IRS determination 200532051: Organization denied section 501(c)(3) exemption

Plain-English summary

The IRS issued a final adverse ruling denying an organization's claim to section 501(c)(3) tax exemption. It found that more than an insubstantial part of the organization's activities served private interests, that the organization had not established freedom from private inurement, and that it had not shown it would operate primarily for exempt purposes. The letter says donors may not deduct contributions under section 170 and tells the organization to file federal income tax returns. It also explains the deadline for seeking a declaratory judgment under section 7428. The public release gives no further facts about the activities behind the denial.

Ruling snapshot

• Question: Did the organization establish eligibility for section 501(c)(3) exemption?
• Outcome: Denied.
• Key authorities: IRC §§ 170, 501(c)(3), 509(a), 7428.

Full text (IRS public release)

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Number: 200532051
Release Date: 8/12/05
SE:T:EO
Date: May 17, 2005
Employer Identification Number:

Form:

UIL Index
Tax Years:
501.03-20
Contact Person:

Identification Number:

Telephone Number:

Dear ------------:

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 reason(s):

You have failed to establish that you are operated exclusively for one or more exempt purposes described in section 501(c)(3) of the Code. More than an insubstantial part of your activities serves private interests. Yo u have failed to establish that your net earnings will not inure to the benefit of private shareholders or individuals. You have failed to establish that you will engage primarily in activities which accomplish exempt purposes specified in section 501(c)(3). Even if you qualified for exemption as an organization described in section 501(c)(3), we have determined that you would be a private foundation under section 509(a).

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

2

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.

In accordance with section 6104(c) of the Code, we will notify the appropriate State officials of this action.

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.

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,

Leonard J. Henzke

Martha Sullivan
Director, Exempt Organizations

Enclosure
Notice 437