Written determination 1245023: IRS revokes an organization's tax exemption for missing records

Plain-English summary

The IRS revoked an organization's exemption under section 501(c)(3), effective July 1 of a redacted year. The organization did not provide all of the books, records, and other information needed to examine its Form 990 or establish its exempt activities. The IRS concluded that the organization had not shown that it operated exclusively for exempt purposes or that its earnings did not benefit private individuals. Contributions were no longer deductible, and the organization was required to file Form 1120 returns.

Ruling snapshot

• Question: Did the organization remain exempt under IRC § 501(c)(3) when it failed to provide records and information requested during an examination?
• Outcome: Revocation
• Key authorities: IRC §§ 501(a), 501(c)(3), 6001, 6033, 6104, 170, and 7428; Treas. Reg. §§ 1.501(c)(3)-1(d) and 1.6033-2(h)(2)

Full text (IRS public release)

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE
1100 Commerce Street

Dallas, TX 75242

501.03-00

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Date: July 2, 2012

Person to Contact:
Badge Number:
Release Number: 201245023

Release Date: 11/9/2012
Contact Telephone Number:
ORG Contact Address:
ADDRESS Employer Identification Number:

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). Our favorable determination letter to you dated May
2007 is hereby revoked and you are no longer exempt under section 501(a) of the Code
effective July 1, 20XX.

The revocation of your exempt status was made for the following reason(s):

You have failed to produce documents to establish that you are operated exclusively for exempt
purposes within the meaning of Internal Revenue Code section 501(c)(3), and that no part of
your net earnings inure to the benefit of private shareholders or individuals. Also, you have
failed to keep adequate books and records as required by IRC section 6001 and the regulations
there under. In our letters dated April 13, 20XX; May 24, 20XX; July 11, 20XX; and October 11,
20XX, we requested information necessary to conduct an examination of your Form 990 for the
year ended June 30, 20XX. We have not received all of the requested information.

Section 1.6033-2(h)(2) of the Income Tax Regulations provides, in part, that every organization
which is exempt from tax, shall submit such additional information as may be required by the
Internal Revenue Service for the purpose of inquiring into its exempt status. You have not
provided the requested information.

Contributions to your organization are no longer deductible under section 170 of the Internal
Revenue Code, effective July 1, 20XX.

You are required to file Federal income tax returns on Form 1120. These returns should be filed
with the appropriate Service Center for the year ending June 30, 20XX, and for all the tax years
thereafter in accordance with instructions of the return.

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: United
States Tax Court, the United States Court of Federal Claims, or the United States District Court
for the District of Columbia. A petition in one of these three courts must be filed before the

2
91st day after the date that this determination was mailed to you if you wish to seek review of
our determination. Please contact the clerk of the respective court for rules regarding filing
petitions for declaratory judgment by referring to the enclosed Publication 892. Please note that
the United States Tax Court is the only one of these courts where a declaratory judgment action
can be pursued without the services of a lawyer. You may write to the United States Tax Court
at the following address:

Please understand that filing a petition for a declaratory judgment under IRC section 7428 will
not delay the processing of subsequent income tax returns and assessment of any taxes due.

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 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
the Taxpayer Advocate assistance. If you prefer, you may contact your local Taxpayer Advocate
at:

Taxpayer Advocate assistance cannot be used as substitute for established IRS procedures,
formal appeals processes, etc. The Taxpayer Advocate is not able to reverse legal or technically
correct tax determination, 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 section 6104(c) of the
Internal Revenue Code.

This letter should be kept within your permanent records.

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

Sincerely,

Nanette M. Downing
Director, EO Examinations
Enclosures:
Publication 892

Internal Revenue Service

Tax Exempt and Government Entities Division

Exempt Organizations: Examinations
625 Fulton Street, 5th Floor
Brooklyn, NY 11201

Date: December 2, 2011

Department of the Treasury

Taxpayer Identification Number:
Form:
Tax Year(s) Ended:

LEGEND Person to Contact/ID Number:
ORG - Organization name Contact Numbers:
XX = Date Address - address Telephone:
Fax:
ORG
ADDRESS

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 6001 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.

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.

Letter 3618 (Rev 11-2003)
Catalog Number 34809F

2

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,

Nanette M. Downing
Director, EO Examinations

Enclosures:
Publication 892
Publication 3498
Report of Examination

Letter 3618 (Rev 11-2003)
Catalog Number 34809F

Form 886A Department of the Treasury - Internal Revenue Service Schedule No.
Explanation of Items

Name of Taxpayer Year/Period Ended
ORG June 30, 20XX
LEGEND
ORG - ORGANIZATION NAME XX - DATE

We have made numerous attempts (see attached Exhibit A), via telephone, certified
mail and first class mail to schedule an appointment to examine your books and records
for the period referenced above. To date, we have not received a responds to our
request.

Section 1.6033-2(i)(2) of the Income Tax Regulations provides, in part, that every
organization which is exempt from tax shall submit such additional information as may
be required by the Internal Revenue Service for the purpose of inquiring into its exempt
status.

Since you have not provided the requested information, we propose to revoke your
organization's exemption from Federal income tax under section 501(c)(3) of the
Internal Revenue Code, effective July 1, 20XX. As a taxable entity, you will be required
to file the appropriate Federal income tax return.

Form 886-A(Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -1-

ORG
EIN:

FYE: June 30, 20XX

Attachment to Form 886-A

Description of mailings and contact information

XX - Date RA-1 & RA-2 - 1st & 2nd RA EXHIBIT A

Date of
Mailing/Telephone
Number Description of Correspondence Contact Status of Mailing

1 Letter 3611 with attached Information Document
Requesting examination of tax return. Sent to last
known address on IRS records via certified mail. 4/13/20XX Returned to sender
unclaimed/unable to
forward.

2 Attempt to contact the organization via telephone,
phone number listed on website and accurint. 5/19/20XX Busy signal.

3 Attempt to contact the organization via telephone,
phone number listed on website and accurint. 5/24/20XX Busy signal.

4 Letter 3611 with attached Information Document
Requesting examination of tax return. Sent to Principal
Officer that is listed on F990-N home address via
certified mail. 5/24/20XX Returned to sender
unclaimed/unable to
forward.

5 Attempt to contact the Principal Officer via telephone,
phone number listed on accurint. 6/16/20XX No answer, voice mail not
activated.

6 Letter 3606 with attached Information Document
Requesting examination of tax return. Sent to the
Principal Officer listed on F990-N home address via
certified mail. 7/11/20XX Signed for on July 14, 20XX
by RA-1.

7 Letter 3606 with attached Information Document
Requesting examination of tax return. Sent to the
Principal Officer listed on the F990-N home address
via regular mail. 7/11/20XX No letter was returned.

8 Letter 3606 with attached Information Document
Requesting examination of tax return. Sent to the last
known address of the organization via certified mail. 7/11/20XX Returned to sender
unclaimed/unable to
forward.

9 Letter 3606 with attached Information Document
Request addressing filing requirements. Sent to the last
known address of the organization via regular mail. 7/11/20XX No letter was returned.

10 Adverse letter with attached Information Document
requesting examination of tax return. Sent to the
organization via certified mail. 8/8/20XX Returned to sender
unclaimed/unable to
forward.

11 Adverse letter with attached Information Document
requesting examination of tax return. Sent to the
Principal Officer home address via certified mail. 8/8/20XX Signed for on August 11,
20XX by RA-2.

Page 1 of 2

ORG
EIN:

FYE: June 30, 20XX

XX - Date RA-1 & RA-2 - 1st & 2nd RA

Attachment to Form 886-A

Description of mailings and contact information

EXHIBIT A
Date of
Mailing/Telephone
Number Description of Correspondence Contact Status of Mailing

12 Information Document requesting attached Form 1023
Application for Recognition of Exemption and Letter
1045 Determination letter. Sent to the Principal Officer
home address via certified mail. 10/11/20XX Returned to sender
unclaimed/unable to
forward.

13 Information Document requesting attached Form 1023
Application for Recognition of Exemption and Letter
1045 Determination letter. Sent to the organization
address via certified mail. 10/11/20XX Returned to sender
unclaimed/unable to
forward.

Page 2 of 2