PLR 200316042: Supplemental ruling on health report transfer and self-dealing

Plain-English summary

This letter supplements an earlier private ruling about a tax-exempt organization's publication of an annual report on state health statistics. It clarifies the report's publication history and says the organization will adjust its name to distinguish it from the party transferring the report rights. The IRS amended its earlier ruling to say that the transfer of those rights and the organization's publication and distribution of the report further its exempt purposes and do not harm its § 501(c)(3) status. It also ruled that neither the publication and distribution nor the rights transfer constitutes self-dealing under § 4941. The earlier ruling's full text is not part of this supplemental letter.

Ruling snapshot

• Question: Do the revised report rights transfer and publication facts affect exemption or constitute self-dealing?
• Outcome: Approved: no adverse effect on exemption and no self-dealing under § 4941.
• Key authorities: IRC §§ 501(c)(3), 4941.

Full text (IRS public release)

200316042

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

UIL: 4941.04-00
Date: JAN 21 2003
Contact Person:
Identification Number:
Telephone Number:
T:EO:B3
Employer Identification Number:

LEGEND:
X =
Z =
d =
m =
n =
s =
w =

Dear Sir or Madam:

This letter is in response to the letter of your authorized representative dated December 19, 2002, and supplements the private letter ruling issued by our office dated December 2, 2002 (the “Ruling Letter”).

The first paragraph of page 3 of the Ruling Letter is amended as follows:

X’s s was originally published by an unrelated third party from year d to w. In w, Z purchased the rights to s from such unrelated third party, and s is one of the most comprehensive annual analyses of the United States’ health statistics. Each state is ranked by five categories of individual components based on statistical information compiled from other sources. Each state is ranked overall based on a formula that weighs the various components.

Representation 5 of the Ruling Letter, found at the top of page 4, is supplemented as follows:

5. X will change its name going forward in a manner that makes X’s name more
   distinguishable from the name of Z than was the case previously. Specifically, X will change its name by inserting a space between the words m and n.

200316042

• 2 -

Ruling 2 of the Ruling Letter, on page 7 of the letter, is amended as follows:

2. Based on the representations set forth above, Z’s transfer of all its rights to s to X and X’s
   publication and distribution of s will be treated as furthering X’s exempt purposes and will not adversely affect X’s exempt status under section 501(c)(3) of the Code. Further, X’s publication and distribution of s will not constitute an act of self-dealing under section 4941 of the Code. Additionally, Z’s transfer of its rights to s to X will not constitute an act of self-dealing under section 4941.

This ruling is directed only to organization that requested it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent. This ruling does not purport to rule on any issue under any Code section not specifically addressed herein.

If you have any questions about this ruling, please contact the person whose name and telephone number are shown in the heading of this letter.

Pursuant to a power of attorney on file with this office, we are sending a copy of this ruling letter to your attorney.

Sincerely,
(signed) Robert C. Harper, Jr.
Robert C. Harper, Jr.

Manager, Exempt Organizations
Technical Group 3