Use this button to switch between dark and light mode.

Signed, Sealed, and Delivered: IRS Guidance for LLCs Seeking Tax-Exempt Determination Letters

November 17, 2021

The Internal Revenue Service has provided guidance clarifying the standards a limited liability company (LLC) must satisfy to receive a determination letter recognizing it as tax-exempt under I.R.C. Section 501(a) and as described in I.R.C. Section 501(c)(3). One requirement that must be met before a favorable determination letter is issued to an LLC is that both the LLC’s articles of organization and its operating agreement include certain provisions. The clarified standards issued by the IRS provide welcome guidance for taxpayers because the regulations under I.R.C. Section 501(c)(3) predate the enactment of the first LLC statute in the United States.  I.R.S. Notice 2021-56, 2021-45 IRB 1 (Oct. 12, 2021).


Related Content

  • Limited Liability Companies
    Explore the reasons to select an LLC as a form of ownership for a business. and the formation, operation, and dissolution of an LLC. This practice note is non-jurisdictional but discusses default laws applicable in most jurisdictions, including how such default laws may be altered (in some cases) by the operating agreement of the LLC. 
  • Exempt Organizations: Utilizing a Separate Entity
    Explore the motivations underlying the merits of creating and including separate entities in exempt organization (EO) structures, how such entities can best assure EO tax compliance and also achieve the organization’s goals, and how leadership can manage liability exposures.
  • Taxation Fundamentals for Partnerships and LLCs
    Delve into the complex subject of partnership taxation. Included is a discussion of the most important tax factors that distinguish a partnership from other entities, a discussion of other significant tax provisions unique to the partnership form, and an analysis of the new audit rules that apply to partnerships for tax years beginning after December 31, 2017, including how these new rules affect the traditional conceptions of the partnership form.
  • Private Foundations
    Learn about the requirements and restrictions for private foundations and obtain valuable information that will assist you in analyzing a private foundation’s I.R.C. Section 501(c)(3) status, organizing documents, the purpose clause, and IRS forms including 1023 and 990-PF.


Practical Guidance Updates 

Featuring the latest updates from your Practical Guidance account.    

Experience results today with practical guidance, legal research, and data-driven insights—all in one place.

Experience Lexis+