IRS Guidance on Governmental Information Letters

Volume 12 Issue 2, Public Sector Perspective

Jun 7, 2019

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.