Determination 200814027: Exemption denied for failure to meet operational test

Plain-English summary

The IRS issued a final adverse determination on an organization's request for section 501(c)(3) exemption. The letter says the organization failed the operational test because its activities did not accomplish an exempt purpose. It does not describe those activities in the public letter. The IRS stated that contributions were not deductible under section 170 and that the organization had to file Form 1120. It also explained the deadline for seeking a declaratory judgment under section 7428.

Ruling snapshot

• Question: Did the organization meet the operational test for section 501(c)(3) exemption?
• Outcome: Denied; the IRS issued a final adverse determination.
• Key authorities: IRC §§ 501(c)(3), 170, 7428; Treas. Reg. § 1.501(c)(3)-1(c)(1).

Full text (IRS public release)

200814027

Internal Revenue Service Department of the Treasury
Appeals Division CERTIFIED

1352 Marrows Rd.

Newark, DE 19711

Release Date: 4/4/08
UIL Code 501.03-00

Taxpayer Identification Number:
C
Person to Contact:

Employee ID Number:
Tel:
Fax:
Refer Reply to:
AP:

In Re:
Exempt status
Tax Years:

Last Day to File a Petition with the
United States Tax Court:

Dear

This is a final adverse determination as to your exempt status under section 501(a) as an organization described under section 501(c)(3) of the Internal Revenue Code. Our adverse determination was made for the following reason(s):

You did not meet the operational test as required by section 1.501(c)(3)-1 of the Treasury Regulations. You did not engage in activities which accomplish one or more of such exempt purposes specified in section 501(c)(3) as required by Treas. Reg. §

1.501(c)(3)-1(c)(1)

Contributions to your organization are not deductible under Code § 170. You are required to file federal Form 1120 for the year(s) shown above.

200814027

If you decide to contest this determination under the declaratory judgment provisions of Code section 7428 a petition to the United States Tax Court, the United States Court of Claims, or the district court of the United States for the District of Columbia must be filed before the 91st (ninety-first) day after the date this determination was mailed to you. Contact the clerk of the appropriate court for rules for filing petitions for declaratory judgment. To secure a petition form from the United States Tax Court, write to the United States Tax Court, 400 Second Street, N W., Washington, D.C. 20217.

You also have the right to contact the Office of the Taxpayer Advocate. However, you should first contact the person whose name and telephone number are shown above since this person can access your tax information and can help you get answers. You can call 1-877-777-4778, and ask for Taxpayer Advocate assistance.

Taxpayer Advocate assistance cannot be used as a substitute for established IRS procedures, formal appeals procedures, etc. The Taxpayer Advocate is not able to reverse legal or technically correct tax determinations, or extend the time fixed by law that you have to file a petition in the United States Tax 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.

We will notify the appropriate State officials of this final adverse determination of your exempt status, as required by Code section 6104(c).

If you have any questions, please contact the person whose name and telephone number are shown in the heading of this letter.

Sincerely,

~

/~ Charles F. Fisher
Appeals Team Manager

cc:

MN