IRS denies section 501(c)(3) recognition after applicant fails to substantiate operations

Plain-English summary

The IRS denied an organization's application for recognition under IRC section 501(c)(3). The applicant described drug-rehabilitation, counseling, religious, and outreach activities, but did not provide enough consistent information about its operations, funding, governance, relationships with other organizations, or use of personnel and resources. The IRS concluded that the applicant had not established that it operated exclusively for charitable, religious, or educational purposes under the operational test. Donors therefore could not deduct contributions under section 170, and the organization was required to file federal income tax returns.

Ruling snapshot

• Question: Whether the applicant established that it was organized and operated exclusively for exempt purposes under IRC section 501(c)(3).
• Outcome: Denied. The applicant failed to provide sufficient facts to establish qualification.
• Key authorities: IRC §§ 501(c)(3), 501(a), 170, 7428, and 6110; Treas. Reg. §§ 1.501(c)(3)-1(a)(1), 1.501(c)(3)-1(c)(1); Rev. Proc. 2010-9; Nelson v. Commissioner, 30 T.C. 1154 (1958); Founding Church of Scientology v. United States, 188 Ct. Cl. 490, 412 F.2d 1197 (1969); Christian Echoes Nat'l Ministry v. United States, 470 F.2d 849 (10th Cir. 1972); Universal Life Church v. United States, 372 F. Supp. 770 (E.D. Cal. 1974); Levy Family Tribe Found. v. Commissioner, 69 T.C. 615 (1978); Bubbling Well Church of Universal Love v. Commissioner, 74 T.C. 531 (1980); Basic Bible Church v. Commissioner, 74 T.C. 848 (1980); Peoples Prize v. Commissioner, 87 T.C.M. (CCH) 813 (2004); New Dynamics Found. v. United States, 70 Fed. Cl. 782 (2006).

Full text (IRS public release)

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

TAX EXEMPT AND
GOVERNMENT ENTITIES

DIVISION
Release Number: 201317012 Contact Person:
Release Date: 4/26/2013
Date: February 1, 2013 Identification Number:
UIL: 501.03-11
501.03-30 Contact Number:
Employer Identification Number:
Form Required To Be Filed:
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 did not provide sufficient facts to
establish that you engage primarily in activities that accomplish an exempt purpose. Therefore,
you failed to establish that you are operated exclusively for exempt purposes described in
section 501(c)(3) of the Code.

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

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the enclosed Notice 437, Notice of Intention to Disclose, and review the two attached letters that
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.

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,

Holly O. Paz
Director, Rulings and 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: AUG 5 2010 Contact Person:
Identification Number:
Contact Number:
FAX Number:
Employer Identification Number:

Legend

M

N

O

P

State 1

State 2

Date 1

Date 2

Date 3

Dear

We have considered your application for recognition of exemption from Federal income tax
under section 501(c)(3) of the Internal Revenue Code (the Code). Based on the written
information exchanged between us, we have determined that you failed to establish your
qualification for exemption under that section. Our reasons for this conclusion, and the facts on
which it is based, are explained below.

Facts

The information you submitted indicates that you, M, are a calendar year corporation that was
formed on Date 1 under the laws of State 1. You mailed your Form 1023 to the IRS in
Covington, Kentucky via Federal Express, which recorded receipt of the application on Date 2.
The application was stamped received by Cincinnati one day later.

During the application process, we sent you a letter requesting additional information to help

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determine whether you qualify for exemption from federal income tax under section 501(c)(3) of
the Code. A few months later, we sent you a second letter, also requesting additional
information and clarification of the answers you submitted to the first letter we sent. In response
to our letters, you submitted three letters (including accompanying information); two of those
letters were not submitted under penalties of perjury. We have talked on the telephone on
several occasions with your authorized representatives seeking clarification on information you
have submitted.

With your application, you filed a Certification of Incorporation (COI), which provides that you
were “organized exclusively for charitable, religious, educational, and scientific purposes,
including for such purposes, the making of distributions to organizations that qualify as exempt
under section 501(c)(3) of the Internal Revenue Code of 1986 or the corresponding provisions
of any future United States Internal Revenue Law.” Your COI specifically states that you will
engage in activities that promote your goal of striving “towards the founding of one or more
Christian ministry and Christian churches of Divine worship and religious observance according
to the teachings and belief of the Christian faith.”

Your COI and application documents indicate that one of your main activities involves
conducting outreach programs for drug-addiction prevention, rehabilitation, and counseling. As
part of your drug rehabilitation program, you offer room, board, counseling, emotional and
religious support, nutritional needs, and assistance with obtaining out-patient employment,
mental health, and counseling services elsewhere. According to your application, you will
provide drug addicts with treatment and support “to make them change their lives and be people
of dignity and respect in the society. As part of the rehabilitation program we enforce in
spirituality, social values, social relations and discipline.” You state that you have accepted
individuals into your drug rehabilitation program who were rejected by other facilities.

You state that you accept as residents any and all individuals with chemical dependency issues.
You have numerous contacts with the state of and government agencies in State 2,
from which you receive referrals of clients. The average length of time a resident stays at your
facility is 5-12 months, depending upon a resident's progress, adjustment, and reintegration into
the community. You have rules and regulations, which all residents must read, study, and
accept as a requirement to enter your rehabilitation program. These rules pertain to hygiene,
housekeeping, visitors, and termination of residency.

In your initial application documents, you stated, “today more than 10,000 people had
participated in this rehabilitation program.” In regard to this statement, we asked you to explain
how, since 2005, you certify the number of people who have gone through your substance abuse
program. In reply to our question, you indicated that “approximately 10,000 citizens in public
events in admittance and assisting group counseling with members of our clinic and religious
communities.”

In our letters to you, we asked you the following questions:

(1) Provide further detailed information about the activities you will engage in as
indicated in sections (1) through (17) of the Fourteenth Article of your COI (for
example, creating orphanages, organizing missionary work, promoting
educational doctrines, etc.)

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(2) Provide a percentage breakdown of the amount of time and resources (financial,
staff, and otherwise) you have allocated or will allocate to your substance abuse
rehabilitation program.

(3) Identify the hours that your employees and volunteers work in relation to your
substance abuse rehabilitation program.

(4) Explain in detail what sort of government assistance you were referring to in your
letter to us dated September 17, 2009, what government agency is offering you
assistance, and any deadlines this agency is imposing upon you.

(5) Explain how, since 2005, you certify the number of people who have gone
through your substance abuse program.

(6) Explain what you have done and will do with the excess amount of income you
have over expenses for the years 2005-2008.

You did not provide a response to any of these questions.

In our letters to you, we asked you to state whether you charge a fee for performing any of the
services that you render. In response, you indicated that you do not “collect a fee for performing
any of the services provided,” adding that “the revenues and contributions [you] receive are from
the monthly rent pay of $/ that [P pays] for every participant that is resident in our premises.”
You state in your “Rules and Regulations” that all residents must pay a one-time, nonrefundable
fee of upon intake. You also state that any “economical help from family members must be
named by our facility.” In one of your letters to us, you state that you have not yet received any
donations. Attached to this letter, you submitted information in Spanish that contains the words
“donaciones” and “fundador.” In addition, in one of your letters to us you indicate, in an Income
Statement for the year ending December, 20XX, that you received “Other revenue/Donations” in
the amount of $ . You also stated in a letter to us, “we are not receiving assistance from the
government.”

In our letters to you, we asked you several questions about your relationship with O. You
answered some of the questions we posed about this organization, but you did not answer all
questions. Specifically, you did not specify what your obligations are to this organization,
whether you share any resources (staff, equipment, facilities, etc.), or whether you exercise any

control over this organization or vice versa.

We asked you to explain what your relationship is to N, and we asked you to state whether you
are filing for exempt status as a church or a religious organization. In response, you stated that
you are organized exclusively as a religious organization and that you are the organization that
regulates the religious services offered in your facilities and that N accomplishes “the other
services we offer in our premises.” Attached to or within your application, you submitted a
Certificate of Incorporation for M and N, specified that M was a church (e.g., in the Statement of
Ordained Clergy and Certificate of Ordination), stated that you have a chapel, and stated that you
“are under religious laws.” On Schedule E of Form 1023, you answered “No” to the question of
whether you are a church, association of churches, or integrated auxiliary of a church, and you
did not file a completed Form 1023 Schedule A “Churches.”

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In our letters, we asked you to provide copies of all your board/trustee meeting minutes from
formation to the present, which were to be held in February of each year since you were formed.
You replied that these documents were destroyed in a fire that occurred three years after you
were formed. You did not provide copies of any minutes, including for your meetings that were
held in February of the two years after the year the fire occurred.

Attached to your application was Schedule E, Organizations Not Filing Form 1023 Within 27
Months of Formation. You requested an extension of time to apply to be recognized as exempt
from the date you were formed. In our letters to you, we asked you to explain why you did not
timely file your Form 1023 application. You stated, at one point, that you “did not file during the
27 month period because the application was filed and sent [on Date 3]. The application sent
[then] was returned to us because we used the [older] version of the Form 1023 and the correct
form was the [newer] version.” In another document, you stated that the reason you did not file
your Form 1023 in a timely manner “was because [you] didn't know of a need of a 1023. As
soon as [you were] aware of the need of the 1023, [you] took the necessary steps to have it
done.”

Law

Section 501(c)(3) of the Code provides for the exemption from federal income tax of
organizations organized and operated exclusively for religious, charitable, or educational
purposes, 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 to be
exempt as an organization described in section 501(c)(3) of the Code, an organization must be
both organized and operated exclusively for one or more exempt purposes specified in such
section. If an organization fails to meet either the organizational test or operational test, it is not
exempt.

Section 1.501(c)(3)-1(c)(1) of the regulations provides that an organization will be regarded as
“operated exclusively” for one or more exempt purposes only if it engages primarily in activities
that accomplish one or more of the exempt purposes specified in section 501(c)(3) of the Code.
An organization will not be so regarded if more than an insubstantial part of its activities is not in
furtherance of an exempt purpose.

Section 4 of Rev. Proc. 2010-9, 2010-2 I.R.B. 258, provides that a favorable determination
letter will be issued to an organization only if its application and supporting documents establish
that it meets the particular requirements of the section under which exemption from federal
income tax is claimed. A determination letter on exempt status is issued based solely upon the
facts and representations contained in the administrative record. The applicant is responsible
for the accuracy of any factual representations contained in the application. The failure to
disclose a material fact or a misrepresentation of a material fact on the application may
adversely affect the reliance that would otherwise be obtained through issuance by the IRS of a
favorable determination letter.

In Nelson v. Commissioner, 30 T.C. 1154 (1958), the Tax Court held, “Exemptions as well as
deductions are matters of legislative grace, and a taxpayer seeking either must show that he
comes squarely within the terms of the law conferring the benefit sought.”

In Founding Church of Scientology v. United States, 188 Ct. Cl. 490, 412 F.2d 1197 (1969),
cert. denied, 397 U.S. 1009 (1970), the Supreme Court examined whether the net earnings of
the Scientology church inured to the benefit of private individuals. The court drew inferences
from the facts presented to conclude that the organization had failed to prove its entitlement to
exempt status under section 501(c)(3) of the Code. The court concluded, “the logical inference
can be drawn that these payments were disguised and unjustified distributions of [the
organization's] earnings.”

In Christian Echoes Nat'l Ministry v. United States, 470 F.2d 849 (10th Cir. 1972), cert. denied,
414 U.S. 864 (1973), the court held that a religious organization was not exempt from tax under
section 501(c)(3) of the Code, because a substantial part of the organization's activities
consisted of carrying on propaganda or attempting to influence legislation. In reaching this
conclusion, the court stated that “exemption is a privilege, a matter of grace rather than right,”
adding that “taxpayers have the burden of establishing their entitlement to exemption.”

In Universal Life Church v. United States, 372 F. Supp. 770 (E.D. Cal. 1974), the court
concluded that “one seeking a tax exemption has the burden of establishing his right to a tax-
exempt status.”

In Levy Family Tribe Found. v. Commissioner, 69 T.C. 615 (1978), the Tax Court held that an
organization failed to qualify for recognition of exemption under section 501(c)(3) of the Code.
The court concluded, “The record is replete with unsupported generalizations. These
explanations are too general and lack the facts necessary to establish public, rather than
personal, purposes of the organization.”

In Bubbling Well Church of Universal Love v. Commissioner, 74 T.C. 531 (1980), aff'd, 670 F.2d
104 (9th Cir. 1981), the Tax Court held that an organization failed to establish that no part of its
net earnings inure to the benefit of private individuals and, thus, the organization was not
exempt from taxation under section 501(c)(3) of the Code. A claim for tax-exempt status,
the court held, “calls for open and candid disclosure of all facts bearing upon [an organization's]
organization, operations, and finances so that the Court, should it uphold the claimed
exemption, can be assured that it is not sanctioning an abuse of the revenue laws. If such
disclosure is not made, the logical inference is that the facts, if disclosed would show that [the
organization] fails to meet the requirements of section 501(c)(3).”

In Basic Bible Church v. Commissioner, 74 T.C. 848 (1980), aff'd sub nom., Kile v.
Commissioner, 739 F.2d 265 (7th Cir. 1984), the Tax Court held that an organization seeking
exemption under section 501(c)(3) of the Code has the burden of proving it is entitled to exempt
status.

In Peoples Prize v. Commissioner, 87 T.C.M. (CCH) 813 (2004), the Tax Court concluded that
an organization failed to establish that it was operated for exempt purposes under section
501(c)(3) of the Code. The court stated that the organization had “for the most part, provided
only generalizations in response to repeated requests by [the IRS] for more detail on
prospective activities.” These “generalizations do not satisfy us,” the court concluded, that the
applicant qualifies for exemption.

In New Dynamics Found. v. United States, 70 Fed. Cl. 782 (2006), the U.S. Court of Federal
Claims held that the IRS properly denied tax exempt status under section 501(c)(3) to a
nonprofit corporation that was organized to promote and contribute to charitable causes. In
reaching this conclusion, the court stated, “It is well-accepted that, in initial qualification cases .
. . gaps in the administrative record are resolved against the applicant,” adding that courts “can
draw inferences adverse to a taxpayer seeking exempt status where the taxpayer fails to provide
evidence concerning its operations, or where the evidence is vague or inconclusive.”

Analysis

To be exempt under section 501(c)(3) of the Code, an organization must meet both an
organizational and an operational test. Section 1.501(c)(3)-1(a)(1) of the regulations. Our
analysis of the information you submitted shows that while you meet the organizational test, you
do not meet the operational test. That is, you have not submitted sufficient information in
support of your application for exempt status under section 501(c)(3) for us to conclude that you
are operated exclusively for charitable, religious, or educational purposes as specified in section

501(c)(3).

For an organization claiming the benefits of section 501(c)(3) of the Code, “exemption is a
privilege, a matter of grace rather than right.” Christian Echoes Nat'l Ministry, 470 F.2d at 857.
It is well-established that the law imposes on the applicant the burden of proving that it is
entitled to exemption. See, Basic Bible Church, 74 T.C. at 855, and Universal Life Church, 372
F. Supp. at 775. The applicant has the burden of showing it “comes squarely within the terms of
the law conferring the benefit sought.” Nelson, 30 T.C. at 1154. A favorable determination
letter will be issued to an organization only if its application and supporting documents establish
that it meets the particular requirements of the section under which exemption from federal
income tax is claimed. Section 4 of Rev. Proc. 2010-9. In all, your application and supporting
documents do not satisfy your burden of showing that you fall “squarely within the terms” of
section 501(c)(3), because you have provided insufficient, incomplete, or inconsistent
information in support of your application for exempt status.

In our letters to you, we asked you specific questions to help determine whether you qualify for
exemption from federal income tax under section 501(c)(3) of the Code. While you did provide
some general information and did answer some of our questions, you failed to provide a
response to some of the key questions that we asked pertaining to your activities. Specifically,
we asked you to provide more detailed information about other activities your COI indicates you
will engage in (e.g., creating orphanages, organizing missionary work, promoting educational
doctrines, etc.), to provide a percentage breakdown of the amount of time and resources you
spend on your substance abuse rehabilitation program, to identify the hours that your
employees and volunteers work in relation to this program, to explain how you certify the
number of people who have participated in your drug rehabilitation program, and to account for
the excess amount of your income over your expenses. You did not provide a response to these
aforementioned questions. Courts have been persuaded to rule unfavorably on a tax exemption
issue when the nature of the proposed activities is especially ambiguous. Levy Family Tribe
Found., 69 T.C. at 619.

We also asked you specific questions about your relationship with N and O. As far as your
relationship with O, you provided general responses to our questions but you did not specifically
answer all of our questions. That is, you did not provide a response to the questions of what

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your obligations are to O, whether you and O share any resources, or whether you exercise any
control over O or vice versa. As for your relationship with N, it appears that N was established to
operate your drug rehabilitation program and that you were established to operate as a religious
organization or church, yet most of the supporting documents you submitted with your application
indicate that you were established to operate a drug rehabilitation program. Also, your COI
specifically states that you will engage in activities that promote your goal of striving “towards the
founding of one or more Christian ministry and Christian churches of Divine worship and
religious observance according to the teachings and belief of the Christian faith.” Despite our
repeated requests, you did not clarify your relationship with O or N.

Likewise, it is not entirely clear whether you operate through one or two different corporations
(i.e., M, N, or both), or whether you are filing as a church or a religious organization. Attached to
or within your application, you submitted a Certificate of Incorporation for M and N, specified
that M was a church (e.g., in the Statement of Ordained Clergy and Certificate of Ordination),
stated that you have a chapel, and also stated that you “are under religious laws.” Yet, on
Schedule E of Form 1023, you answered “No” to the question of whether you are a church,
association of churches, or integrated auxiliary of a church, and you did not file a completed Form
1023 Schedule A “Churches.” Thus, some of the information you have submitted indicates you
are either a religious organization or church, while other information indicates that you are
neither.

In addition, some of the documents you submitted with your application were in Spanish, which
we are unable to process. And, much of the documentation you submitted in response to our
requests for additional information was not submitted under penalties of perjury. Also, you did
not provide copies of minutes from your board of director meetings for any of the years that you
have been organized. You did indicate that a fire destroyed many of your important documents
and, thus, you are unable to provide a copy of minutes for years prior to that time. However,
you still did not provide copies of minutes for your board meetings that took place after the fire
occurred.

The Tax Court has stated that an application for tax-exempt status “calls for open and candid
disclosure of all facts bearing upon [an applicant's] organization, operations, and finances [to
assure that there is no] abuse of the revenue laws. If such disclosure is not made, the logical
inference is that the facts, if disclosed, would show that the [applicant] fails to meet the
requirements of section 501(c)(3).” Bubbling Well Church, 74 T.C. at 535. See also, Founding
Church of Scientology, 412 F.2d at 1201. Furthermore, the courts have repeatedly upheld the
Service's determination that an organization has failed to establish exemption where the
organization fails to provide requested information. When an application “has, for the most part,
provided only generalizations in response to repeated requests by [the Service] for more detail
on prospective activities, those “generalizations do not satisfy us that [the applicant] qualifies for
the exemption.” Peoples Prize, 87 T.C.M. at 814.

In addition to not providing all requested information, you also provided inconsistent
information in response to our request for additional information. For example, regarding our
questions relating to your sources of funding, you stated in one part of your application that your
only source of funding was from the $/ you receive per month, per resident from a

government agency. However, you state in another part of your application that residents also
pay a $. one-time, nonrefundable fee upon admission to your facility, that residents are
required to state any “economic help from family members,” and that you received $ , in

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“Other Revenue/Donations” for the year 20 . In another part of your application, you

submitted documents (in Spanish) that appear to indicate that you may have solicited donations

and contributions and, thus, you may also have income from that source as well. These facts

are inconsistent, indicating that you may have more sources of income and revenues than the
$ you receive each month for each resident in your facility.

Moreover, you submitted inconsistent explanations for why you did not timely file your Form
1023 within 27 months from formation. In one part of your application, you stated that you
timely filed the application but that it was returned to you because you used the wrong
application form. Yet in another part of your application you state that you were unaware that
you needed to file an application and when you became aware you did file one.

Finally, there are a variety of key gaps within your application. For example, you
provided very little information on the government agency that you indicated you receive
funding from. We specifically asked you to explain in detail what sort of assistance you
were referring to, what government agency is offering you assistance, and any deadlines
this agency is imposing upon you. You not only did not provide this information, but you
also stated at another point in your application that you were not receiving any financial
assistance from the government. In addition, you failed to explain how you have cared
for 10,000 addicts with only the assistance of volunteers. That is, in your initial
application documents, you stated, “today more than 10,000 people had participated in
this rehabilitation program.” When we asked for further information about this statement,
you replied, “approximately 10,000 citizens in public events in admittance and assisting
group counseling with members of our clinic and religious communities.” Thus, it is
unclear whether 10,000 people have been through your drug rehabilitation program,
have attended public events that you have held, or have been in your group counseling
sessions.

As the U.S. Court of Federal Claims stated in New Dynamics Found., 70 Fed. Cl. 782, “It is well-
accepted that, in initial qualification cases . . . gaps in the administrative record are resolved
against the applicant,” adding that courts “can draw inferences adverse to a taxpayer seeking
exempt status where the taxpayer fails to provide evidence concerning its operations, or where
the evidence is vague or inconclusive.” Id. at 802. Thus, the gaps in the administrative record
in this case, combined with your failure to provide conclusive and clear documentation
concerning your operations, leads us to infer that you are not operating for an exempt purpose
under section 501(c)(3).

In conclusion, based on the information you submitted to us, we are unable to make a
reasonable determination of the issues raised in your application. The information you
submitted is, on different occasions, insufficient, incomplete, inconsistent, or contradictory and,
thus, taken as a whole, inadequate. In all, you have not provided an open and candid disclosure
of all the facts bearing upon your organization and operations. Accordingly, it is our
determination that you fail to qualify for exemption under section 501(c)(3) of the Code because
you failed to prove that your operations will be exclusively in furtherance of exempt purposes.
Thus, you do not satisfy the operational test under section 501(c)(3).

For these reasons, we conclude that you do not qualify for recognition of exemption from federal
income tax under section 501(c)(3) of the Code, and you must file federal income tax returns.

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, over the signature
of one of your principal officers or directors:

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 IRS will consider the failure to protest as a failure to exhaust
available administrative remedies. Section 7428(b)(2) of the Code 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 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.

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

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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, contact the person whose name and telephone number are shown in
the heading of this letter.

Sincerely,

A

Robert Choi
Director, Exempt Organizations
Rulings & Agreements