Other 201318018: IRS revokes an inactive organization's exemption

Plain-English summary

The IRS revoked an organization's exemption under section 501(c)(4) because it had stopped operating. During the examination, a representative said that the organization no longer conducted activities because most of its officers had died, and that its books and records could not be located. The IRS concluded that the organization no longer carried out activities serving an exempt purpose and revoked its status effective January 1, 20XX.

Ruling snapshot

• Question: Whether inactivity required revocation of the organization's exemption under section 501(c)(4).
• Outcome: Revocation.
• Key authorities: IRC § 501(c)(4); Treas. Reg. § 1.501(c)(4)-1.

Full text (IRS public release)

DEPARTMENT (: THE TREASURY

INTERNAL REVie JE SERVICE
TE/GE EO Examinations
1100 Commerce St.
Dallas, Texas 75242 501.04-00
TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION
Date: April 26, 2012
Number: 201318018
Release Date: 5/3/2013
LEGEND
eee Det nadecce. address Taxpayer Identification Number: Form: Tax Year(s) Ended: ORG Person to Contact/ID Number: ADDRESS Contact Numbers: Telephone: Fax:

CERTIFIED MAIL — RETRUN RECEIPT REQUESTED
Dear

In a determination letter dated January, 19XX, you were held to be exempt from Federal income tax under section 501(c)(4) of the Internal Revenue Code (the Code).

Based on recent information received, we have determined you have not operated in accordance with the provisions of section 501(c)(4) of the Code. Accordingly, your exemption from Federal income tax is revoked effective January 1°, 20XX. This is a final adverse determination letter with regard to your status under section 501(c)(4) of the Code.

We previously provided you a report of examination explaining why we believe revocation of your exempt status is necessary. At that time, we informed you of your right to contact the Taxpayer Advocate, as well as your appeal rights. On April 6, 20XX, you signed Form 6018- A, Consent to Proposed Action, agreeing to the revocation of your exempt status under section 501(c)(4) of the Code.

You are required to file Federal income tax returns for the tax period(s) shown above. If you have not yet filed these returns, please file them with the Ogden Service Center within 60 days from the date of this letter, unless a request for an extension of time is granted, or unless an examiner's report for income tax liability was issued to you with other instructions. File returns for later tax years with the appropriate service center indicated in the instructions for those returns.

You have the right to contact to 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 contact the person whose name and telephone number are shown at the beginning of this letter.

Sincerely,

Nanette M. Downing
Director, EO Examinations

DEPARTMENT OF THE TREASURY
Internal Revenue Service
TEGE EO Examinations
1100 Commerce Street
ae emcee coe Dallas, TX 75242

GOVERNMENT ENTITIES
DIVISION

March 10, 2011

Taxpayer Identification Number:

ORG
ADDRESS Form:

Tax Year(s) Ended:
Person to Contact/ID Number:

Contact Numbers:
Telephone:
Fax:

CERTIFIED MAIL — RETURN RECEIPT REQUESTED

Dear

We have enclosed a copy of our report of examination explaining why we believe an adjustment of your organization's exempt status is necessary.

If you do not agree with our position you may appeal your case. The enclosed Publication 3498, The Examination Process, explains 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.

If you request a conference, we will forward your written statement of protest to the Appeals Office and they will contact you. For your convenience, an envelope is enclosed.

If you and Appeals do not agree on some or all of the issues after your Appeals conference, or if you do not request an Appeals conference, you may file suit in United States Tax Court, the United States Court of Federal Claims, or United States District Court, after satisfying procedural and jurisdictional requirements as described in Publication 3498.

Letter 3610 (04-2002)
Catalog Number 34801V

You may also request that we refer this matter for technical advice as explained in Publication 892, Exempt Organization Appeal Procedures for Unagreed Issues. Ifa determination letter is issued to you based on technical advice, no further administrative appeal is available to you within the IRS on the issue that was the subject of the technical advice.

If you accept our findings, please sign and return the enclosed Form 6018, Consent to Proposed Adverse Action. We will then send you a final letter modifying or revoking exempt status. If we do not hear from you within 30 days from the date of this letter, we will process your case on the basis of the recommendations shown in the report of examination and this letter will become final. In that event, you will be required to file Federal income tax returns for the tax period(s) shown above. File these returns with the Ogden Service Center within 60 days from the date of this letter, unless a request for an extension of time is granted. File returns for later tax years with the appropriate service center indicated in the instructions for those returns.

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.

Letter 3610 (04-2002)
Catalog Numbcr 34801V

Thank you for your cooperation.

Sincerely,

Nanette M. Downing
Director, EO Examinations

Enclosures:
Publication 892
Publication 3498
Form 6018

Report of Examination
Envelope

Letter 3610 (04-2002)
Catalog Number 34801V

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

1. Whether revocation of the organization’s tax-exempt status, under IRC section 501(c)(4),
   is necessary because of inactivity.

FACTS:

The ORG is recognized as tax-exempt under section 501(c)(4) of the Internal Revenue Code. Ina phone conversation on March 9, 20XX, stated that the organization no longer conducts activities, due to the fact that the majority of the officers have passed away. He stated that he does not have the books or records and he does not know where they are.

LAw:

An organization exempt under Internal Revenue Code section 501(c)(4) is a civic league or organization not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes.

Treasury Regulations section 1.501(c)(4)-1 describes a civic organization as a civic league or organization that is not organized or operated for profit and is operated exclusively for the promotion of social welfare.

TAXPAYER’S POSITION

The EO has agreed to the revocation by signing form 6018-A on April 6", 20XX. GOVERNMENT’S POSITION

The ORG has not engaged in any activities which accomplish one or more of the exempt purposes specified in IRC section 501(c)(4), in the year under examination. Since the

organization no longer operates any activities related to their exempt purpose we are proposing revocation of the organizations exempt status.

CONCLUSION

The service is proposing revocation of the of the determination of the exempt status, under IRC 501(c)(4), of the ORG, with a revocation date effective January 1, 20XX, because the

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

Form 886A

Department of the Treasury - Internal Revenue Service
Explanation of Items

Schedule No. or
Exhibit

Name of Taxpayer

ORG

Year/Period Ended

December 31, 20XX

LEGEND

ORG —- Organization name XX - Date

organization has discontinued operations and no longer conducts any activities in accordance

with their exempt purpose.

Form 886-Arev.4-68)

Department of the Treasury - Internal Revenue Service

Page: -2-