The IRS has released Rev. Proc. 2018-15 which makes some very welcome changes for some organizations. Organizations that are changing their state of incorporation or their corporate form will generally no longer need to file a new application for tax exempt status if they have already been recognized as tax exempt.
In English — that means that organizations that that want to change their state of incorporation generally won’t have to file a new application for recognition as a tax exempt organization. That requirement was a big hurdle for some organizations, particularly small national organizations, that incorporated in one state because one or more directors was located there but has instead found its activities concentrated elsewhere over time. Until recently, that was only possible if both states had statutes that allowed for domestication. Even more exciting to me is that the new procedures also allow unincorporated associations to incorporate without requiring a new application. That no only allows them to take advantage of the protections provided by incorporating, but it also allows them to benefit from the clarity provided by a nonprofit corporation statute in states that don’t have a statute governing unincorporated associations (like Minnesota). The change from unincorporated association to nonprofit corporation has always been a struggle for my smaller clients because of the requirement to file a new application. Organizations that are currently not incorporated may want to review with their attorney whether it makes sense to make the change.