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Title 26 — Internal Revenue CodeRelease 119-73not60

§508 Special Rules with Respect to Section 501(c)(3) Organizations

Title 26 › Subtitle Subtitle A— Income Taxes › Chapter 1— NORMAL TAXES AND SURTAXES › Subchapter F— Exempt Organizations › Part II— PRIVATE FOUNDATIONS › § 508

Last updated Apr 5, 2026|Official source

Summary

Organizations formed after October 9, 1969, must tell the IRS when they apply for recognition as a 501(c)(3) charity in the way and by the time the IRS requires. If they notify late, they won't be treated as a 501(c)(3) for the earlier period. Any group that is a 501(c)(3), including ones already around on October 9, 1969, must tell the IRS if it is not a private foundation. If it does not give that notice the way and time the IRS requires, it will be assumed to be a private foundation. Churches and their integrated auxiliaries or church conventions, and organizations that are not private foundations with normal yearly gross receipts of $5,000 or less, are exempt. The IRS can also exempt certain educational groups (under section 170(b)(1)(A)(ii)) and other classes if full compliance is not needed. Donors cannot claim tax deductions for gifts or bequests to an organization if the tax in section 507(c) has been imposed and the gift is made after the notice in section 507(a), or if a substantial contributor gives in the taxable year that includes the first action leading to that tax and in later years; this does not apply if the unpaid tax is abated under section 507(g). Gifts are also not deductible to a private foundation or a section 4947 trust for any year the foundation fails to meet the requirements in subsection (e), or to any group not treated as a 501(c)(3) because it failed to give the required notice. A private foundation must have rules in its governing documents requiring yearly distribution of income to avoid tax under section 4942 and must bar self-dealing, excess business holdings, investments that trigger tax under section 4944, and taxable expenditures under section 4945. For organizations formed before January 1, 1970, some of these governing-document rules do not apply during certain court cases begun before January 1, 1972, and related periods. A sponsoring organization (see section 4966(d)(1)) must tell the IRS whether it has or plans to have donor advised funds (see section 4966(d)(2)) and how it will run them.

Full Legal Text

Title 26, §508

Internal Revenue Code — Source: USLM XML via OLRC

(a)Except as provided in subsection (c), an organization organized after October 9, 1969, shall not be treated as an organization described in section 501(c)(3)—
(1)unless it has given notice to the Secretary in such manner as the Secretary may by regulations prescribe, that it is applying for recognition of such status, or
(2)for any period before the giving of such notice, if such notice is given after the time prescribed by the Secretary by regulations for giving notice under this subsection.
(b)Except as provided in subsection (c), any organization (including an organization in existence on October 9, 1969) which is described in section 501(c)(3) and which does not notify the Secretary, at such time and in such manner as the Secretary may by regulations prescribe, that it is not a private foundation shall be presumed to be a private foundation.
(c)(1)Subsections (a) and (b) shall not apply to—
(A)churches, their integrated auxiliaries, and conventions or associations of churches, or
(B)any organization which is not a private foundation (as defined in section 509(a)) and the gross receipts of which in each taxable year are normally not more than $5,000.
(2)The Secretary may by regulations exempt (to the extent and subject to such conditions as may be prescribed in such regulations) from the provisions of subsection (a) or (b) or both—
(A)educational organizations described in section 170(b)(1)(A)(ii), and
(B)any other class of organizations with respect to which the Secretary determines that full compliance with the provisions of subsections (a) and (b) is not necessary to the efficient administration of the provisions of this title relating to private foundations.
(d)(1)No gift or bequest made to an organization upon which the tax provided by section 507(c) has been imposed shall be allowed as a deduction under section 170, 545(b)(2), 642(c), 2055, 2106(a)(2), or 2522, if such gift or bequest is made—
(A)by any person after notification is made under section 507(a), or
(B)by a substantial contributor (as defined in section 507(d)(2)) in his taxable year which includes the first day on which action is taken by such organization which culminates in the imposition of tax under section 507(c) and any subsequent taxable year.
(2)No gift or bequest made to an organization shall be allowed as a deduction under section 170, 545(b)(2), 642(c), 2055, 2106(a)(2), or 2522, if such gift or bequest is made—
(A)to a private foundation or a trust described in section 4947 in a taxable year for which it fails to meet the requirements of subsection (e) (determined without regard to subsection (e)(2)), or
(B)to any organization in a period for which it is not treated as an organization described in section 501(c)(3) by reason of subsection (a).
(3)Paragraph (1) shall not apply if the entire amount of the unpaid portion of the tax imposed by section 507(c) is abated by the Secretary under section 507(g).
(e)(1)A private foundation shall not be exempt from taxation under section 501(a) unless its governing instrument includes provisions the effects of which are—
(A)to require its income for each taxable year to be distributed at such time and in such manner as not to subject the foundation to tax under section 4942, and
(B)to prohibit the foundation from engaging in any act of self-dealing (as defined in section 4941(d)), from retaining any excess business holdings (as defined in section 4943(c)), from making any investments in such manner as to subject the foundation to tax under section 4944, and from making any taxable expenditures (as defined in section 4945(d)).
(2)In the case of any organization organized before January 1, 1970, paragraph (1) shall not apply—
(A)to any period after December 31, 1971, during the pendency of any judicial proceeding begun before January 1, 1972, by the private foundation which is necessary to reform, or to excuse such foundation from compliance with, its governing instrument or any other instrument in order to meet the requirements of paragraph (1), and
(B)to any period after the termination of any judicial proceeding described in subparagraph (A) during which its governing instrument or any other instrument does not permit it to meet the requirements of paragraph (1).
(f)A sponsoring organization (as defined in section 4966(d)(1)) shall give notice to the Secretary (in such manner as the Secretary may provide) whether such organization maintains or intends to maintain donor advised funds (as defined in section 4966(d)(2)) and the manner in which such organization plans to operate such funds.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

2006—Subsec. (f). Pub. L. 109–280, which directed the addition of subsec. (f) to section 508, without specifying the act to be amended, was executed by making the addition to this section, which is section 508 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress. 2004—Subsec. (d)(1), (2). Pub. L. 108–357 struck out “556(b)(2),” after “545(b)(2),”. 1976—Subsec. (a). Pub. L. 94–455, § 1901(a)(71)(A), struck out last sentence providing that for purposes of paragraph (2), the time prescribed for giving notice under this subsection shall not expire before the 90th day after the day on which

Regulations

first prescribed under this subsection become final. Subsec. (a)(1), (2). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” in three places after “Secretary”. Subsec. (b). Pub. L. 94–455, §§ 1901(a)(71)(A), 1906(b)(13)(A), struck out “or his delegate” in two places after “Secretary” and “The time prescribed for giving notice under this subsection shall not expire before the 90th day after the day on which

Regulations

first prescribed under this subsection become final” after “a private foundation”. Subsec. (c)(2). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”. Subsec. (c)(2)(A). Pub. L. 94–455, § 1901(b)(8)(E), substituted “(A) educational organizations described in section 170(b)(1)(A)(ii), and” for “(A) educational organizations which normally maintain a regular faculty and curriculum and normally have a regularly enrolled body of pupils or students in attendance at the place where their educational activities are regularly carried on; and” after “(b) or both—”. Subsec. (c)(2)(B). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”. Subsec. (d)(2)(A). Pub. L. 94–455, § 1901(a)(71)(C), substituted “(e)(2)” for “(e)(2)(B) and (C)” after “regard to subsection”. Subsec. (d)(3). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”. Subsec. (e)(2)(A). Pub. L. 94–455, § 1901(a)(71)(B), struck out subpar. (A) relating to taxable years beginning before 1972, and redesignated subpars. (B) and (C) as (A) and (B), respectively. Subsec. (e)(2)(B). Pub. L. 94–455, § 1901(a)(71)(B), redesignated subpar. (C) as (B) and substituted “(A)” for “(B)” after “described in subparagraph”. Subsec. (e)(2)(C). Pub. L. 94–455, § 1901(a)(71)(B), redesignated subpar. (C) as (B).

Statutory Notes and Related Subsidiaries

Effective Date

of 2006 Amendment Pub. L. 109–280, title XII, § 1235(b)(2), Aug. 17, 2006, 120 Stat. 1102, provided that: “The amendment made by this subsection [amending this section] shall apply to organizations applying for tax-exempt status after the date of the enactment of this Act [Aug. 17, 2006].”

Effective Date

of 2004 AmendmentAmendment by Pub. L. 108–357 applicable to taxable years of foreign corporations beginning after Dec. 31, 2004, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end, see section 413(d)(1) of Pub. L. 108–357, set out as an Effective and Termination Dates of 2004

Amendments

note under section 1 of this title.

Effective Date

of 1976 AmendmentAmendment by section 1901(a)(71)(A)–(C), (b)(8)(E) of Pub. L. 94–455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title.

Effective Date

Section effective Jan. 1, 1970, except that subsecs. (a), (b), and (c) effective Oct. 9, 1969, see section 101(k)(1), (3) of Pub. L. 91–172, set out as a note under section 4940 of this title.

Savings Provision

Limits on inclusion of provisions inconsistent with subsec. (e) of this section in governing instruments, see section 101(l)(6) of Pub. L. 91–172, set out as a note under section 4940 of this title.

Reference

Citations & Metadata

Citation

26 U.S.C. § 508

Title 26 — Internal Revenue Code

Last Updated

Apr 5, 2026

Release point: 119-73not60