IRS revokes an organization's section 501(c)(3) exemption for bingo activity

Plain-English summary

The IRS revoked an organization’s section 501(c)(3) exemption effective on the stated date. The organization’s primary activity was conducting weekly bingo games and selling pull-tabs, while its charitable donations were insubstantial compared with its gross receipts. The examination also found substantial payments for facilities, equipment, and security, including payments to entities controlled by the organization’s officer. The IRS concluded that the organization did not operate primarily for exempt purposes, that its activities constituted unrelated trade or business in the circumstances described, and that contributions were no longer deductible under section 170.

Ruling snapshot

• Question: Did the organization continue to qualify for exemption under section 501(c)(3)?
• Outcome: Revocation
• Key authorities: IRC §§ 170, 501(c)(3), 507, 511, 513, 6110, and 7428; Treas. Reg. §§ 1.501(c)(3)-1 and 1.513-5

Full text (IRS public release)

Internal Revenue Service Department of the Treasury

Appeals Office
2525 Capitol Street, Suite 201, MS 55204 Taxpayer Identification Number:
Fresno, CA 93721 Cc

Person to Contact:
Release Number: 201237020
Release Date: 9/14/2012 ber:
Date: June 21.2012 ane Number:

Tel:

A Fax:
B

Tax Period(s) Ended:

D

UIL: 501.03-22

Certified Mail

Dear ’

This is a final adverse determination regarding your exempt status under section 501(c){3) of the Internal
Revenue Code (the “Code”). It is determined that you do not qualify as exempt from Federal income tax

under section 501(c)(3) of the Code effective January 1, 2004.
The revocation of your exempt status was made for the following reason(s):

Your primary activity consists of conducting weekly bingo games and the sale of pull-tabs. Conducting
bingo games and the Selling of pull-tabs are not activities which further charitable or educational purposes
within the meaning of Internal Revenue Code section 501(c)(3). In addition, we found that you have a
program of making contributions to charitable and educational organizations. Your organization’s
program of charitable giving, while laudable, is insubstantial and incidental in comparison to your primary
activity. To be exempt, an organization’s primary activity must further purposes described in section
501(c)(3). Since your primary activity does not further exempt purposes you have not operated
exclusively for exempt purposes as is required for continuing recognition of you by the Internal Revenue

Service as an organization described in section 501(c)(3).
Contributions to your organization are not deductible under section 170 of the Code.

You are required to file Federal income tax returns on Forms 1120 for the tax periods stated in the
heading of this letter and for all tax years thereafter. File your return with the appropriate Internal

Revenue Service Center per the instructions of the return. For further instructions, forms, and information
please visit www.irs.gov.

If you were a private foundation as of the effective date of revocation, you are considered to be taxable
private foundation until you terminate your private foundation status under section 507 of the Code. In
addition to your income tax return, you must also continue to file Form 990-PF by the 15th Day of the fifth

month after the end of your annual accounting period.

Processing of income tax returns and assessments of any taxes due will not be delayed should a petition
for declaratory judgment be filed under section 7428 of the Code.

If you decide to-contest this determination, you may file an action for declaratory judgment under the
provisions of section 7428 of the Code in one of the following three venues: 1) United States Tax Court,
2) the United States Court of Federal Claims, or 3) the United States District Court for the District of
Columbia. A petition or complaint in one of these three courts must be filed within 90 days from the date
this determination letter was mailed to you. Please 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. See also Publication

892.

You also 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 matters
that may not have been resolved through normal channels get prompt and proper handling. If you want
Taxpayer Advocate assistance, please contact the Taxpayer Advocate for the IRS office that issued this
letter. You may call toll-free, 1-877-777-4778, for the Taxpayer Advocate or visit www.irs.gov/advocate

for more information.

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

Sincerely Yours,

Appeals Team Manager
Karen A. Skinder

Enclosure: Publication 892

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE

TE/GE EO Examinations

Sa 4330 Watt Ave SA6209 EO
Sacramento, CA 95821

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Date

Taxpayer Identification Number:

ORG Form:
Tax Year(s) Ended

ADDRESS
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 is necessary.

If you accept our findings, please sign and return the enclosed Form 6018, Consent to
Proposed Action - Section 7428.If you have already given us a signed Form 6018, you need
not repeat this process. 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
Organization 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.

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.

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,

Sunita Lough
Director, EO Examinations

Enclosures:
Publication 892
Publication 3498
Report of Examination
Form 6018

Form 886A Department of the Treasury - Internal Revenue Service Schedule No. or
Explanation of Items Exhibit
Name of Taxpayer TIN Year/Period Ended
ORG EIN 20XX12 & 20XX

LEGEND
ORG - Organization name XX - Date Address ~- address City - city
State - state BM-1 - 1st BM CO-1 & CO-2 - 1st & 2nd COMPANIES Motto

• motto
  Issue:

Whether the tax-exempt status of an organization, whose only activity is conducting
motto games while making only insubstantial donations to charity, should be revoked.

Facts:

ORG Scholarship (ORG) is recognized as a tax-exempt organization under IRC
501(c)(3) in May 20XX. The organization was incorporated in the state of State in March
20XX. According to its articles of incorporation, the stated purpose of this corporation is
to promote and support educational opportunities for children and young adults in the
United States of America. The only activity that the organization participated in was an
on going motto game. The organization does not have a phone number other than that
of the officer's home number. The address listed by the organization on their Form 990
is that of one of the officers of the organization.

The organization conducts weekly motto events in an effort to raise funds for their
stated purpose of supporting education opportunities for children The games are held
on Sunday afternoon starting at 1:45PM, Sunday evening starting at 7:00 PM, and
Monday starting at 7:00PM. The sessions were held at Address, City, State. In 20XX
sessions were also held at the Address location. The events are open to the general
public and ORG estimates that anywhere from 120 to 300 people may attend a motto
event. Three types of motto are generally conducted which are session motto,
electronic motto, and pull-tabs (called flash games by ORG). Session motto is basically
traditional motto where a number is called and players mark the number on their
corresponding cards, electronic motto is played with electronic handsets, and pull-tabs
are tickets purchased that give a player a chance to win instant cash. No other revenue
generating activities are conducted by ORG.

Total gross receipts for the years 20XX through 20XX were $, $, and $respectively.
ORG made charitable donations from 20XX through 20XX. In 20XX the organization
donated $to charity. In 20XX the org donated $ to charity. In 20XX distributions of
$were made .For the years 20XX thru 20XX the organization had $ in revenue while
donating $to charity, this is a percentage of % over a three year period.

Year Gross Receipts Donated to Charity | Percentage

20XX

20XX

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

Page: -1-

Form 886A Department of the Treasury Internal Revenue Service Schedule No. or
Explanation of Items Exhibit
Name of Taxpayer TIN Year/Period Ended
ORG EIN 20XX12 & 20XX
| 20XX | | ]

ORG states that it cannot make greater charitable distributions because it has not been
very profitable in the years 20XX thru 20XX. The majority of the organization’s revenue
is paid out to winners of motto games. From looking at ORG’s profit and loss
statements it can be determined that in 20XX roughly % of gross receipts was paid out
to winners of motto games, % was paid as rental of facilities and motto equipment, 2%
was paid to charity. In 20XX roughly % of gross receipts was paid out to winners of
motto games, % was paid as rental of facilities % was donated to charity. In 2OXX
roughly % of gross receipts was paid out to winners of motto games, % was paid for
rental of facilities and motto equipment, 0.6% was paid to charity. ORG leases the
motto hall from CO-1 . for a total of over $ for every session. ORG leases motto
equipment from CO-2 based on a percent of the session’s net profits, as well as a flat
rate for the rental of handsets. Payments to CO-2 are typically over $ for each session.
It should be noted that BM-1 is the person who signed as the lessor on both the
contract between ORG and CO-1. and between ORG and CO-2 Facility rents paid were
as follows, in 20XX - $ or $ per month. In 20XX - $ or $ per month ( there were two
locations in 20XX, Address $ & Address $). In 20XX the org paid $ or $ per month.
Equipment Rental (these amounts were paid to CO-2 a company controlled by BM-1)
was $ (or $ per month) in 20XX, $ (or $ per month) in 20XX and $ (or $ per month) in
20XX. It should be noted that during this time period State state law limited rent and

overhead to $ per month.

Year Facility Equipment
Rental/Month Rental/Month

20XX

20XX

20XX

The organization utilized the services of private security guards at the motto games,
these individuals were treated as private contractors. For the 20XX year they were paid
$, they were paid $ in 20XX while in 20XX they were paid $. Their services were
described as providing protection for the motto operation. They were paid by check at
the end of each motto session. The organization states that the guards had no direct
involvement with the operations of the games. Their duties were described as
monitoring doors inside and outside hall, maintaining noise levels and disruptions and
player safety. It should be noted that for the years 20XX thru 20XX that compensation

payments for security exceeded donations to charity.

Law:

Form 886-A(Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -2-

Form 886A Department of the Treasury - Internal Revenue Service Schedule No. or
Explanation of Items Exhibit
TIN Year/Period Ended

Name of Taxpayer

ORG EIN 20XX12 & 20XX

Charitable Contributions :

Section 501(c)(3) of the Internal Revenue Code exempts from federal income tax
organizations organized and operated exclusively for religious, charitable, scientific,
testing for public safety, literary, educational purposes, to foster national or international
amateur sports competition, or for the prevention of cruelty to children or animals,
provided that no part of the organization’s net earnings inures to the benefit of any

private shareholder or individual.

Section 1.501(c)(3)-1(a)(1) of the regulations provides that in order to be exempt as an
organization described in section 501(c)(3) of the Code, the organization must be one
that is both organized and operated exclusively for one or more of the purposes

specified in that section.

Section 1.501(c)(3)-1(c)(1) of the regulations provides that an organization will not be
regarded as operated exclusively for exempt purposes if more than an insubstantial part
of its activities is not in furtherance of exempt purposes.

Section 1.501(c)(3)-(d)(1)(ii) of the regulations provides that an organization is not
organized or operated exclusively for one or more of the purposes specified in
subdivision (i) of this subparagraph unless it serves a public rather than a private
interest. Thus, to meet the requirement of this subdivision, it is necessary for an
organization to establish that it is not organized or operated for the benefit of private

interests such as designated individuals.

In Rev. Rul. 64-182, 1964-1 C.B. 186, the IRS ruled that an organization qualified for
exemption under IRC section 501(c)(3) where it used proceeds from a business activity
to conduct a charitable program, commensurate in scope with its financial resources, of
making grants to other charitable organizations.

In Help the Children, Inc. vs. Commissioner, 28 T.C. 1128 (1957), a section 501(c)(3)
organization conducted motto games as its principle activity. Its stated purpose was to
promote lawful forms of entertainment and amusement to acquire funds and financial
assistance for the care and assistance of needy children and children’s institutions. Its
charitable function consisted of contributions to charitable institutions of amounts that
were insubstantial when compared to gross receipts from the motto games. For the two
years under consideration, the percentage of gross motto receipts that was distributed
for charitable purposes was 0.2% and 0.5%. The court held that the organization did
not qualify for exemption under IRC section 501(c)(3) because it did not operate any
charitable institutions and its principal activity was the profitable operation of motto
games on a business or commercial basis.

Rent

Form 886-A(Rev.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 TIN Year/Period Ended
20XX12 & 20XX

ORG EIN

State Law — Rent
Cal. Penal Code section 326.5(k)(2) limits the amount for rental of property and

overhead to $ per month. The law does not apply to cities that adopt their own
ordinances. (Cal. Penal Code section 326.5(a).) Oakland adopted the provisions of the
State Penal Code for it’s ordinance, thereby adopting the $ per month restriction.

State Penal Code Section 326.5

a) Neither the prohibition on gambling in this chapter nor

in Chapter 10 (commencing with Section 330) applies to any motto game
that is conducted in a city, county, or city and county pursuant to

an ordinance enacted under Section 19 of Article IV of the State
Constitution, if the ordinance allows games to be conducted only in
accordance with this section and only by organizations exempted from
the payment of the bank and corporation tax by Sections 23701a,
23701b, 23701d, 23701e, 23701f, 23701g, 23701k, 23701w, and 237011 of
the Revenue and Taxation Code and by mobile home park associations,
senior citizens organizations, and school districts; and if the

receipts of those games are used only for charitable purposes.

(k) With respect to other organizations authorized to conduct

motto games pursuant to this section, all proceeds derived from a
motto game shall be kept in a special fund or account and shall not
be commingled with any other fund or account. Proceeds are the
receipts of motto games conducted by organizations not within
subdivision (j). Those proceeds shall be used only for charitable
purposes, except as follows:

(1) The proceeds may be used for prizes.

(2) (A) Except as provided in subparagraph (B), a portion of the
proceeds, not to exceed 20 percent of the proceeds before the
deduction for prizes, or two thousand dollars ($) per month,
whichever is less, may be used for the rental of property and for
overhead, including the purchase of motto equipment, administrative
expenses, security equipment, and security personnel.

FINAL-REG, TAX-REGS, §1.513-5. Certain motto games not unrelated trade or

business
§1.513-5. Certain motto games not unrelated trade or business

(a) In general. —Under section 51 3(f), and subject to the limitations in paragraph
(c) of this section, in the case of an organization subject to the tax imposed by
section 511, the term “unrelated trade or business” does not include any trade or

Form 886-A(Rev.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 TIN Year/ Period Ended
20XX12 & 20XX

ORG

EIN

business that consists of conducting motto games (as defined in paragraph (d) of this

section).

(b) Exception. —The provisions of this section shall not apply with respect to any
motto game otherwise excluded from the term “unrelated trade or business” by
reason of section 513(a)(1) and §1.513-1(e)(1) (relating to trades or businesses in
which substantially all the work is performed without compensation).

(c) Limitations

(1) Motto games must be legal. —Paragraph (a) of this section shall not apply
with respect to any motto game conducted in violation of State or local law.

(2) No commercial competition. —Paragraph (a) of this section shall not apply
with respect to any motto game conducted in a jurisdiction in which motto games
are ordinarily carried out on a commercial basis. Motto games are “ordinarily
Carried out on a commercial basis” within a jurisdiction if they are regularly carried
on (within the meaning of §1.513-1(c)) by for-profit organizations in any part of that
jurisdiction. Normally, the entire State will constitute the appropriate jurisdiction for
determining whether motto games are ordinarily carried out on a commercial basis.
However, if State law permits local jurisdictions to determine whether motto games
may be conducted by for-profit organizations, or if State law limits or confines the
conduct of motto games by for-profit organizations to specific local jurisdictions,
then the local jurisdiction will constitute the appropriate jurisdiction for determining
whether motto games are ordinarily carried out on a commercial basis.

(3) Examples. —The application of this paragraph is illustrated by the examples
that follow. In each example, it is assumed that the motto games referred to are
operated by individuals who are compensated for their services. Accordingly, none
of the motto games would be excluded from the term “unrelated trade or business”

under section 513(a)(1).

Example (1). Church Z, a tax-exempt organization, conducts weekly motto games
in State O. State and local laws in State O expressly provide that motto games may
be conducted by tax-exempt organizations. Motto games are not conducted in
State O by any for-profit businesses. Since Z's motto games are not conducted in
violation of State or local law and are not the type of activity ordinarily carried out
on a commercial basis in State O, Z's motto games do not constitute unrelated

trade or business.

Example (2). Rescue Squad X, a tax-exempt organization, conducts weekly motto
games in State M. State M has a statutory provision that prohibits all forms of gambling
including motto games. However, that law generally is not enforced by State officials

Form 886-A(Rev.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 TIN Year/Period Ended
20XX12 & 20KX

ORG EIN

against local charitable organizations such as X that conduct motto games to raise
funds. Since motto games are illegal under State law, X's motto games constitute
unrelated trade or business regardless of the degree to which the State law is enforced.

Compensated Workers — Security Guards

In South Community Ass'n v. C.I.R.U.S.Tax Ct.,20XX. United States Tax Court. It was
found that paid security guards were considered compensated workers, the fact that the
security guards who worked in the gaming operation were independent contractors,
rather than employees was irrelevant and security guards were part of the workforce of

gaming operations.

The role of the security guards as we see it was to prevent a robbery from being
attempted in the first place, primarily by virtue of their physical presence at the sites of
the motto games and the instant pull-tab ticket sales. We consider the security guards
to be part of the workforce of the gaming operation, cf. Waco Lodge No. 166,
Benevolent & Protective Order of Elks v. Commissioner, 696 F.2d 372 (5th Cir.1983)
(concluding that a bartender's services on motto night were connected with the carrying
on of the motto games although the bar was down the hall from the games), affg. T.C.
Memo.1981-546, and conclude that the security guards worked in the gaming operation
for purposes of the “substantially all” test.

Taxpayer’s Position:

The organization states that in the early years it could not give more money to charity
because the high rents made it unprofitable. The organization claims that they are
currently giving larger sums to charity.

Government’s Position:

Based on the facts of the examination ORG does not qualify for tax-exempt status
under IRC 501(c)(3) because the organization does not engage primarily in activities
that serve an exempt purpose. Even though ORG’s articles of incorporation state that
its specific purpose is to help children with their growth and development and support
educational opportunities for the children and young adults in the United States of
America. The organization primarily exists to hold weekly motto sessions and virtually
no charitable donations are made by the organization. Conducting motto games while
making no significant charitable donations or substantially serving an exempt purpose
suggests that more than an insubstantial part of an organization’s activities is not in
furtherance of exempt purposes. An organization will not be regarded as exempt if
more than an insubstantial part of its activities is not in furtherance of exempt purposes.

See Treas. Reg. 1.501(c)(3)-1(c)(1).

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 TIN Year/Period Ended
ORG EIN 20XX12 & 20XX

In order to be exempt under IRC 501(c)(3), an organization must be organized and
operated exclusively for religious, charitable, scientific, testing for public safety, literary,
educational purposes, etc. An organization that conducts motto games may be exempt
under IRC 501(c)(3) if it uses the proceeds from motto to conduct a charitable program,
commensurate in scope with its financial resources, of making grants to other charitable
organizations. See Rev. Rul. 64-182, 1964-1 C.B. 186. In 20XX ORG’s gross receipts
totaled $, of which$ (or 0. %) was donated to charity. In 20XX gross receipts were $ out
of this $ ( or .0%) was donated to charity. In 20XX gross receipts were $ out of this $ (or
0.%) was donated to charity. This minimal amount of donations does not represent a
charitable program commensurate in scope with its financial resources as stated in
Rev. Rul. 64-182, 1964-1 C.B. 186. In Help the Children, Inc. vs. Commissioner, 28
T.C. 1128 (1957), an organization’s charitable function consisted of contributions to
charitable institutions of amounts that were insubstantial when compared to gross
receipts from the motto games. In this case contributions were .2 and .5%. The court
held that the organization did not qualify for exemption under IRC 501(c)(3) because it
did not operate any charitable institutions and its principal activity was the profitable
operation of motto games on a business or commercial basis.

Year Gross Receipts Donated to Charity | Percentage

20XX
20XX
20XX

ORG rents a building from CO-1 20XX. Facility rents paid were as follows, In 20XX - $
or $ per month. In 20XX - $ or $ per month ( there were two locations in 20XX, Address
$ & Address $). In 20XX the org paid $ or $ per month. Equipment rental ( these
amounts were paid to CO-2 a company controlled by BM-1) was $ (or $ per month) in
20XX and $ (or $ per month) in 20XX (amounts for the 20XX year are not available) It
should be noted that during this time period State state law limited rent and overhead to

$ per month.

Section 1.501(c)(3)-(d)(1)(ii) of the regulations states that an organization must be
organized to serve a public rather than a private interest. The service believes that such
large payments to entities controlled by the same individual for weekly facility and
equipment rentals are in violation of Regulation 1.501(c)(3)-(d)(1)(ii). These payments
show a private benefit to the lessor, BM-1. Even if the State Regulations are not
enforced, per Reg 1.513-5 violation of the state law still make the organization’s
activities fall outside the UBI exception for motto.

The amounts paid for private security, over $ per year constitute paid compensation
which makes the motto activities not meet the motto exception to UBI per the code.

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

Department of the Treasury - Internal Revenue Service Schedule No. or

Form 886A
i Explanation of Items Exhibit
Name of Taxpayer TIN Year/Period Ended
ORG EIN 20XX12 & 20KX
Conclusion:

Due to the excessive amounts paid for rent as well as paying compensation to security
guards, the organization’s activities constitute unrelated trade or business activity

Conducting motto games while making no significant charitable donations or
substantially serving an exempt purpose suggests that more than an insubstantial part
of an organization's activities is not in furtherance of exempt purposes. An organization
will not be regarded as exempt if more than an insubstantial part of its activities is not in
furtherance of exempt purposes. See Treas. Reg. 1.501(c)(3)-1(c)(1).

Based on the foregoing reasons, the organization does not qualify for exemption under
section 501(c)(3) and its tax exempt status should be revoked effective January 1,

20XX.

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