A foundation manager described in section 4946(b);

(iii) An organization manager described in section 4955(f)(2) or 4958(f)(2);

(iv) A person described in section 4958(c)(3)(B);

(v) An entity manager described in section 4965(d); and

(vi) A fund manager described in section 4966(d)(3).

(j) Failure to comply. Upon a determination that an ASO has failed to comply with the requirements of section 6103(p)(4), the IRS may take the actions it deems necessary to ensure compliance, including the refusal to disclose any further returns or return information to the ASO until the IRS determines that the requirements of section 6103(p)(4) have been met. For procedures for the administrative review of a determination that an authorized recipient has failed to safeguard returns or return information, see § 301.6103(p)(7)-1.

(k) Applicability date. The rules of this section apply on and after August 16, 2022.

[T.D. 9964, 87 FR 50244, Aug. 16, 2022]