IRS denied exemption to an entertainment-industry website organization

Plain-English summary

The IRS denied an organization's application for recognition under section 501(c)(3). The organization planned to operate a paid website offering profiles, calendars, communication tools, and career-related services to people in the entertainment industry, while providing free website services to agents, managers, and casting directors. The IRS concluded that the organization had not shown that its activities were exclusively educational or charitable, and that its operations served substantial private and commercial interests. The IRS also found that the proposed dissolution provision would distribute assets to a section 501(c)(6) organization for non-exempt purposes. Contributions to the organization were therefore not deductible, and the organization was required to file federal income tax returns.

Ruling snapshot

• Question: Did the organization qualify for exemption under IRC § 501(c)(3) based on its planned website and entertainment-career services?
• Outcome: Denied.
• Key authorities: IRC §§ 501(a), 501(c)(3), 501(c)(6), 170, 6104(c), and 7428; Treas. Reg. § 1.501(c)(3)-1.

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Release Number: 201007060 Contact Person:
Release Date: 2/19/10

Date: November 25, 2009 Identification Number:
Uniform Issue List Number:

501.00-00 Contact Number:

501.03-08

501.35-00 Employer Identification Number:
503.00-00

503.03-00 Form Required To Be Filed:
SE:T:EO:RA:T:2 Tax Years:

Dear

This is our final determination that you do not qualify for exemption from Federal income tax
under Internal Revenue Code section 501(a) as an organization described in Code section
501(c)(3).

We made this determination for the following reason(s):

You have failed to establish that you will be operated exclusively for exempt purposes as
required by section 501(c)(3) of the Code. Furthermore, you have not described your
operations in sufficient detail to permit a conclusion in advance of the commencement of
operations that you clearly meet the requirements of section 501(c)(3) of the Code. See Rev.
Proc. 2008-9, 2008-2 I.R.B. 258. Finally, you have failed to establish that you will not serve
private interests.

Because you do not qualify for exemption as an organization described in Code section
501(c)(3), donors may not deduct contributions to you under Code section 170. You must file
Federal income tax returns on the form and for the years listed above within 30 days of this
letter, unless you request an extension of time to file. File the returns in accordance with their
instructions, and do not send them to this office. Failure to file the returns timely may result in a
penalty.

If you decide to contest this determination under the declaratory judgment provisions of Code
section 7428, you must initiate a suit in the United States Tax Court, the United States Court of
Federal Claims, or the District Court of the United States for the District of Columbia before the
91st day after the date that we mailed this letter to you. Contact the clerk of the appropriate
court for rules for initiating suits for declaratory judgment. Filing a declaratory judgment suit
under Code section 7428 does not stay the requirement to file returns and pay taxes.

We will make this letter and our proposed adverse determination letter available for public
inspection under Code section 6110, after deleting certain identifying information. Please read
the enclosed Notice 437, Notice of Intention to Disclose, and review the two attached letters that

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show our proposed deletions. If you disagree with our proposed deletions, you should follow
the instructions in Notice 437. If you agree with our deletions, you do not need to take any
further action.

In accordance with Code section 6104(c), we will notify the appropriate State officials of our
determination by sending them a copy of this final letter and the proposed adverse letter. 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 about this letter, please contact the person whose name and
telephone number are shown in the heading of this letter. If you have any questions about your
Federal income tax status and responsibilities, please contact IRS Customer Service at
1-800-829-1040 or the IRS Customer Service number for businesses, 1-800-829-4933. The
IRS Customer Service number for people with hearing impairments is 1-800-829-4059.

Sincerely,

Robert Choi
Director, Exempt Organizations
Rulings & Agreements

Enclosure
Notice 437
Redacted Proposed Adverse Determination Letter
Redacted Final Adverse Determination Letter

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Date: December 24, 2008 Contact Person:

Identification Number:
Uniform Issue List Number:
501.00-00 Contact Number:
501.03-08
501.35-00 Employer Identification Number:
503.00-00
503.03-00 Form Required To Be Filed:

Legend:

M =
State =
A =
B =
C =
R =
S =
T =
Z =

Dear

We have considered your application for recognition of exemption from Federal income tax
under Internal Revenue Code section 501(a). Based on the information provided, we have
concluded that you do not qualify for exemption under Code section 501(c)(3). The basis for
our conclusion is set forth below.

FACTS:

You, M, are a not-for-profit corporation organized under the laws of State. You filed a Form
1023 seeking exempt status under section 501(c)(3) of the Internal Revenue Code.

Your articles of incorporation provide that you are organized for the specific purpose of creating
“systems that will service talent, talent agents, talent managers, producers, directors and
casting directors, helping them keep organized, informed, and up to date.”

You offer a subscription service whereby you provide subscribers with a domain name, a
website, a website editor, an email address, an appointment calendar, a career tracking grid,
profiles of casting directors and talent agents, and an endorsement gallery where subscribers
can endorse products in exchange for those products. You describe your activity to potential
subscribers as being similar to “T” because it allows subscribers to have “free reign to create
their own website.” Subscribers can also use your website to “pitch” themselves for potential
jobs within the entertainment industry.

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You state that your website is a “safe place for anyone interested in the entertainment industry”
because it offers “a virtual office that will share systems and information at a reasonable and
nominal cost to the subscriber with no advertising... .” You specifically intend for your website
to be “like a magazine online all about them [the subscribers] and their career.” You describe
yourself as a “one stop virtual and interactive office web space, guiding [subscribers] to make
informed spending decisions and helping them to be on top of their creative game by preparing
them to win.”

Additionally, you state that your website will allow individuals to:

[U]pdate their personal website and all their on line website presence as well as
log, update and keep track of their business history. Via a myriad of editable
grids including a calendar, audition grid, callback grid, booking grid, pitch list grid,
publicity grid, thank you history grid and other related integrated relational grids,
the talent and their representatives stay organized and informed.

You claim to be operated for educational purposes because you assist subscribers with
managing their careers by providing them with the “information and tools” that they “need to
obtain employment in the acting industry. You do not plan to offer your subscribers any
educational opportunities such as formalized instruction, performance opportunities, mentoring
opportunities, or internships within the entertainment industry. Instead, you assert that you are
providing “vocational counseling” because you will post interviews with “industry professionals,
including casting directors, talent agents and personal managers to compile a library of
information” on your website. Your subscribers will also be able to receive notes, instructions,
and suggestions from casting directors, talent agents, and managers. These suggestions would
include lists of specific vendors or services that the subscriber should use or purchase. The
notes and instructions would only come from managers and agents if that manager or agent is
specifically listed as the subscriber’s “representation.” The only live person class you plan on
providing is a “free weekly workshop when [you have] space available to help show the
subscribers how to use their virtual office.”

You submitted, as examples of your services, several websites created by your subscribers. In
particular, you submitted both the public and private pages for C as an example of your typical
subscriber’s website. C’s public pages consist of photographs, a resume, a biography, a
scrapbook, and a questionnaire containing answers to questions such as “My Zodiac Sign,” “My
Favorite Food,” and “My Favorite Ice Cream.” The private page contains a blog, email, a
notepad, a rolodex, a calendar, a guide to setting up a website, and a website editor.

You also provide other services to your subscribers. For example, on your home page you
provide links to websites of other companies so that your subscribers can purchase
merchandise. You “want[ed] to have products . . . that are fun and interesting and if the
subscriber clicks them they find out how they can buy that product . . .” You state that this is
“advertising or product placement only.” You also have another site called S, which is
accessible from your website. S provides a link to a website that allows subscribers to book
their travel plans. You will receive a referral fee for each subscriber that makes their travel
plans through this site. You state that you have temporarily removed this link because there is a
monthly fee associated with it, but that the fee will be removed once you are given exempt
status under section 501(c)(3) and at that time you will “buy the membership” to the travel
agency’s site.

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In exchange for these features, you charge subscribers an annual membership fee. Additional
fees are charged for multimedia, email set up, and search optimization. You will also provide
referrals to website designers if individuals would like customized pages or specialized
assistance.

In addition to providing sites for a fee to subscribers, you also provide free services to other
individuals. You allow casting directors, talent agents, and personal managers to have “side”
websites to your own website. These companion sites will contain the names, biographies,
photos, videos, audio messages, contact information for these casting directors, talent agents,
and personal managers. The sites will also provide information on the “type of talent they are
interested in” employing. The agents, managers, and casting directors would also have the
same virtual office set up as other subscribers, except for a “different color scheme.” Their site
includes a “blog,” email access, a website editor, professional profiles of their clients, links to
client websites, access to various documents, a calendar, a notepad, a rolodex, and other
services. Registration and access to these services are free for agents, managers, and casting
directors. You state that the casting directors, talent agents and managers are “giving the talent
valuable information about each of these entertainment industry professionals” and that asking
“a casting director or talent agent or personal manager to pay for this is just not proper business
protocol in the industry” because the “talent NEED them and their information . . . .” You also
plan on allowing talent agents and managers to use your website for the purpose of scheduling
auditions, marketing to subscribers, and showing “quotes from jobs which is useful for the
agents and managers when negotiating” on behalf of their clients. Finally, you plan on providing
agents with an “internet photo delivery system” which will give agents the ability to compete in
the marketplace.

A, your president, is a talent manager for R. Of your current subscribers, 80% are either clients
of R or are working as interns and receiving “management services [from R] in exchange for
their various tasks.” You do not believe that you are providing a benefit to your interns or R.
However, you do state that “A has been able to make [you] grow and make the clients of R get a
website for a reasonable fee . . . in the long run it will all be quite good for the clients of R and
for [your] future.” You state that “the website of the talent is a marketing tool for the talent and
for the manager which is R to use to market the career of that talent.” But also feel that your
services do not benefit R more than any other talent agency.

Your president, A does not currently receive a salary. However, when you are fully running, A
will receive a percentage of the amount generated by fees, not to exceed a certain amount. B,
your vice president, is currently receiving all the subscription fees from “all the original
subscribers.” Additionally, B will receive a percentage of the fees from new subscribers. In your
original application, you stated that both A and B would be rewarded for their contributions to
the company by having a “paid staff position” for “as long as that individual wants.” These
individuals would also receive a “retirement 401k to be determined and designed by a 401k
expert of their choice.” You proposed modifying this section of your bylaws to state that A and B

will have paid positions for nine years.

Additionally, while your Articles of Incorporation provide that upon dissolution, your remaining
assets shall be distributed to an organization that is exempt under section 501(c)(3) of the
Code, according to your bylaws, another organization, Z, a 501(c)(6) organization, will receive a
distribution of your assets upon your dissolution. These funds will be earmarked for the
creation of a fund for talent managers in the entertainment industry. A, who is also a member of

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Z, will “coordinate” the “structure, guidelines, and regulations for distribution of the funds given
to the [fund] and or to Z.” As a “requirement of Z accepting this donation” A will be given “a
lifetime honorary membership [to Z] and or a President Emeritus status, titles of her choice” and
will not “have to pay the annual dues.” You have proposed modifying this provision so that it
allows A to be the committee chairperson for the fund instead of having a lifetime honorary
membership or President Emeritus status.

LAW:

Section 501(c)(3) of the Internal Revenue Code (“Code”) provides that corporations will be
exempted from tax if they are organized and operated exclusively for religious, charitable,
scientific, testing for public safety, literary, or educational purposes and “no part of the net
earnings of which inures to the benefit of any private shareholder or individual . . . .”

Section 1.501(c)(3)-1(a)(1) of the Income Tax Regulations (“regulations”) provides that an
organization, in order to be exempt under section 501(c)(3) of the Code, must be both organized
and operated exclusively for one or more of the exempt purposes specified in that section.

Section 1.501(c)(3)-1(d)(1)(ii) of the regulations provides that an organization must show that it
serves a public rather than a private interest and specifically that it is not organized or operated
for the benefit of private interests.

Section 1.501(c)(3)-1(c)(2) of the regulations provides “[a]n organization is not operated
exclusively for one or more exempt purposes if its net earnings inure in whole or in part to the
benefit of private shareholders or individuals . . . .”

Section 1.501(a)(1)-1(c) of the regulations defines private shareholder or individual as “persons
having a personal and private interest in the activities of the organization.”

Section 1.501(c)(3)-1(d)(3) of the regulations defines educational as referring to:

(a) The instruction or training of the individual for the purpose of improving or developing his
capabilities; or (b) The instruction of the public on subjects useful to the individual and beneficial
to the community. The regulation also provides four examples of educational organizations.
Example 1 states that an organization, such as a primary or secondary school, a college, or a
professional or trade school, which has a regularly scheduled curriculum, a regular faculty, and
a regularly enrolled body of students in attendance at a place where the educational activities
are regularly carried on is educational if it otherwise meets the requirements of section 501(c) of
the Code. Example 2 provides that an organization whose activities consist of presenting public
discussion groups, forums, panels, lectures, or other similar programs is educational if it
otherwise meets the requirements of the section 501(c). Such programs may be on radio or
television. Example 3 states that an organization which presents a course of instruction by
means of correspondence or through the utilization of television or radio is educational if it
otherwise meets the requirements of section 501(c). Example 4 provides that museums, zoos,
planetariums, symphony orchestras, and other similar organizations are educational if they
otherwise meet the requirements of section 501(c).

In Rev. Rul. 67-392, 1967-2 C.B. 191 an organization which encouraged and promoted the
advancement of young musical artists by conducting weekly workshops, sponsoring public
concerts, and securing paid engagements for the artists to improve their professional standing

was granted exempt status.

In Rev. Rul. 68-71, 1968-2 C.B. 249 an organization formed to educate young people as well as
adults about employment opportunities, and to assist them in planning their careers and
achieving occupational adjustment was found to be tax exempt. To implement its purposes, the
organization conducted occupational research, published the results of such research, and
sponsored group and individual vocational counseling. The organization also presented broad
pictures of various vocational areas, such as skilled trades, business, and civil service. The
publications were sold at a nominal charge to educational institutions, agencies of the Federal
Government, and the general public. The organization did not charge a fee for its vocational
counseling services. Its income was derived mainly from contributions.

In Rev. Rul. 71-395, 1971-2 C.B. 228 a cooperative art gallery formed by a group of artists to
exhibit and sell their works was not entitled to exemption because the gallery was a vehicle for
advancing the careers of its members and for promoting the sale of their works. As such, “It
serves the private purposes of its members, even though the exhibition and sale of paintings
may be an educational activity in other respects.” Accordingly, the organization failed to qualify
for exemption as it was deemed operated for the benefit of private individuals within the
prohibition of Treas. Reg. § 1.501(c)(3)-1(d)(ii).

Under Rev. Proc. 2008-9, 2008-2 I.R.B. 258, exempt status will be recognized in advance of the
commencement of operations if the proposed operations can be described in sufficient detail to
permit a conclusion that the organization will clearly meet the particular requirements of the
section under which exemption is claimed. In order to satisfy this criteria, the organization must
fully describe the activities in which it expects to engage, including the standards, criteria,
procedures, or other means adopted or planned for carrying out the activities.

In Better Business Bureau of Washington, D.C., Inc. v. United States, 326 U.S. 279, the
Supreme Court held that the presence of a single non-exempt purpose, if substantial in nature,
will destroy a claim for exemption regardless of the number or importance of truly exempt
purposes. The Court found that the trade association had an “underlying commercial motive”
that distinguished its educational program from those carried out by universities.

An organization's net earnings may inure to the benefit of private individuals in ways other than
by the actual distribution of dividends or payment of excessive salaries. Founding Church of
Scientology v. United States, 188 Ct.Cl. 490 (Ct. Cl. 1969).

In Airlie Foundation v. Commissioner, 283 F. Supp. 2d 58 (D.D.C. 2003), the court relied on the
“commerciality” doctrine in applying the operational test. Because of the commercial manner in
which this organization conducted its activities, the court found that it was operated for a non-
exempt commercial purpose, rather than for a tax-exempt purpose.” Among the major factors
the court considered in assessing the commerciality of an organization is the organization’s
competition with for-profit commercial entities, the extent and degree of below cost services
provided, the pricing policies, and the reasonableness of financial reserves. Additional factors
included whether the organization used commercial promotional methods, such as advertising,
and the extent to which the organization receives charitable donations.

In B.S.W. Group, Inc. v. Commissioner, 70 T.C. 352 (1978), the court found that a corporation
formed to provide consulting services was not exempt under section 501(c)(3) of the Code

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because its activities constituted the conduct of a trade or business that is ordinarily carried on
by commercial ventures organized for profit. In making this determination the court relied upon
the following: that the corporation had failed to demonstrate that its services were not in
competition with commercial businesses, that the organization's financing did not resemble that
of a typical 501(c)(3) organization, that the organization had not solicited, nor had it received,
voluntary contributions from the general public, that the corporation’s only source of income was
from fees for services, and those fees were set high enough to recoup all projected costs, and
to produce a profit.

RATIONALE:

Based on the information provided in your Form 1023 and the supporting documentation you
provided, we conclude that you are neither organized nor operated exclusively for purposes
described in section 501(c)(3) of the Internal Revenue Code. In order to qualify for tax exempt
status under section 501(c)(3) of the Code, you must be both organized and operated
exclusively for exempt purposes.

You are not organized for exempt purposes because your funds will be distributed for non-
exempt purposes upon your dissolution. Your articles of incorporation provide that your funds
will be distributed to an organization recognized as exempt under section 501(c)(3) of the Code
upon dissolution. However, both your bylaws, and other information submitted to us, shows that
in actuality you will distribute your funds to an organization organized under section 501(c)(6) of
the Code. The provision of funds to a 501(c)(6) organization for purposes that are not in
furtherance of your exempt purposes under section 501(c)(3) of the Code prohibits you from
meeting the organizational requirements for exemption.

You are also not operated exclusively for exempt purposes. You claim that you are operated for
educational and charitable purposes. However, your main activity is operating a website that
allows users to create personal profiles, calendars, emails, and blogs. Your website allows
managers, directors, and casting agents to do the same. This activity is not educational within
the definition of section 501(c)(3) of the Code and is not directed to the public benefit.

Section 1.501(c)(3)-1(d)(3) of the regulations defines educational as referring to the instruction
or training of an individual for the purposes of improving or developing the individual's
capabilities or as the instruction of the public on subjects that are useful and beneficial to the
community. Examples of educational organizations under the regulations include colleges and
primary schools, public discussion groups that have panels, correspondence schools, and
museums, zoos, and similar organizations. You do not meet the definitions of an educational
organization and are not comparable to any of the examples contained in the regulations.
Hosting an online website that is similar to “T” is not educational.

You also claim that you are operated for educational purposes because you assist actors with
obtaining employment in the entertainment industry. In Rev. Rul. 68-71, 1968-2 C.B. 249 an
organization formed to educate young people as well as adults about employment opportunities,
and to assist them in planning their careers and achieving occupational adjustment was found to
be tax exempt. To implement its purposes, the organization conducted occupational research,
published the results of such research, sponsored group and individual vocational counseling,
and presented broad pictures of various vocational areas, such as skilled trades, business, and
civil service. The publications were sold at a nominal charge to educational institutions,

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agencies of the Federal Government, and the general public. The organization did not charge a
fee for its vocational counseling services. Its income was derived mainly from contributions.
Unlike that organization, you do not conduct occupational research, sponsor counseling,
present a broad picture of various vocational areas, or provide any service that could be
deemed educational. Additionally, you charge substantial fees for your services and do not
receive any income from the general public.

While you claim to be similar to the organization described in Rev. Rul. 67-392, 1967-2 C.B.
191, you do not conduct any activities that would make this comparison accurate. You do not
hold weekly workshops, you do not sponsor concerts, and you do not actively secure paid
engagements for your subscribers. Rather, you provide them with a website that allows them to
stay organized and allows their agent to provide them with regular updates. Indeed you are
more like the organization described in Rev. Rul. 71-395, 1971-2 C.B. 228. There, the
organization was not entitled to exemption because the cooperative art gallery it operated was
merely a vehicle for advancing the careers of its members. Similarly, you operate for the private
benefit of enhancing the careers of your members.

The activities you perform are more akin to those of a trade or business that is ordinarily carried
on by for-profit commercial organizations. In Airlie Foundation v. Commissioner, 283 F. Supp.
2d 58 (D.D.C. 2003), the court relied on the “commerciality” doctrine in determining whether an
organization was operated for exempt purposes. The court in Airlie concluded that the
organization was operated for a non-exempt commercial purpose because of the commercial
manner in which the organization conducted its activities. Among the major factors the court
considered in assessing the commerciality of the organization was the organization's
competition with for-profit commercial entities, the extent and degree of below cost services
provided, the pricing policies, and the reasonableness of financial reserves. Additional factors
included whether the organization used commercial promotional methods, such as advertising,
and the extent to which the organization receives charitable donations. Similarly, in B.S.W.
Group, Inc. v. Commissioner, 70 T.C. 352 (1978), a corporation formed to provide consulting
services was also deemed not exempt under section 501(c)(3) of the Code because its activities
constituted the conduct of a trade or business that is ordinarily carried on by commercial
ventures organized for profit. In making this determination the court relied upon the following:
that the corporation had failed to demonstrate that its services were not in competition with
commercial businesses, that the organization's financing did not resemble that of a typical
501(c)(3) organization, that the organization had not solicited, nor had it received, voluntary
contributions from the general public, that the corporation’s only source of income was from fees
for services, and those fees were set high enough to recoup all projected costs.

Like the organizations in Airlie and B.S.W. Group you are not organized for an exempt purpose.
Rather you are operated for non-exempt commercial purpose. You compete with for-profit
companies in providing your services and you stated that in your application that the primary
difference between you and these for-profit organizations is that your fees are less. While your
fees may be less, they are certainly not below cost or in any way distinguishable from the fees
charged by similar organizations. You use advertising to recruit new subscribers, and your
president directs clients from her for-profit talent agencies to your service. Your revenues are
primarily generated through your subscribers and advertisers. You are a commercial
organization with no distinction from a commercial for-profit venture and therefore are not
organized for exempt purposes under section 501(c)(3) of the Code.

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In addition to meeting the requirements of an exempt purpose, you must also operate for public
benefit. Section 1.501(c)(3)-1(d)(1)(ii) of the regulations require you to establish that you are
not operated for the benefit of private individuals. However, you have not shown that you are
operated for a public benefit, rather than private benefit. You provide organizational services
and assistance directly to your subscribers. You allow talent agents and casting directors to
access these profiles and send information to your subscribers for the purpose of obtaining jobs.
You are providing more than an insubstantial private benefit to your subscribers. Even in your
own words, you state that the subscribers to your service are receiving a benefit. You state that
“the private benefit is to the talent that are using this system.” You also provide a more than
insubstantial private benefit to A. Under your bylaws, A is entitled to a Board position in
exchange for directing the distribution of your assets upon dissolution. Even in your proposed
amended bylaws, A would still receive an impermissible private benefit by being appointed to a
life long position in exchange for the assets. Finally, you provide a private benefit to casting
directors, agents, and managers because you allow them to use your site free of charge to
assist with their clients in a variety of ways. As such, you are not operated for the public benefit,
but rather a private benefit in violation of Treas. Reg. § 1.501(c)(3)-1(d)(ii).

CONCLUSION:

Accordingly, you do not qualify for exemption as an organization described in section 501(c)(3)
of the Internal Revenue Code and you must file federal income tax returns.

Contributions to you are not deductible under section 170 of the Internal Revenue Code.

You have the right to file a protest if you believe this determination is incorrect. To protest, you
must submit a statement of your views and fully explain your reasoning. You must submit the
statement, signed by one of your officers, within 30 days from the date of this letter. We will
consider your statement and decide if the information affects our determination.

Your protest statement should be accompanied by the following declaration:

Under penalties of perjury, I declare that I have examined this protest statement, including
accompanying documents, and, to the best of my knowledge and belief, the statement
contains all the relevant facts, and such facts are true, correct, and complete.

You also have a right to request a conference to discuss your protest. This request should be
made when you file your protest statement. An attorney, certified public accountant, or an
individual enrolled to practice before the Internal Revenue Service may represent you. If you
want representation during the conference procedures, you must file a proper power of attorney,
Form 2848, Power of Attorney and Declaration of Representative, if you have not already done
so. For more information about representation, see Publication 947, Practice before the IRS
and Power of Attorney. All forms and publications mentioned in this letter can be found at
www.irs.gov, Forms and Publications.

If you do not file a protest within 30 days, you will not be able to file a suit for declaratory
judgment in court because the Internal Revenue Service (IRS) will consider the failure to protest
as a failure to exhaust available administrative remedies. Code section 7428(b)(2) provides, in
part, that a declaratory judgment or decree shall not be issued in any proceeding unless the Tax
Court, the United States Court of Federal Claims, or the District Court of the United States for

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the District of Columbia determines that the organization involved has exhausted all of the
administrative remedies available to it within the IRS.

If you do not intend to protest this determination, you do not need to take any further action. If
we do not hear from you within 30 days, we will issue a final adverse determination letter. That
letter will provide information about filing tax returns and other matters.

Please send your protest statement, Form 2848 and any supporting documents to this address:

Internal Revenue Service
TE/GE

1111 Constitution Ave, N.W.
Washington, DC 20224

You may also fax your statement using the fax number shown in the heading of this letter. If
you fax your statement, please call the person identified in the heading of this letter to confirm
that he or she received your fax.

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

Sincerely,

Robert Choi
Director, Exempt Organizations
Rulings & Agreements