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The Internal Revenue Service on Thursday released new rules governing how organizations may obtain tax-exempt status as a group, easing concerns raised by religious institutions that feared the process would interfere with their governance practices.

The changes, issued in Revenue Procedure 2026-8,, revise the IRS’s group exemption program under Section 501(c) of the Internal Revenue Code. Under the updated framework, a central organization will no longer be required to annually review the financial records of affiliated member organizations in order to qualify for a group exemption, provided those subordinate entities are not required to file annual information returns or notices.

The revisions respond to objections raised during the comment period for an earlier proposal, the IRS said. Religious organizations had argued that the prior draft would effectively exclude them from the group exemption program by forcing centralized financial oversight that conflicted with faith-based governance structures.

According to the IRS, several religious groups warned that the proposal could violate the First Amendment and the Religious Freedom Restoration Act by interfering with doctrines requiring local autonomy.

Under the final rules, a central organization may satisfy the required supervisory relationship by annually educating affiliated organizations about the requirements for maintaining tax-exempt status, including compliance with filing obligations.

The IRS declined to change its longstanding use of the term “subordinate organization,” despite objections from some religious groups that said the phrase does not accurately reflect their internal structure. The agency said the terminology has been used for decades and changing it would create confusion without affecting the tax treatment of participating entities.

The group exemption program is designed to allow affiliated organizations to operate under a single exemption letter, eliminating the need for each member to file its own application for tax-exempt status. The new revenue procedure also updates administrative requirements for maintaining a valid group exemption letter.

The IRS suspended acceptance of group exemption applications in 2020 while it worked on revising the program. Under the new rules, the agency will resume accepting applications starting Jan. 20.

The final procedure retains a requirement that a group exemption include at least five affiliated organizations. While some commenters urged the IRS to eliminate that threshold, the agency said processing a single group application requires roughly the same administrative effort as reviewing four individual applications, making the requirement necessary for efficiency.