Determination 200720028: IRS proposes revoking exemption after unanswered examination requests

Plain-English summary

An exempt organization did not provide information requested for an IRS examination of its Form 990. The examination report says the IRS received confirmation that its letters reached the organization but received no substantive reply. The IRS concluded that the organization had not met its recordkeeping and information duties under IRC §§ 6001 and 6033, and it proposed revocation. The letter offered an Appeals conference and said it would become final if the organization did not respond within 30 days. The public text leaves the effective date of revocation blank.

Ruling snapshot

• Question: Could the organization retain its exemption without supplying requested examination records?
• Outcome: Proposed revocation, to become final absent a timely response.
• Key authorities: IRC §§ 6001, 6033; Treas. Reg. §§ 1.6001-1, 1.6033-2(i)(2); Rev. Rul. 59-95.

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
Internal Revenue Service

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

May 9, 2006
Release Number: 200720028
Release Date: 5/18/07 Taxpayer Identification Number:
UIL: 501.05-01
Form:
ORG

Tax Year(s) Ended:
Person to Contact/ID Number:

Contact Numbers:
Telephone:
Fax:

CERTIFIED MAIL - RETURN RECEIPT REQUESTED

Dear

We have enclosed a copy of our report of examination explaining why we believe an adjustment of your organization's exempt status is necessary.

If you do not agree with our position you may appeal your case. The enclosed Publication 3498, The Examination Process, explains 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.

If you request a conference, we will forward your written statement of protest to the Appeals Office and they will contact you. For your convenience, an envelope is enclosed.

If you and Appeals do not agree on some or all of the issues after your Appeals conference, or if you do not request an Appeals conference, you may file suit in United States Tax Court, the United States Court of Federal Claims, or United States District Court, after satisfying procedural and jurisdictional requirements as described in Publication 3498.

Letter 3610 (04-2002)
Catalog Number 34801V

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

If you accept our findings, please sign and return the enclosed Form 6018, Consent to Proposed Adverse Action. We will then send you a final letter modifying or revoking exempt status. If we do not hear from you within 30 days from the date of this letter, we will process your case on the basis of the recommendations shown in the report of examination and this letter will become final. In that event, you will be required to file Federal income tax returns for the tax period(s) shown above. File these returns 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:

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.

Letter 3610 (04-2002)
Catalog Number 34801V

Thank you for your cooperation.

Sincerely,

Marsha A. Ramirez
Director, EO Examinations

Enclosures:
Publication 892
Publication 3498
Form 6018

Report of Examination
Envelope

Letter 3610 (04-2002)
Catalog Number 34801V

Form 886-A Schedule number or exhibit
(Rev. January 1994) REPORT OF EXAMINATION 0001
Name of taxpayer Tax Identification Number Year/Period ended
Issue Name: Tax Exempt Status
Per Return:
Per Exam:
Issue:
Whether qualifies for exemption under Section 501(c)(_) of the Internal Revenue Code Facts: failed to respond to the Internal Revenue Service attempts to obtain information to perform an examination of form 990 for the above mentioned tax period. This organization was contacted for examination on . Information was requested using letter with IDR. TCO received no response to the initial letter so the 10 day letter was sent certified. TCO received the green certification card back on December 28, 2005. TCO received a phone call regarding our letter, on . The caller was the former treasurer and had not

been affiliated with the organization for years. He directed TCO to the current Vice President, since the President had been fired.

On , after speaking to the former treasurer, TCO resent the 10 day letter certified, to the PO Box in care of the Vice president. No reply.

Because the organization has not cooperated with TCO attempts to secure information for the exam, revocation is being proposed. No mail has been returned undeliverable. Return receipt was received as evidence that the taxpayer is receiving correspondence.

Law:

Section 6033(a)(1) of the Code provides, except as provided in section 6033(a)(2), every organization exempt from tax under section 501(a) shall file an annual return, stating specifically the items of gross income, receipts and disbursements, and such other information for the purposes of carrying out the internal revenue laws as the Secretary may by forms or regulations prescribe, and keep such records, render under oath such statements, make such other returns, and comply with such rules and regulations as the Secretary may from time to time prescribe.

Section 1.6033-2(i)(2) of the regulations provides that every organization which is exempt from tax, whether or not it is required to file an annual information return, shall submit such additional information as may be required by the Internal Revenue Service for the purpose of inquiring into its exempt status and administering the provisions of subchapter F (section 501 and following), chapter 1 of subtitle A of the Code, section 6033, and chapter 42 of subtitle D of the Code. See section 6001 and
§1.6001-1 with respect to the authority of the district directors or directors of service centers to require

Form 886-A (1-1994) Catalog Number 20810W —_ Page publish.no.irs.gov | Department of the Treasury-Internal Revenue Service

Form 886-A Schedule number or exhibit
(Rev. January 1994) REPORT OF EXAMINATION 0001
Name of taxpayer Tax Identification Number Year/Period ended

such additional information and with respect to the books of accounts or records to be kept by such organizations.

Section 6001 of the Code provides that every person liable for any tax imposed by the Code, or for the collection thereof, shall keep adequate records as the Secretary of the Treasury or his delegate may from time to time prescribe.

Section 1.6001-1(e) of the regulations states that the books or records required by this section shall be kept at all time available for inspection by authorized internal revenue officers or employees, and shall be retained as long as the contents thereof may be material in the administration of any internal revenue law.

Rev. Rul. 59-95, 1959-1 C.B. 627, concerns an exempt organization that was requested to produce a financial statement and statement of its operations for a certain year. However, its records were so incomplete that the organization was unable to furnish such statements. The Service held that the failure or inability to file the required information return or otherwise to comply with the provisions of section 6033 of the Code and the regulations which implement it, may result in the termination of the exempt status of an organization previously held exempt, on the grounds that the organization has not established that it is observing the conditions required for the continuation of exempt status.

In accordance with the above-cited provisions of the Code and regulations under sections 6001 and 6033, organizations recognized as exempt from federal income tax must meet certain reporting requirements. These requirements relate to the filing of a complete and accurate annual information (and other required federal tax forms) and the retention of records sufficient to determine whether such entity is operated for the purposes for which it was granted tax-exempt status and to determine its liability for any unrelated business income tax.

Conclusion:

It is the IRS's position that the organization failed to meet the requirements under sections 6001 and 6033 to be recognized as exempt from federal income tax under 501(c)(_) of the Internal Revenue Code. Accordingly, the organization's exempt status is revoked effective

Form 1120 returns should be filed for the tax periods after

Form 886-A (1-1994) Catalog Number 20810W —— Page publish.no.irs.gov | Department of the Treasury-Internal Revenue Service