IRS determination 200752041: IRS proposes revocation after organization fails to provide records

Plain-English summary

The IRS proposed revoking an organization's § 501(c)(6) exemption because it did not answer requests to examine its books and records. The attached examination report says the IRS had tried to contact the organization twice, received no replies, and found in its records that the organization had previously been revoked. The IRS cited its authority to request records and information needed to examine exempt status under §§ 6001 and 7602 and Treasury Regulation § 1.6033-2(i)(2). The letter gave the organization appeal options and said it would become final if the organization did not respond within 30 days. The document states only a proposed revocation, with its effective date redacted as Date 4.

Ruling snapshot

• Question: Should the organization's § 501(c)(6) exemption be revoked after it failed to provide requested examination records?
• Outcome: Proposed revocation; the letter provided a 30-day opportunity to respond.
• Key authorities: IRC §§ 501(c)(6), 6001, 7602; Treas. Reg. § 1.6033-2(i)(2).

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
Internal Revenue Service
TE/GE EO Examinations
1100 Commerce Street
Dallas, TX 75242

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

August 1, 2007

Taxpayer Identification Number:
Number: 200752041

Release Date: December 28, 2007
Form:
990
A
B
Tax Year(s) Ended:
Date 1
Person to Contact/ID Number:
UIL: 501.06-01
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 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
Explanation of Items
Schedule No. or Exhibit
Name of Taxpayer
A
Year/Period Ended
Date 1

Issues — The proposed revocation is based on the organization not providing any records that were requested for examination.

Facts - We have tried to contact the organization Date 2 and Date 3 regarding our request to examine your organization’s books and records for the year(s) indicated above.

We have received no replies.

Law - Internal Revenue Code Section 6001, Notice or regulations requiring records, statements, and special returns, states in part: Every person liable for any tax imposed by this title, or for the collection thereof, shall keep such records, render such statements, make such returns, and comply with such rules and regulations as the Secretary may from time to time prescribe. Whenever in the judgment of the Secretary it is necessary, he may require any person, by notice served upon such person or by regulations, to make such returns, render such statements, or keep such records, as the Secretary deems sufficient to show whether or not such person is liable for tax under this title.

Code section 7602, Examination of Books and Witnesses, states in part the following: For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, or collecting any such liability, the Secretary is authorized- (1) To examine any books, papers, records, or other data which may be relevant or material to such inquiry.

Section 1.6033-2(i)(2) of the Income Tax Regulations provides, in part, that every organization 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. Failure to comply with our request for information could result in the loss of your tax-exempt status.

Government's Position - Since we are unable to contact the organization and IDRS shows that the organization was previously revoked, we are proposing revocation.

Taxpayer’s Position — Unknown, the taxpayer has not responded.

Conclusion - Based on the organization’s refusal to respond and provide us the records we have requested, we are proposing revocation of the organization’s exempt status under section 501(c)(6) of the Internal Revenue Code effective Date 4.

Department of the Treasury - Internal Revenue Service Form 886-A Page 1 of 2

Form 886-A

Explanation of Items

Schedule No. or Exhibit

Name of Taxpayer
A

Year/Period Ended
Date 1

The proposed effective date of the revocation is Date 4.

The organization will not continue to qualify for tax exemption under section 501(c)(6).

Department of the Treasury - Internal Revenue Service

Form 886-A
Page 2 of 2