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Group Exemption LetterA Group Exemption Letter or (GEL) is a special letter that is issued by the United States IRS. These letters pertain to organizations that have been authorized as tax exempt organizations by the IRS. Many organizations in the United States maintain a GEL and it can be of great benefit to them. What is a Group Exemption Letter? According to the IRS, a Group Exemption Letter (GEL), is a ruling or determination letter that is issued to a central organization recognizing on a group basis the exemption under section 501(c) of subordinate organizations on whose behalf the central organization has applied for recognition of exemption. To obtain a Group Exemption Letter, then central organization must have first applied for and received it's own 501(c)3 Exemption Determination Letter allowing it to have 501(c)3 Tax Exemption status. Once the central organization has received it's determination letter and has at least 1 subordinate wishing to operate under it's exemption, then it's time to file for the GEL. Each year, the central organization submits a list of subordinate organizations to be included in the next years GEL. What is the benefit of a Group Exemption Letter? By obtaining a Group Exemption Letter, the central organization is able to pass along to it's subordinates, it's tax exemption status, thus making them eligible to be claimed as a 501(c) organization under the same status as the central organization. If the central organization is recognized as a 501(c)3, then all the subordinates are also considered 501(c)3, as long as they follow the required guidelines set by the central organization. By being included in the Group Exemption Letter, the subordinates do not have to file an applicaiton for exemption and can accept donations that are tax-deductible under the law. A major benefit is that a subordinate does not have to pay the fees to obtain an exemption letter and the 4 year wait period.
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