Other 200550045: Insurer's tax exemption revoked effective 2001

Plain-English summary

The IRS issued a final adverse determination revoking an organization's exemption under § 501(c)(15), effective January 1, 2001. The letter says the organization agreed to the revocation, which was based on a separate Technical Advice Memorandum. That memorandum's substantive reasoning is not reproduced in this release. The IRS told the organization to file income tax returns for open and later years and explained how it could contest related deficiency determinations. This is a revocation notice, rather than a ruling granting a requested tax benefit.

Ruling snapshot

• Question: Did the organization qualify for exemption under § 501(c)(15) during the examined years?
• Outcome: Revocation. The IRS ended the exemption effective January 1, 2001.
• Key authorities: IRC §§ 501(c)(15), 7428.

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
4923CHI Simpson
230 S. Dearborn Street
Chicago, IL 60604

September 23, 2005

Number: 200550045
Release Date: 12/16/2005
1178
UIL: 501.15-01

Taxpayer’s Name
Taxpayer Identification Number:
Taxpayer’s Address
Form:

Tax Year(s) Ended:

CERTIFIED MAIL – RETURN RECEIPT REQUESTED

Dear ----

This is our final adverse determination letter as to your exempt status under I.R.C. § 501(c)(15) of the Internal Revenue Code. Our adverse determination was made because, for the year(s) of the examination, you did not qualify for exempt status under I.R.C. § 501(C)(15) of the Internal Revenue Code. Your exempt status is revoked effective January 1, 2001.

You have agreed to this revocation which is based upon a Technical Advice Memorandum (TAM) dated February 15, 2005. We have enclosed a copy of the TAM further explaining why we believe an adjustment of your organization’s exempt status is necessary.

We have also enclosed Publication 892, Exempt Organization Appeal Procedures for Unagreed Issues, and Publication 3498, The Examination Process. These publications include information on your rights as a taxpayer. They explain appeal rights and the procedure for obtaining technical advice.

Because this case involves exemption under I.R.C. § 501(c)(15), you cannot contest the adverse determination in a declaratory judgment action under I.R.C. § 7428. You can, however, contest the

revocation of exempt status in the context of any related deficiency case involving adjustments that flow from the loss of exemption. Thus, you may file suit in United States Tax Court, the United States Court of Federal Claims, or United States District Court, from any deficiency notice issued in this case or a related case after satisfying procedural and jurisdictional requirements as described in Publications 3498 and 892.

You are required to file federal income tax returns for the tax period(s) shown above, for all years still open under the statute of limitations, and for all later years. File the federal tax return for the tax period(s) shown above with the Ogden Service Center within 60 days from the date of this letter, unless a request for an extension of time is granted. File returns for later tax years with the appropriate service center indicated in the instructions for those returns.

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:

Taxpayer Advocate Office
Room. 2855, Stop 1005-CHI,
Chicago, IL 60604
(312) 566-3800
(312) 566-3803 FAX

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
Technical Advice Memorandum