The IRS issued new guidance to clarify the standards that an LLC must satisfy to receive a determination letter recognizing it as tax-exempt.
Generally, all members of an LLC seeking tax-exempt status will need to be tax-exempt organizations themselves or governmental units. The LLC will also need to include specified language in it articles of organization and operating agreement.
This is the first time the IRS has issued formal guidance addressing the standards for recognition of LLCs as Sec. 501(c)(3) organizations. The new guidance, Notice 2021-56, does not affect the status of organizations currently recognized as tax-exempt. Read more.