group exemption
Reviewed by Owen Hathaway, AttorneyUpdated June 5, 2026An IRS arrangement letting a central organization extend its tax-exempt status to subordinate chapters under one umbrella, instead of each applying separately.
A group exemption is an IRS mechanism allowing a central (parent) organization to obtain recognition of tax exemption that extends to its affiliated subordinate organizations (chapters, lodges, or units) under a single group ruling, sparing each subordinate from filing its own exemption application.
The central organization takes on responsibility for confirming each subordinate's eligibility and maintaining the group. It is common for federated nonprofits and religious denominations.
Group exemptions are federal and governed by IRS procedures, currently Rev. Proc. 2023-15, applying the same to Colorado and Wyoming subordinates. Subordinates may still have separate state registration and Form 990 obligations.
Related terms
- 501(c)(3)The federal tax status for charitable nonprofits. These entities are exempt from income tax, and sometimes certain state-level taxes, and are able to receive tax-deductible donations, in exchange for strict limits on their activities.
- articles of incorporationThe document filed with the state that legally creates a corporation or nonprofit corporation. (LLCs file articles of organization instead.)