IRS Guidance on Governmental Information Letters

Oftentimes, government entities are asked to provide proof of their tax-exempt status. On their website, the IRS offers specific details for organizations that encounter such a situation. Key takeaways from the article include:

  • While the IRS does not provide tax-exempt numbers, government entities can use their Federal taxpayer identification number.
  • Governmental units—a term which covers states and their political subdivisions—are not subject to federal income tax.
  • Entities that are not political subdivisions, but that perform essential government functions, may be either fully or partially tax exempt, depending on the type of income they have.
  • For a fee, entities can obtain a letter ruling from the IRS that determines their status as a political subdivision, instrument of government, or exempt status under IRC section 115.
  • For no fee, government entities can obtain a “governmental information letter” from the IRS. In most cases, this is sufficient substantiation of tax-exempt status.

For more information, read the article in full on the IRS website.