IRS determination 200449044: Charity exemption revoked after records were not provided

Plain-English summary

The IRS revoked an organization's exemption under § 501(c)(3). Its final letter said the organization was neither organized nor operated exclusively for exempt purposes and stated that contributions were no longer deductible beginning August 1, 2001. An enclosed examination report says the organization did not provide records requested for an examination and cites a regulation requiring exempt organizations to supply additional information. The final letter directs the organization to file corporate income tax returns and explains how to seek court review. The public release does not identify the organization or show the dates of the record requests.

Ruling snapshot

• Question: Should the organization's § 501(c)(3) exemption continue when it did not supply requested examination records?
• Outcome: Revocation.
• Key authorities: IRC § 501(c)(3); Treas. Reg. §§ 1.501(c)(3)-1(d), 1.6033-2(i)(2).

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Date: August 9, 2004
200449044

Person to Contact:

UIL: 501.00-00
Badge Number:

Contact Telephone Number:

Contact Address:

EIN:

Last Day to Petition Tax Court:
November 8, 2004

CERTIFIED MAIL

Dear Sir or Madam:

This is a final revocation letter as to your exempt status under section 501(c) (3) of the Internal Revenue Code. The revocation of your exempt status is effective for year ending December 31, 2001 for the following reason(s):

You are not organized and operated exclusively for exempt purposes within the meaning of Internal Revenue Code section 501(c) (3). You have not been engaged primarily in activities which accomplish one or more exempt purposes. You are not a charitable organization within the meaning of Treasury Regulation 1.501(c) (3)-1(d).

Contributions to your organization are no longer deductible effective August 1, 2001.

If you decide to contest this determination in court, you must initiate a suit for a declaratory judgment 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 of this final adverse determination letter was mailed to you. Please contact the clerk of the appropriate court for rules regarding filing petitions for declaratory judgments by referring to the enclosed Publication892. You may write to the United States Tax Court at the following address: 400 Second Street, NW, Washington, DC 20217.

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200449044

Since your exempt status has been revoked, you are required to file Form 1120, U.S. Corporation Income Tax Return, for all years beginning on or after August 1,

Income tax returns for subsequent years are to be filed with the appropriate Service Center identified in the instructions for those returns.

You also have the right to contact the Office of the Taxpayer Advocate. However, you should first contact the person whose name and telephone number are shown above since this person can access you tax information and can help you get answers. You can call 1-877-777-4778, and ask for the Taxpayer Advocate assistance or you can contact the Advocate from the site where this issue was determined by writing to:

Brooklyn Office
10 MetroTech Center
625 Fulton Street
Brooklyn, NY 11201
(718) 488-2080

Taxpayer Advocate assistance cannot be used as substitute for established IRS procedures, formal appeals processes, etc. The Taxpayer Advocate is not able to reverse legal or technically correct tax determination, nor extend the time fixed by law that you have to file a petition in Court. The Taxpayer Advocate can, however, see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling.

We will notify the appropriate State officials of this action, as required by section 6104(c) of the Internal Revenue Code.

This letter should be kept within your permanent records.

If you have any questions, please contact the person whose name and telephone number are shown above.

Sincerely,

Betty A. McClernan
Acting Director, EO Examinations

Enclosures:
Publication 892

DEPARTMENT OF THE TREASURY
Internal Revenue Service
TEGE:EO EXAMINATIONS

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Taxpayer Identification Number:

Form:
990
Tax Year(s) Ended:

Person to Contact/ID Number:

Contact Numbers:
Telephone:
Fax:

Certified Mail - Return Receipt Requested

Dear Sir or Madam:

We have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under section 501(c)(3) of the Internal Revenue Code (Code) is necessary.

If you accept our findings, take no further action. We will issue a final revocation letter.

If you do not agree with our proposed revocation, you must submit to us a written request for Appeals Office consideration within 30 days from the date of this letter to protest our decision. Your protest should include a statement of the facts, the applicable law, and arguments in support of your position.

An Appeals officer will review your case. The Appeals office is independent of the Director, EO Examinations. The Appeals Office resolves most disputes informally and promptly. The enclosed Publication 3498, The Examination Process, and Publication 892, Exempt Organizations Appeal Procedures for Unagreed Issues, explain how to appeal an Internal Revenue Service (IRS) decision. Publication 3498 also includes information on your rights as a taxpayer and the IRS collection process.

You may also request that we refer this matter for technical advice as explained in Publication 892. If we issue a determination letter to you based on technical advice, no further administrative appeal is available to you within the IRS regarding the issue that was the subject of the technical advice.

Letter 3618 (04-2002)
Catalog Number 34809F

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If we do not hear from you within 30 days from the date of this letter, we will process your case based on the recommendations shown in the report of examination. If you do not protest this proposed determination within 30 days from the date of this letter, the IRS will consider it to be a failure to exhaust your available administrative remedies. Section 7428(b)(2) of the Code provides, in part: "A declaratory judgment or decree under this section shall not be issued in any proceeding unless the Tax Court, the Claims Court, or the District Court of the United States for the District of Columbia determines that the organization involved has exhausted its administrative remedies within the Internal Revenue Service." We will then issue a final revocation letter. We will also notify the appropriate state officials of the revocation in accordance with section 6104(c) of the Code.

You have the right to contact the office of the Taxpayer Advocate. Taxpayer Advocate assistance is not a substitute for established IRS procedures, such as the formal appeals process. The Taxpayer Advocate cannot reverse a legally correct tax determination, or extend the time fixed by law that you have to file a petition in a United States court. The Taxpayer Advocate can, however, see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling. You may call toll-free 1-877-777-4778 and ask for Taxpayer Advocate Assistance. If you prefer, you may contact your local Taxpayer Advocate at:

If you have any questions, please call the contact person at the telephone number shown in the heading of this letter. If you write, please provide a telephone number and the most convenient time to call if we need to contact you.

Thank you for your cooperation.

Sincerely,

R.C. Johnson
Director, EO Examinations

Enclosures:
Publication 892
Publication 3498
Report of Examination

Letter 3618 (04-2002)
Catalog Number 34809F

Form 886A
Department of the Treasury - Internal Revenue Service
Explanation of Items
Schedule No. or Exhibit

Name of Taxpayer
Year/Period Ended

FACTS:

In our letter(s) dated
and
we requested information necessary to conduct an examination of your books and
records for the year ended
As of this date, we have not
received the requested information.

Section 1.6033-2(i)(2) of the Income Tax Regulations provides, in part that every organization which is exempt from tax shall submit such additional information as may be required by the Internal Revenue Service for the purpose of inquiring into its exempt status.

Since you have not provided the requested information, we propose to revoke your organization's exemption from Federation income tax under section 501(c)(3) of the Internal Revenue Code effective
As a taxable entity, you will be required to file the appropriate Federal income tax return.

Form 886-A (Rev. 4-68) Department of the Treasury - Internal Revenue Service Page: -1-