Determination 200850043: every letter was answered and no document ever arrived

Plain-English summary

A final adverse determination dated September 3, 2008, issued by EO Mandatory Review in Dallas and signed by Lois G. Lerner as Director, Exempt Organizations. The organization was incorporated to do medical research, telling the Service on its Form 1023 that it would serve the public through modern alternative therapies relating to chronic disease prevention and cancer research. It was recognized in the usual provisional way, with a final foundation classification deferred and an advance ruling period set.

Then nothing was filed. No Form 8734 at the close of the advance ruling period, which dropped the organization into non-operating private foundation status on January 1 of the redacted year. No Form 990 during the advance ruling period and no Form 990PF afterward, even though the Service's own records showed interest income reported on Forms 1099-INT in four successive years. The state revoked its corporate charter on June 12 of the redacted year for failing to file an annual report.

The distinctive feature of this file is that the taxpayer was not silent. The contact log runs to a page: the former president left voice mail, returned calls, signed the certified receipts for both follow-up letters, said her accountant had each notice, said an extension had been requested, said the organization had ceased operations, and said some of its financial records had been lost in her move to another state. Research of Service records showed no return posted and no extension requested. So the government builds its case out of a cooperative correspondent, and uses the signed return receipts as proof she was adequately advised of the consequences. The charge is never misconduct. It is that after all that contact the Service still cannot tell whether the foundation terminated properly under section 507, because nobody would say where the remaining assets went.

Two issues are stated, argued, and concluded separately: failure to provide requested information, and failure to file the annual return. Both conclusions end with the same sentence about the effective date, printed twice.

Three citation defects are reproduced as released and could not be verified here. The report quotes the exceptions in section 6033(a)(2) at length and then finds the organization met none of the exceptions stated in paragraph (3). Inside that quotation, section 170(b)(1)(A)(vi) is labelled the educational organization, which is the subparagraph other documents in this release use for public support. And the enclosed proposed letter, from EO Examinations at 10 Causeway Street in Boston over Marsha A. Ramirez's signature, carries no date at all, unlike its siblings in this release, so the thirty-day protest clock the letter describes cannot be dated from the document itself.

Six scanning corrections were made, each a single character or a lost space: the letterhead read Auternal Revenue Service; the UILC label printed a semicolon for its colon; a pipe stood in for the numeral in chapter 1; the first statutory exception printed (1) where its own list runs (i), (ii), (iii); a missing space produced acharitable organization; and a cross-reference to clause (1) belongs to the clause (i) it names.

Flagged and left as released: the sentence telling the taxpayer the Service needs to determine if your still qualify; a two-column header collapsed into the fragments re and ax;; the lost ordinals in September 13", December 18", and October 13"; a missing period where the former president is introduced; and eight separately mangled Form 886-A masthead bands, one of which prints the revision as Rev.4-08) where the rest read 4-68.

Ruling snapshot

• Question: Should exemption be revoked where a private foundation answered every letter and phone call but never produced its returns, its records, or an account of where its assets went?
• Outcome: Revoked on both grounds effective January 1 of the redacted year, contributions not deductible, returns due within thirty days.
• Key authorities: Sections 501(c)(3), 507, 6001, and 6033; Treas. Reg. 1.507-1, 1.507-2, 1.6001-1, and 1.6033-2(i)(2); Rev. Rul. 59-95, 1959-1 C.B. 627.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
4920DAL: EO Mandatory Review

1100 Commerce Street Employer Identification No.:
Dallas, TX 75242 Person to Contact:
Employee ID Number:
Release Number: 200850043 re
ax;

Release Date: 12/12/08 Form Required to be Filed:

Tax Years:20XX and subsequent
LEGEND UIL: 501.03-01 Last Day to File a Petition with the
United States Tax Court:

ORG = Organization name XX = Date
Address = address December 2, 20XX

Date: September 3, 2008

ORG

ADDRESS

Certified Mail

Dear

This is a final adverse determination as to your exempt status under section 501(c)(3) of the
Internal Revenue Code (IRC). It is determined that you are no longer recognized as exempt from
Federal income tax under IRC section 501(c)(3), effective January 1, 20XX, for the following
reason(s):

You have not established you are operated exclusively for Charitable, Educational, Scientific, or
Religious purposes because you failed to comply with the IRS’s requests for information to
determine if your still qualify for tax exempt status under IRC 501(c)(3).

Contributions to your organization are not deductible under IRC section 170.

You are required to file Federal income tax returns on the forms indicated above. You should
file these returns within 30 days from the date of this letter, unless a request for an extension of
time is granted. File the returns in accordance with their instructions, and do not send them to
this office. Processing of income tax returns and assessment of any taxes due will not be delayed
because you have filed a petition for declaratory judgment under IRC section 7428.

If you decide to contest this determination under the declaratory judgment provisions of IRC
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 within 90 days from
the date this determination letter 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 or you can contact your nearest Advocate’s office, in this
case by calling or writing to:

Taxpayer Advocate assistance cannot be used as a substitute for established IRS procedures,
formal appeals processes, etc. The Taxpayer Advocate is not able to reverse legal or technically
correct tax determinations, nor extend the time fixed by law that you have to file a petition in
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 action, as required by IRC section 6104(c).
You should contact your state officials if you have any questions about how this determination
may affect your state responsibilities and requirements.

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

Sincerely,

Lois G. Lerner
Director, Exempt Organizations

Attachments:
Publication 892

to

Form 886A Department of the Treasury - Internal Revenue Service Schedule No. or
Explanation of Items Exhibit
Name of Taxpayer Year/Period Ended
ORG December 31,
20XX

LEGEND
ORG = Organization name XX = Date XYZ = State President-1 = 1°
President
Issue:

1. Should the tax exempt status of the ORG under Section 501(c)(3) of the Internal Revenue
Code as a private foundation classified under Section 509(a) of the Internal Revenue
Code be revoked for failure to provide the requested information to the Internal Revenue
Service?

2. Should the tax exempt status of the ORG under Section 501(c)(3) of the Internal Revenue
Code as a private foundation classified under Section 509(a) of the Internal Revenue
Code be revoked for failing to file the required annual information returns?

Facts:

The ORG was incorporated in the state of XYZ on September 2, 19XX. On January 18, 20XX
the organization filed a Form 1023 with the Internal Revenue Service requesting tax exempt
status under Section 501(c)(3) of the Internal Revenue Code. According to their articles of
incorporation which were filed with the Internal Revenue Service as part of their Form 1023
Application for Exemption, the organization was formed with the purpose of conducting medical
research. They stated that their primary purpose would be to serve the public through modern
alternative therapies relating to chronic disease prevention and cancer research. The
organization’s mission is to prevent or mitigate incidence of chronic diseases while enhancing
the value of good health.

On April 25, 20XX the ORG was granted tax exempt status under Section 501(c)(3) of the
Internal Revenue Code. The determination letter issued to the organization on April 25, 20XX
stated that, “based on information you supplied, and assuming your operations will be as stated in
your application for recognition of exemption, we have determined you are exempt from federal
income tax under Section 501(a) of the Internal Revenue Code as an organization described in
Section 501(c)(3).” As the organization was granted exemption under Section 501(c)(3), their
determination letter also stated “because you are a newly created organization we are not now
making a final determination of your foundation status under Section 509(a) of the Code.
However, we have determined that you can reasonably expect to be a publicly supported
organization described in Section 509(a)(2).” Accordingly the Internal Revenue Service set the
organization’s advance ruling period from September 9, 19XX through December 31, 20XX.

The ORG did not file the required Form 8734 following the conclusion of their advance ruling
period at the end of 20XX. As a result they were classified as a non-operating private foundation
under Section 509(a) of the Internal Revenue Code beginning on January 1, 20XX.

Form 886-A rev.4-68) Department of the Treasury - Internal Revenue Service

Page: -1-

eye 886A Department of the ‘Treasury - Internal Revenue Service Schedule No. or
Explanation of Items Exhibit
Name of Taxpayer Year/ Period Ended
ORG December 31,
20XX

ORG did not file a Form 990 for any tax period during their advance ruling period. The
organization also did not file a Form 990PF for the 20XX tax period, or any subsequent calendar
year.

A review of IRS records indicated that the ORG filed quarterly Form 941 employment tax returns
through the December 31, 20XX tax period. Other IRS records indicated that the organization
received interest income reported to them on a Form 1099-INT from 20XX through 20XX. The
organization generated interest in the following amounts:

20XX $
20XX $
20XX $

20XX $

A review of the Secretary of State’s records of the State of XYZ indicated that the organization’s
corporate charter was revoked on June 12, 20XX for failing to file their annual report with the
State.

The first attempt to make contact with the organization was done on May 31, 20XX using Letter
3606 (Attachment A). This letter was mailed to the organization along with an information
document request, and a copy of Publication 1. The information requested by the Internal
Revenue Service from the organization was a statement indicating why the organization did not
file a Form 990PF for the 20XX tax period as well as financial documentation supporting their
position. The Internal Revenue Service allowed the organization 30 days to provide the
information and requested that the information be mailed in by June 30, 20XX.

Although no response was received from the organization relating to the Information Document
Request, agent received a voice mail from the former President of the ORG The former
President, President-1, stated in her message that she had relocated to XYZ. On August 4,
20XX, agent left a message for the organization’s President.

On September 13, 20XX after not receiving a return call from the organization’s President,
another Letter 3606 was sent to the ORG via certified mail (Attachment B).

On September 22, 20XX the former President left another voice mail message. On October 11,
20XX agent returned the taxpayer’s call and left another message for the former President. On
October 13, 20XX the former President called and stated that the organization was planning on
filing a final return for the 20XX tax period and that her accountant had requested an extension
to file for this return. She also stated that she relocated to XYZ due to health reasons and since
that move the ORG has ceased operations.

E orm 886 A (Rev.4-68 Department of the Treasury - Internal Revenue Service
) Pp

ieleyeen 886A Department of the Treasury - Internal Revenue Service Schedule No. or
Explanation of Items Exhibit
Name of Taxpayer Year/Period Ended
ORG December 31,
20XX

President-1 stated that in relocating, some of the organization’s financial records have been lost.
She stated she would be meeting with her CPA in the upcoming week to resolve this issue.

At the conclusion of the phone call, President-1 stated that she would provide the Internal
Revenue Service with a copy of the 20XX return, a 20XX return, as well as a letter stating that
the organization had dissolved. Research of IRS records indicated that no return has been posted
or extension requested by the organization.

On December 18, 20XX after not receiving a response from the organization another letter,
drafted by the agent (Attachment C), was sent to President-1 requesting a written statement
stating that the organization dissolved along with a statement regarding how the remaining assets
of the organization were disposed of after the organization ceased operations.

On December 29, 20XX, President-1 left another voice mail stating that she had transferred this
latest notice to her accountant for follow up.

Law:

Section 1.501(c)(3)-1 of the Federal Tax Regulations states that, “(1) In order to be exempt as an
organization described in section 501(c)(3), an organization must be both organized and operated
exclusively for one or more of the purposes specified in such section. If an organization fails to
meet either the organizational test or the operational test, it is not exempt.”

Section 1.509(a)-1 of the Federal Tax Regulations states that, “section 509(a) defines the term
“private foundation” to mean any domestic or foreign organization described in section 501(c)(3)
other than an organization described in section 509(a)(1), (2), (3) or (4).”

Section 1.507-1 of the Federal Tax Regulations states that,
“(a) Except as provided in §1.507-2, the status of any organization as a private foundation
shall be terminated only if —

(1) Such organization notifies the district director of its intent to accomplish such
termination, or

(2)

(i) With respect to such organization, there have been either willful repeated acts (or
failures to act), or a willful and flagrant act (or failure to act), giving rise to liability for
tax under chapter 42, and

Form 886-A crev.4-68) Department of the Treasury - Internal Revenue Service
Page: -3-

Form 886A Department of the Treasury - Internal Revenue Service Schedule No. or
Explanation of Items Exhibit
Name of Taxpayer Year/Period Ended
ORG December 31,
20XX

(ii) The Commissioner notifies such organization that, by reason of subdivision (i) of
this subparagraph, such organization is liable for the tax imposed by section 507(c),

and either such organization pays the tax imposed by section 507(c) (or any portion not abated
under section 507(g)) or the entire amount of such tax is abated under section 507(g).”

Section 1.507-2 of the Federal Tax Regulations states that,

“(1) Under section 507 (b)(1)(A) a private foundation, with respect to which there have not been
either willful repeated acts (or failures to act) or a willful and flagrant act (or failure to act) giving
rise to liability for tax under chapter 42, may terminate its private foundation status by
distributing all of its net assets to one or more organizations described in section 170(b)(1)(A)
(other than in clauses (vii) and (viii)) each of which has been in existence and so described for a
continuous period of at least 60 calendar months immediately preceding such distribution. Since
section 507(a) does not apply to such a termination, a private foundation which makes such a
termination is not required to give the notification described in section 507(a)(1). A private
foundation which terminates its private foundation status under section 507(b)(1)(A) does not
incur tax under section 507(c) and, therefore, no abatement of such tax under section 507(g) is
required.”

Section 6001 of the Internal Revenue 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 6033(a)(1) of the Internal Revenue 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 1.6001-1(a) of the Federal Tax Regulations in conjunction with section 1.6001-1(c)
provides that, “every organization exempt from tax under section 501(a) of the Internal
Revenue Code and subject to the tax imposed by section 511 on its unrelated business income
must keep such permanent books or accounts or records, including inventories, as are
sufficient to establish the amount of gross income, deduction, credits, or other matters
required to be shown by such person in any return of such tax. Such organization shall also
keep such books and records as are required to substantiate the information required by
section 6033.”

Form 886-A crev.4-68) Department of the Treasury - Internal Revenue Service
Page: -4-

Form 886A Department of the Treasury - Internal Revenue Service Schedule No. or
Explanation of Items Exhibit
Name of Taxpayer Year/Period Ended
ORG December 31,
20XX

Section 1.6001-1(e) of the Federal Tax Regulations states that, “the books or records required
by this section shall be kept at all times 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.”

Section 1.6033-1(h)(2) of the Federal Tax Regulations provides that, “every organization
which has established its right to exemption from tax, whether or not it is required to file an
annual return of information, shall submit such additional information as may be required by
the district director for the purpose of enabling him to inquire further into its exempt status
and to administer the provisions of subchapter F (section 501 and the following), chapter 1 of
the Internal Revenue Code and section 6033.”

Revenue Ruling 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 Internal Revenue 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.

Taxpayer’s Position:

The former President of the ORG, President-1, did not provide a reason for not filing a Form 990
or 990PF during the telephone contact with the Internal Revenue Service. She stated that she
would be speaking with her CPA on how to resolve the issue and that the requested Forms 990PF
for the 20XX and 20XX tax periods would be filed.

President-1 also did not provide a reason for not providing the requested information to the
Internal Revenue Service. She stated during the telephone contact with the Internal Revenue
Service that she forwarded each letter received to her CPA.

Government’s Position:
Issue 1:

It is the government’s position that the tax exempt status of the ORG under section 501(c)(3) of
the Internal Revenue Code should be revoked for failing to provide the information requested by
the Internal Revenue Service.

Treasury Regulation Section 1.6033-2(i)(2) provides, in part, that every organization which is
exempt from tax, whether or not it is required to file an annual return, shall submit such

Form 886-A ev.4-68) Department of the Treasury - Internal Revenue Service
Page: -5-

Form 886A Department of the Treasury - Internal Revenue Service Schedule No. or
Explanation of Items Exhibit
Name of Taxpayer Year/Period Ended
ORG December 31,
20XX

additional information as may be required by the Internal Revenue Service for the purpose of
inquiring into its exempt status and administering the provision of subchapter F, chapter 1 of
subtitle A of the Code, IRC Section 6033, and Chapter 42 of Subtitle D of the Code.

The ORG did not file a Form 990PF for the year under examination, calendar year 20XX. They
also did not file a Form 990 for any tax period during their advance ruling period of September 9,
19XX through December 31, 20XX. The organization also does not have a website. The only
information that the Internal Revenue Service has received on the activities of the organization is
their Form 1023 Application for Exemption. However this does not provide any current
information as to what the ORG is currently doing. The Information Document Request mailed
to the organization requested a statement of activities, and financial information that would be
used to substantiate this information. During a phone conversation with the former President of
the organization, President-1 stated that the organization had dissolved and ceased all operations.
Section 1.501(c)(3)-1(b)(4) of the Federal Tax Regulations states that upon dissolution of an
organization exempt from Federal income tax under Section 501(c)(3) of the Internal Revenue
Code all remaining assets must be distributed to another organization which has exemption under
Section 501(c)(3). Based on this information the Internal Revenue Service, requested a letter
signed by President-1 stating where the remaining assets at the time operations ceased of the
ORG were distributed upon dissolution of the organization. This information was not provided
by the organization. Section 507(a) of the Internal Revenue Code requires in most cases that
private foundations which terminate write a letter to the Director of Exempt Organization’s
indicating their decision to dissolve and pay any tax imposed by Section 507(c). Private
Foundations may dissolve under Section 507(b)(1)(A) of the Internal Revenue Code by
distributing all of its remaining assets to organization’s exempt under Section 501(c)(3) without
providing advance notice to the Internal Revenue Service, as required by Section 507(a).
However, they are still required to provide information regarding the distribution of all the
remaining assets to the Internal Revenue Service when requested. This information is material in
establishing whether the ORG properly dissolved under Section 507 of the Internal Revenue
Code.

The ORG was given an adequate opportunity to provide the requested information. As stated
previously the organization was mailed three separate letters by the Internal Revenue Service
with the information document request and a copy of Publication 1. The first letter was mailed to
the organization on May 31, 20XX. The remaining letters were mailed via certified mail on
September 13" and December 18". The certified mailing receipts for the final two letters were
returned, each signed by the organization’s former President. Along with the letters, agent spoke
to the former President of the organization on October 13", and December 29, 20XX.

The first two attempts to contact the organization were made using Letter 3606. The third
paragraph on this letter specifically states that, “...failure to comply with our request for
information could result in the loss of your tax exempt status.” The final attempted contact with
the ORG was made through a drafted letter.

Form 886-A rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -6-

Form 886A Department of the Treasury - Internal Revenue Service Schedule No. or
Explanation of Items Exhibit
Name of Taxpayer Year/Period Ended
ORG December 31,
20XX

Based on the wording of these letters which were used to make contact with The ORG and the
return receipts which show that the organization received the letters, it is apparent that the
organization was adequately advised of the consequences of failing to provide the requested
information to the Internal Revenue Service.

In accordance with the above cited provisions of the Internal Revenue Code and Federal Tax
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.

Since the ORG did not comply with the Internal Revenue Service’s requests for information and
thus did not comply with Treasury Regulation 1.6033-2(i)(2), the government has no way of
determining whether they dissolved properly under Section 507 of the Internal Revenue Code.
Since ORG could not meet the requirements of the operational test set forth in Section
1.501(c)(3)-1 of the Federal Tax Regulations, or the requirements set forth in the Federal tax law
governing the termination a private foundation under Section 507(a) or 507(b)(1)(A) it is the
government’s position that their tax exempt status under section 501(c)(3) of the Internal
Revenue Code should be revoked.

Conclusion
Issue 1:

The tax exempt status of the ORG under Section 501(c)(3) of the Internal Revenue Code should
be revoked because the organization has not established that it has observed the conditions
required to properly dissolve a private foundation such as providing information that was
requested from them by the Internal Revenue Service.

The effective date of revocation of the ORG, is January 1, 20XX the first day of the tax year
under examination.

Government’s Position
Issue 2:

It is the government’s position that the tax exempt status of the ORG under section 501(c)(3) of
the Internal Revenue Code should also be revoked for failing to file their annual Form 990PF
when required to do so.

Internal Revenue Code Section 6033(a)(1) states that, “Except as provided in paragraph (2),
every organization exempt from taxation under section 501(a) shall file an annual return...”

Form 886-A crev.4-68) Department of the Treasury - Internal Revenue Service
Page: -7-

Form 886A Department of the ‘l’reasury - Internal Revenue Service Schedule No. or
Explanation of Items Exhibit
Name of Taxpayer Year/ Period Ended
ORG December 31,
20XX

Section 6033(a)(2) states that the exceptions to file are:
(A) Mandatory exceptions:
(i) Churches, their integrated auxiliaries, and conventions or
associations of churches
(ii) Any organization (other than a private foundation, as defined in
section 509(a)) described in subparagraph (C), the gross receipts
of which in each taxable year are normally not more than
$25,000, or
(iii) | The exclusively religious activities of any religious order
(B) Discretionary exceptions: The Secretary may relieve any organization required under
paragraph (1) to file an information return from filing such a return where he
determines that such filing is not necessary to the efficient administration of the
internal revenue laws
(C) Certain organizations The organizations referred to in subparagraph (A)(ii) are—
(i) a religious organization described in section 501(c)(3)
(ii) an educational organization described in section 170(b)(1)(A)(vi)
(iii) | a charitable organization, or an organization for the prevention of
cruelty to children and animals, described in section 501(c)(3), if
such organization is supported, in whole or in part, by funds
contributed by the United States or any State or political
subdivision thereof, or is primarily supported by contributions of
the general public;
(iv) an organization described in section 501(c)(3), if such
organization is operated, supervised, or controlled by or in
connection with a religious organization described in clause (i)
(v) an organization described in section 501(c)(8); and
(vi) an organization described in section 501(c)(1), if such
organization is a corporation wholly owned by the United States
or any agency or instrumentality thereof, or a wholly-owned
subsidiary of such a corporation

The ORG did not meet any of the exceptions stated in paragraph (3) of Section 6033 of the
Internal Revenue Code, as beginning in the tax year under examination, calendar year 20XX, the
organization was classified as a private foundation. Unlike public charities, organizations
classified as a private foundation under Section 509 of the Internal Revenue Code have an annual
filing requirement for a Form 990PF for each tax period despite the amount of gross revenue they
generate. According to IRS records ORG Inc. generated $ in interest income during the year
under examination calendar year 20XX. Based on this information ORG had a filing
requirement for the 20XX calendar year.

Revenue Ruling 59-95 held that failure or inability to file the required information return or
otherwise to comply with the provision of section 6033 of the Code and the regulations which

Form 886-Acrev.4-68) Department of the Treasury - Internal Revenue Service
Page: -8-

Form 886 A Department of the Treasury - Internal Revenue Service Schedule No. or
Explanation of Items Exhibit
Name of Taxpayer Year/Period Ended
ORG December 31,
20XX

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 an exempt status.”

Using this revenue ruling as precedent, it is the government’s position that the tax exempt status
of the ORG under Section 501(c)(3) of the Internal Revenue Code should be revoked.

Conclusion

Issue 2:

The tax exempt status of the ORG under Section 501(c)(3) of the Internal Revenue Code should
be revoked because the organization has not established that it is observing conditions required
for the continuation of exempt status such as filing annual Forms 990PF information returns.

The effective date of revocation of the ORG, is January 1, 20XX the first day of the tax year
under examination.

Form 886-A Rev.4-08) Department of the Treasury - Internal Revenue Service
Page: -9-

DEPARTMENT OF THE TREASURY
Internal Revenue Service
10 Causeway Street
Room 581
TAX EXEMPT AND Boston, MA 02222

GOVERNMENT ENTITIES
DIVISION

Taxpayer Identification Number:

ORG
ADDRESS Form:

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
revocation of your exempt status under section 501(c)(3) of the Internal Revenue Code
(Code) is necessary.

If you accept our findings, take no further action. We will issue a final revocation letter.

If you do not agree with our proposed revocation, you must submit to us a written
request for Appeals Office consideration within 30 days from the date of this letter to
protest our decision. Your protest should include a statement of the facts, the
applicable law, and arguments in support of your position.

An Appeals officer will review your case. The Appeals office is independent of the
Director, EO Examinations. The Appeals Office resolves most disputes informally and
promptly. The enclosed Publication 3498, The Examination Process, and Publication
892, Exempt Organizations Appeal Procedures for Unagreed Issues, explain 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.

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

Letter 3618 (04-2002)
Catalog Number 34809F

If we do not hear from you within 30 days from the date of this letter, we will process
your case based on the recommendations shown in the report of examination. If you do
not protest this proposed determination within 30 days from the date of this letter, the
IRS will consider it to be a failure to exhaust your available administrative remedies.
Section 7428(b)(2) of the Code provides, in part: "A declaratory judgment or decree
under this section shall not be issued in any proceeding unless the Tax Court, the
Claims Court, or the District Court of the United States for the District of Columbia
determines that the organization involved has exhausted its administrative remedies
within the Internal Revenue Service." We will then issue a final revocation letter. We
will also notify the appropriate state officials of the revocation in accordance with section
6104(c) of the Code.

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.

Thank you for your cooperation.

Sincerely,

Marsha A. Ramirez
Director, EO Examinations

Enclosures:
Publication 892
Publication 3498
Report of Examination

Letter 3618 (04-2002)
Catalog Number 34809F