[OSSSA218] Reminder for Government Entities from the IRS

Karen PARK karen.park at state.or.us
Wed May 25 11:37:20 PDT 2011


FYI

Karen Park

Oregon State Social Security Coordinator
Oregon PERS
503 603-7633
karen.park at state.or.us

SL2

Please note my office hours are Monday thru Thursday 6 am to 4:30 pm


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>>> "Stieber Lori A" <Lori.A.Stieber at irs.gov> 5/25/2011 10:52 AM >>>

Government entities are frequently asked to provide a tax-exempt number
or "determination" letter to prove its status as a "tax-exempt" or
charitable entity.   As a special service to government entities, IRS
will issue a "governmental information letter" free of charge. This
letter describes government entity exemption from Federal income tax and
cites applicable Internal Revenue Code sections pertaining to deductible
contributions and income exclusion.  Most organizations and individuals
will accept the governmental information letter as the substantiation
they need. 

Government entities can request a governmental information letter by
calling 1-877-829-5500.

For example, applications for grants from a private foundation or a
charitable organization generally require this information as part of
the application process. 

In addition, donors frequently ask for this information as
substantiation that the donor's contribution is tax deductible, and
vendors ask for this to substantiate that the organization is exempt
from sales or excise taxes. (Exemption from sales taxes is made under
state law rather than Federal law.)

The Internal Revenue Service does not provide a tax-exempt number. A
government entity may use its Federal TIN (taxpayer identification
number), also referred to as an EIN (Employer Identification Number),
for identification purposes. Governmental units, such as states and
their political subdivisions, are not generally subject to federal
income tax. Political subdivisions of a state are entities with one or
more of the sovereign powers of the state such as the power to tax.
Typically they include counties or municipalities and their agencies or
departments. Charitable contributions to governmental units are
tax-deductible under section 170(c)(1) of the Internal Revenue Code if
made for a public purpose.

An entity that is not a political subdivision but that performs an
essential government function may not be subject to federal income tax,
pursuant to Code section 115(1). The income of such entities is excluded
from the definition of gross income as long as the income (1) is derived
from a public utility or the exercise of an essential government
function, and (2) accrues to a State, a political subdivision of a
state, or the District of Columbia. Contributions made to entities whose
income is excluded income under section 115 may be tax deductible to
contributors.

In order for a government entity to receive a determination of its
status as a political subdivision, instrumentality of government, or
whether its revenue is exempt under Internal Revenue Code section 115,
it must obtain a letter ruling by following the procedures specified in
Revenue Procedure 2009-1 or its successor. There is a fee associated
with obtaining a letter ruling. 

As a special service to government entities, IRS will issue a
"governmental information letter" free of charge. This letter describes
government entity exemption from Federal income tax and cites applicable
Internal Revenue Code sections pertaining to deductible contributions
and income exclusion.  Most organizations and individuals will accept
the governmental information letter as the substantiation they need. 

Government entities can request a governmental information letter by
calling 1-877-829-5500.

Lori A. Stieber 
Federal, State, and Local Government Specialist
Badge 9311146
Internal Revenue Service
1660 Oak Street, Suite 300
M/S SE:T:GE:FSL
Salem, OR 97301
Tel: 503.587.3149
Fax: 503.585.5336
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