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2017 Issue 7 | Download as a PDF


IRS Issues New Guidelines for Foreign Equivalency Determinations


IRS Issues New Guidelines for Foreign Equivalency Determinations

On September 14, 2017, the IRS issued Rev. Proc. 2017-53, which contains new guidelines for determining the equivalency of a foreign charitable organization to that of a recognized 501(c)(3) organization in the United States. The updated rules clarify the process by which attorneys, certified public accountants, and other qualified tax practitioners can establish equivalency and detail specific elements that must be included in an equivalency opinion. Making an equivalency determination allows certain funders to avoid excise taxes that might otherwise apply to overseas grantmaking.
The Revenue Procedure builds on 2015 regulations issued by the Department of Treasury that began the process of clarifying equivalency determination standards and practices. Among other revisions, this ruling:
  • Identifies general requirements to be followed by practitioners who prepare equivalency determinations;

  • Specifies documentation that must be included in such a determination, including the grantee’s organizing document and support schedules; and

  • Requires that equivalency determinations must confirm the organization in question is not designated as a terrorist group by the government of the United States.

Elizabeth Kingsley, a partner here at Harmon, Curran, spoke with Charities Aid Foundation of America (CAF America)’s podcast last week about what the guidelines mean in practice and how organizations and practitioners should revise their procedures to conform with the Rev. Proc.’s prescriptions. The podcast can be streamed here

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