Determination 200446025: Organization denied section 501(c)(3) exemption

Plain-English summary

The IRS issued a final adverse ruling on an organization's request for section 501(c)(3) tax exemption. It found that the organization was not organized and operated exclusively for exempt purposes and had not established that its net earnings would avoid benefiting private persons. Donors therefore could not deduct contributions to the organization under section 170. The letter directed the organization to file federal income tax returns and described its right to challenge the ruling in court under section 7428.

Ruling snapshot

• Question: Did the organization qualify for section 501(c)(3) exemption?
• Outcome: Denied; tax exemption and donor deductibility were disallowed.
• Key authorities: IRC §§ 501(c)(3), 170, 7428.

Full text (IRS public release)

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Number: 200446025
Release Date: 11/12/04
Date: July 26, 2004
Employer Identification Number:
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Form:
1120
------------------------------------------------- Tax Years:
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All
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Contact Person:
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Identification Number:
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Telephone Number:
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Dear Applicant:

This letter constitutes a final adverse ruling with respect to your claim of exemption from federal income taxation under section 501(c)(3) of the Internal Revenue Code.

We make our ruling for the following reasons:

You are not organized and operated exclusively for exempt purposes under section 501(c)(3).
You have not established that part of your net earnings will not inure to the benefit of private shareholders or individuals.

Donors may not deduct contributions to your organization under section 170 of the Code.

The Code and the regulations issued thereunder require that you file federal income tax returns.
Based upon the financial information that you furnished, you should file returns on the Form and for the tax years indicated above within 30 days from the date of this letter, unless you request and are granted an extension of time to file the returns. You should attach a copy of this letter to the returns you file. Questions concerning the filing of returns should be directed to the Ohio Tax Exempt and Government Entities (TE/GE) office at 877-829-5500 (a toll free number).

If you decide to contest this ruling under the declaratory judgment provisions of section 7428 of the Code, you must initiate a suit in the United States Tax Court, the United States Court of Federal Claims, or the District Court of the United States for the District of Columbia before the 91st day after the date that we mailed this ruling to you. Contact the clerk of the appropriate court for rules for initiating suits for declaratory judgment. The filing of a declaratory judgment suit under section 7428 does not stay the processing of income tax returns and assessment of any taxes.
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In accordance with section 6104(c) of the Code, we will notify the appropriate State officials of
this action.

If you have any questions concerning the reasons for this ruling, please contact the person
whose name and telephone number appear in the heading of this letter.

Sincerely,

Martha Sullivan
Director, Exempt Organizations