Understanding The New Supporting Organization Proposed Regulations

November 29, 2016

On 2/19/16, the U.S. Department of the Treasury (“Treasury”) released another round of supporting organization proposed regulations, dealing largely with the requirements applicable to Type III supporting organizations. These proposed regulations are only the latest in a long string of rule makings stemming from the Pension Protection Act of 2006, and they trace their roots to the scandals at the turn of the 21st century involving supporting organization abuses. As these proposals and the rules applicable to supporting organizations accumulate, it is useful not only to look at the scope and impact of the proposed regulations, but also to contextualize them within the history and existing regulatory framework of supporting organizations. Ultimately, each round of regulations warrants reflection on the implications of the proposals for structuring and operating supporting organizations, and careful examination of how to balance the utility and benefits of the supporting organization classification with the growing number of regulatory and ongoing compliance obligations imposed on supporting organizations.

To continue reading Megan Bell and Justin Zaremby's article in the September/October 2016 edition of Taxation of Exempts, please click here.