Ruling 200501020: Applicant denied social welfare tax exemption

Plain-English summary

An applicant sought exemption from federal income tax as a social welfare organization under § 501(c)(4). The IRS issued a final adverse ruling because the applicant had not established that it operated exclusively to promote social welfare. It also had not established that commercial activity was not its primary operation or that its earnings did not benefit private individuals. The IRS instructed the applicant to file corporate income tax returns for all indicated years and said the letter superseded an earlier letter.

Ruling snapshot

• Question: Did the applicant qualify for exemption as a § 501(c)(4) social welfare organization?
• Outcome: Denied; the applicant was directed to file federal income tax returns.
• Key authorities: IRC § 501(c)(4).

Full text (IRS public release)

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Number: 200501020
Employer Identification Number:
Release Date: 01/07/2005
Index Number: 501.04-00

Date: October 12, 2004

Form:
1120
Tax Years:
All
Contact Person:

Identification Number:

Telephone Number:

Dear Applicant:

This letter constitutes a final adverse ruling with respect to your claim of exemption from federal income taxation under section 501(c)(4) of the Internal Revenue Code.

We make our ruling for the following reasons: You have not established that you are operated exclusively for the promotion of social welfare. You have not established that you are not operated primarily to carry on commercial activity, nor have you established that your earnings do not inure to the benefit of private individuals.

This letter supersedes the letter dated May **** 2004.

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).

This ruling will be made available for public inspection under section 6110 of the Code after certain deletions of identifying information are made. For details, see enclosed Notice 437, Notice of Intention to Disclose. A copy of this ruling with deletions that we intend to make available for public inspection is attached to Notice 437. If you disagree with our proposed deletions you should follow the instructions in Notice 437.
2

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,

Ward L . Thomas

Lois G. Lerner
Director, Exempt Organizations
Rulings & Agreements

Enclosure
Notice 437