IRS Releases six annual revenue procedures for 2025

The IRS has released six annual revenue procedures for 2025 in Internal Revenue Bulletin 2025-1. This article will focus on the portions of the revenue procedures that affect tax-exempt organizations.

Included in this bulletin are the following revenue procedures:

1. Rev. Proc. 2025-1 – Contains revised procedures for letter rulings, information letters and determination letters issued by the IRS.
2. Rev. Proc. 2025-2 – Explains when and how technical advice is conveyed in technical advice memoranda (TAMs).
3. Rev. Proc. 2025-3 – Provides a revised list of areas in which the IRS will not issue letter rulings or determination letters (domestic).
4. Rev. Proc. 2025-4 – Relates to the types of advice the IRS will provide to taxpayers on issues relating to Tax-Exempt and Government Entities, Employee Plans and the procedures that apply to requests for determination letters.
5. Rev. Proc. 2025-5 – Describes procedures for issuing determination letters on tax exempt status of Exempt Organizations.
6. Rev. Proc. 2025-7 – Provides a revised list of areas in which rulings will not be issued (international).

Tax exempt organizations will be most impacted by the following Revenue Procedures:

Rev. Proc. 2025-1

User fees for Private Letter Rulings (PLRs) and Technical Advice Memoranda (TAMs) will increase for requests submitted after February 1, 2025, as follows:

• Letter ruling request for relief: $14,500
• Private letter ruling requests: $43,700
• Reduced user fee involving a personal, exempt organization, governmental entity, or business tax issue if the request involves a tax issue with gross income of less than $400,000: $3,450
• Reduced user fee involving a personal, exempt organization, governmental entity, or business tax issue if the request involves a tax issue with gross income between $400,000 and $10 million: $9,775
• Substantially identical letter ruling requests: $4,370

Rev. Proc. 2025-5

The following types of organizations are now ineligible to use Form 1023-EZ, Streamlined Application for Recognition of Exemption, per Rev. Proc. 2025-5, Sec. 6.05(2):

1. Organizations previously denied recognition of exemption.
2. Organizations previously determined to be ineligible to use Form 1023-EZ.
3. Organizations involved in activities with federally prohibited controlled substances, regardless of the legality under state law.
4. Organizations involved in the exchange, creation, or distribution of digital assets.

Rev. Proc. 2025-5, Sec. 6.05(2)(w) was updated to state that private foundations applying for reinstatement after automatic revocation and requesting to change to a public charity foundation classification are ineligible to use Form 1023-EZ. Prior years’ procedures provided that any automatically revoked organization was ineligible to use Form 1023-EZ if it sought to change its foundation type.

Rev. Proc. Sec. 3.01(1) clarifies that an organization previously recognized under Internal Revenue Code (IRC) Section 501(c)(3) will remain classified as an applicable tax-exempt entity subject to the rules of excess benefit transactions (IRC Section 4958) for five years after losing its exemption under IRC Section 501(c)(3), except if it is a private foundation or a governmental unit or affiliate.

For any questions relating to these Revenue Procedures, please contact Sarah Piot at [email protected] or Erin Wood at [email protected].

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