Determination 1319031: IRS denies exemption to a member-benefit association

Plain-English summary

The IRS finalized its denial of exemption under IRC § 501(c)(4) for a membership association that offered members limited medical indemnity benefits, discounts, health information, and scholarships. The association's membership was open to the public, but the IRS found that its principal activities primarily benefited members rather than the community as a whole. The IRS also found that the association operated in a commercial manner by selling memberships, collecting fees and insurance premiums, and paying marketing commissions. Because the association did not operate primarily to promote social welfare and had a substantial non-exempt business purpose, it was required to file Form 1120 for all open years.

Ruling snapshot

• Question: Did the membership association operate exclusively for the promotion of social welfare under IRC § 501(c)(4)?
• Outcome: Revocation, following an unprotested proposed adverse determination.
• Key authorities: IRC §§ 501(a), 501(c)(4), and 6110; Treas. Reg. § 1.501(c)(4)-1(a)(2).

Full text (IRS public release)

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Release Number: 201319031
Date: 5/10/2013
Date: December 19, 2012

Contact Person:
Identification Number:
Contact Number:
Employer Identification Number:
UIL: 501.00-00, 501.04-00
Form Required To Be Filed: 1120
Tax Years: All open years

Dear:

This is our final determination that you do not qualify for exemption from Federal income tax as
an organization described in Internal Revenue Code section 501(c)(4). Recently, we sent you a
letter in response to your application that proposed an adverse determination. The letter
explained the facts, law and rationale, and gave you 30 days to file a protest. Since we did not
receive a protest within the requisite 30 days, the proposed adverse determination is now final.

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.

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
show our proposed deletions. If you disagree with our proposed deletions, 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: October 26, 2012
Contact Person:
Identification Number:
Contact Number:
Fax Number:

UIL: 501.00-00, 501.04-00
Employer Identification Number:

LEGEND
Name1 =
Name2 =
Date1 =
Date2 =
Date3 =
Date4 =
Marketer =
$Value1 =
$Value2 =
$Value3 =
University =
Association1 =
Association2 =
Association3 =

Dear:

This decision revokes and supersedes our decision of August 31, 2012. We have considered
your application for recognition of exemption from Federal income tax under Internal Revenue
Code § 501(a). Based on the information provided, we have concluded that you do not qualify
for exemption under § 501(c)(4). The basis for our conclusion is set forth below.

Facts

You incorporated as a non-profit corporation on Date1, under the name Name1. Your initial
purposes were to receive, administer, and expend funds for charitable and educational
purposes focused on tax reform. On Date2, you changed your name to Name2 and filed
revised articles, changing your purposes to promote the adoption of “equitable health care
policies” through research and public education. You filed a second amendment to your articles
on Date3, expanding your purposes, limiting your membership to “small business employers,
(including persons who are self-employed),” and amending your dissolution procedures. On
Date4, you filed your latest amendments to your articles, expanding the membership to include
“employees.” Three years later, you amended your Bylaws to create a new category of
members, called “Reciprocal Association Members,” who are entitled to benefits by virtue of
their membership in an association with which you have an agreement.

You mailed your application for exemption under § 501(c)(4) on July , 20, over twenty-
five years after your incorporation.

The current purposes for which you are organized include: (1) promoting the adoption of
equitable health-care policies; (2) engaging in nonpartisan research, study, and analysis of the
health-care system for the benefit of your members and the public; (3) preparing educational
materials and conducting educational activities in support of your general purposes;
(4) sponsoring programs, including health-care benefit plans for the benefit of your members;
(5) conducting and sponsoring forums, lectures, and debates.

You are a membership association that provides your members access to limited medical
indemnity benefits, discounts on products and services, and information about health care and
other topics. Membership is open to the public; anyone is eligible to participate in the programs
by paying a fee, based on the programs chosen. Your members now include employers, both
large and small, the self-employed, employees, and retirees. To become a member, a person
must complete an application form and have the Board of Directors accept it. You have
approximately 30,000 members from all 50 states.

Marketing Agreements

You have marketing agreements with multiple firms to sell your memberships. A firm
receives a marketing fee for each type of membership it sells; fees are set out in each marketing
agreement and you pay specific fees for each membership.

Your largest marketing agreement is with Marketer. The marketing agreement authorizes
Marketer to sell your memberships to any interested individuals. The agreement establishes
the guidelines for Marketer to properly represent and advertise for you by developing and
managing “a marketing strategy to solicit individuals for membership.” Only licensed insurance
agents have authorization to sell memberships. For each product sold, Marketer receives a
monthly commission as long as the member remains active. Marketer does not have
authorization to sell to your existing members.

Products and Activities

You provide your members with discounts for various consumer programs and services,
access to limited medical indemnity benefits (“indemnity benefits”), information on health care
and other topics, and scholarship opportunities for medical related studies. Members choose
the type of membership they want based on the products and services they choose. While most
members purchase memberships that include the medical indemnity benefits, memberships are
available without it. The indemnity benefits are only available in states where the covering
insurance company has a license.

Depending on where they live and the plan they purchase, members have access to discounts
on many common consumer purchases. You offer discount programs for roadside assistance,
legal services, home warranties, extended service protection, auto protection, tradesmen
referral services, travel, dent repairs, pet services, home protection services, funeral services,
identity theft, magazines, and household appliances.

Your health-related programs and services include access to indemnity benefits, discounts on
various health care services, and information on health care issues. The health care services
include discounts on vision and dental care, prescription drugs, vitamins, and laboratory tests;
call-in nurse and doctor lines; doctor evaluations; accident benefits; emergency medical
transportation; term life insurance; hospital negotiation service; and international medical
services. You provide information on general health care, diseases, injuries, treatments,
providers, research programs, and clinical trials.

As stated in your literature, the indemnity benefits you offer are “limited,” they do not cover
all medical expenses nor provide comprehensive medical coverage. There are payment limits
for medical services in addition to limited coverage for certain persons and for those with pre-
existing conditions. If the member's costs exceed the stated limits, the member is responsible
for payment of additional amounts; neither you nor the insurance company will pay the extra
charges. The policies state, “This is not basic health insurance or major medical coverage and
is not designed as a substitute for basic health insurance or major medical coverage.”

Although you provide access to indemnity benefits, you are not an insurance company. You
do not provide the actual coverage to your members, nor do you assume any risk of economic
loss; a separate insurance company provides the indemnity benefit policies. For those members
who either cannot afford an individual health insurance policy or do not qualify for an employer-
provided plan, you provide them access to the indemnity benefits. You do not pay any of the
premiums from your general funds; rather, you collect dues from participating members and pay
the insurance company the premiums along with the related marketing agreement fees to your
marketing agencies.

You publish a magazine aimed at educating your readers on living a healthy lifestyle, accessing
community resources, and improving their mental health and well-being. You mail the magazine
to your members and any non-members who have requested a subscription; you also provide
free copies to medical and physician offices throughout the United States and at various
functions throughout the year. The magazine is also available to the public on your website for
no charge and the web visitor may request you mail them a free print copy.

In addition to providing the magazine on your public website, you post information on Federal
statutes and regulations that affect health care, proposed legislation relating to health-care
policies, and how the member may contact their representatives in Washington, DC, and their
own state. You also publish nonpartisan research and analysis regarding the health-care system
in America.

You provide scholarships to students studying medical subjects, such as nursing, medical
technology, dental hygiene, health-care assistance, and nutrition. The scholarship program
awards five $ scholarships each year covering a two-year period ($ per academic year)
and is available to all members, their children, and their grandchildren. Once applicants apply
to the program, your selection committee selects the awardees based on need and scholastic
excellence. You also fund a scholarship at University for students in the nursing school. The
selection committee, which is the Board of Directors, does not take into consideration the age,
gender, race, religion, or sexual orientation of the applicant, and the relatives (spouses, children,
parents, etc.) of the selection committee are not eligible to receive a scholarship. The scholarship
recipients do not need to continue their membership to renew the scholarship for the second year.

You state that you engage in advocacy for the health and well-being of your members and for
promoting the adoption of equitable health-care policies. You are a member of Association1,
Association2, and Association3. You also provide information on important health-care
initiatives to federal and state legislatures and executive branch officials.

You count as charitable activities your donations of a small percentage of your monthly
membership dues to your § 501(c)(3) charitable foundation and, if a member loses their job, or
is otherwise unable to pay for their benefits, you will extend the member's current level of benefits
coverage for three months.

Law

Section 501(a) of the Internal Revenue Code provides that an organization described in § 501(c)
is exempt from income taxation.

Section 501(c)(4) of the Code provides exemption from federal income tax for “[c]ivic leagues or
organizations not organized for profit but operated exclusively for the promotion of social welfare,”
and whose net earnings do not inure to the benefit of any private shareholder or individual.

Section 1.501(c)(4)-1(a)(2)(i) of the Income Tax Regulations states that an organization primarily
engaged in promoting the common good and general welfare of the people of the community is
operated exclusively for the promotion of social welfare. This includes an organization operated
primarily for bringing about civic betterments and social improvements.

Section 1.501(c)(4)-1(a)(2)(ii) explains that an organization whose primary activity is the carrying
on of a business in a manner similar to for-profit organizations is not operated primarily for the
promotion of social welfare.

Rev. Rul. 54-394, 1954-2 C.B. 131, stated that a nonprofit organization that provided antenna
services only to its members to enable them to receive television reception was not exempt as a
social welfare organization because the benefits were only available to members and not the
community in general.

In Rev. Rul. 62-167, 1962-2 C.B. 142, a nonprofit organization whose primary activity was to
retransmit TV signals, which were available to any television in the community, qualified for
exemption under § 501(c)(4) because its activities benefited the community in general.
Distinguishing Rev. Rul. 54-394, 1954-2 C.B. 131, in which the television services were available
only to members of the organization who paid membership fees and monthly maintenance charges,
this revenue ruling described an organization that operated its system for the benefit of all
television owners in the community and obtained memberships and contributions on a voluntary
basis. Therefore, the organization qualified for exemption under § 501(c)(4).

Rev. Rul. 73-349, 1973-2 C.B. 179, noted that an organization formed to purchase low-cost
groceries for its members was not exempt as a social welfare organization even though membership
was open to all individuals in the community. The members paid for the cost of the food and a
monthly service charge to cover operating costs. It operated primarily for the private benefit of its
members; any benefits to the community were not sufficient to meet the requirement that it operate
primarily for the common good and general welfare of the people of the community.

An organization provided sick benefits to its members and paid death benefits to member's
beneficiaries in Rev. Rul. 75-199, 1975-1 C.B. 160. Only individuals in a particular ethnic group
in a certain geographical area who were of “good moral character and health” could become
members. It was essentially a mutual self-interest organization, whose income provided direct and
economic benefits to its members; any benefit to the larger community was minor and incidental.
Therefore, it did not qualify for exemption under § 501(c)(4) of the Code. “Where the benefit from
an organization is limited to that organization’s members (except for some minor and incidental
benefit to the community as a whole), the organization is not operated exclusively for the promotion
of social welfare within the meaning of § 501(c)(4) of the Code.”

Rev. Rul. 75-199 distinguishes mutual benefit societies from social welfare organizations by
comparing Rev. Rul. 54-394 with Rev. Rul. 62-167. One organization only benefited its members
who paid membership fees and monthly charges, while the other organization made its services
available to everyone in the community.

The organization in Rev. Rul. 78-132, 1978-1 C.B. 157, facilitated the exchange of personal
services among its members, which was open to all individuals in a particular community. The
members received economic benefit even though they did not use cash for payment; every service
had a corresponding credit hour amount, which the organization tracked for each member. The
community realized minimal, if any, benefit from the organization. It was a private cooperative
enterprise that operated primarily for its members' economic benefit and was not exempt as a
social welfare organization under § 501(c)(4).

“[T]he exemption granted to social welfare . . . organizations is made in recognition of the benefit
which the public derives from their social welfare activities and we think it only fair to determine a
particular organization’s right to an exemption largely on the basis of the effect its operations have
on the public.” People's Educational Camp Society, Inc. v. Commissioner, 331 F.2d 923, 932 (2d
Cir. 1964), cert. denied, 379 U.S. 839 (1964).

The court in Contracting Plumbers Cooperative Restoration Corporation v. United States, 488 F.2d
684 (2d Cir. 1973), held that an organization did not promote the common good, even though its
activities benefited the community, because only members could utilize its services. It repaired
damage to city streets its members caused in the course of their plumbing activities, performing
the repairs in proportion to the member's payment for the services. However, it would not repair
damage created by non-member plumbers or other enterprises that burrow into the city streets.

The organization in Mutual Aid Association of the Church of the Brethren v. United States, 759 F.2d
792 (10th Cir. 1985), provided property and casualty insurance to members of the church and their
dependents. If a member left the church, the organization would cancel their insurance. The court
determined that the church did not promote social welfare because it sold insurance. The
organization operated as a mutual insurance company, not as a church. The court concluded that
the presence of a substantial non-exempt purpose, such as insurance for its members in return for
premiums, precluded the organization’s exempt status under § 501(c)(4) as an organization
primarily engaged in the promotion of social welfare.

In American Association of Christian Schools Voluntary Employees Beneficiary Association Welfare
Plan Trust v. United States, 850 F.2d 1510 (11th Cir. 1988), a tax-exempt association of schools
formed a trust to provide health, hospital, disability, life, accidental death and dismemberment,
dental, and prescription drug insurance to its member schools’ employees and their dependents
and beneficiaries. Citing Mutual Aid Association of the Church of the Brethren, 759 F.2d 792, the
court held that since the Trust had a substantial private purpose of providing insurance to its members
in return for premiums, it was not an organization exclusively engaged in the promotion of social
welfare under § 501(c)(4).

The organization in Vision Service Plan v. United States, No. 04-cv-1993, 2005 WL 3406321 (E.D.
Cal. Dec. 12, 2005), provided eye care services to the employees of its subscriber companies. VSP
claimed that it was exempt under § 501(c)(4) because it served broad segments of the community
through direct services and charitable activities. The court found that servicing small employers or
rural subscribers did not equate to promoting social welfare. Additionally, the services VSP provided
for the Medicaid, Medicare, and Healthy Families contracts were profitable, its charitable activities
were insubstantial compared to its profits, and the executive compensation packages, cost-cutting
measures, and business practices with the public were paid and operated in a manner similar to
for-profit organizations.

The tax court found that an insurance trust organization, created to provide its members access to
insurance at group rates, was not exempt under § 501(c)(4). New York State Association of Real
Estate Boards Group Insurance Fund v. Commissioner, 54 T.C. 1325 (1954), nonacq. on different
grounds, 1974-2 C.B. 5, action on dec., 1974 AOD LEXIS 146 (Sept. 6, 1974). The organization
offered benefits only to its employer members and their employees. “[W]here the primary economic
benefit from an organization is limited to that organization's members, the organization is not
operated exclusively for the social welfare within the meaning of the statute.” Id. at 1333. The
organization did not have “the requisite civic concern to constitute ‘social welfare,’ and therefore . . .
[did] not qualify for tax exemption under § 501(c)(4).”

Analysis/Rationale

Social Welfare

As described in § 501(c)(4), an organization organized as a nonprofit and operated exclusively for
the promotion of social welfare may be exempt from federal income tax under § 501(a). An
organization operates exclusively for the promotion of social welfare if it is primarily engaged in
promoting the common good and general welfare of the people of the community; this includes
organizations operated primarily for bringing about civic betterments and social improvements. See
§ 1.501(c)(4)-1(a)(2)(i).

If an organization operates primarily for the benefit of its members, rather than for the community as
a whole, it is not operating exclusively for the promotion of social welfare. See N.Y. State Ass'n. of
Real Estate Bds. Group Ins. Fund, 54 T.C. at 1333. “[W]here the primary economic benefit from
an organization is limited to that organization's members, the organization is not operated
exclusively for the social welfare within the meaning of the statute.” Id. An organization’s right to
exemption under § 501(c)(4) depends “largely on the basis of the effect its operations have on the
public.” People’s Educ. Camp Soc'y, Inc., 331 F.2d at 932.

Even if the community benefits incidentally, an organization that provides its services exclusively,
or at a preferential price, to its members does not promote the common good or general welfare.
See Contracting Plumbers Coop. Restoration Corp., 488 F.2d at 687; see also Vision Service Plan,
2005 WL 3406321 at 4. The organizations in Rev. Rul. 75-199 and Rev. Rul. 78-132 were both
denied § 501(c)(4) exemption because the benefit to the community was minimal. The first
organization provided sick benefits to its members and paid death benefits to members' beneficiaries.
Only individuals in a particular ethnic group in a certain geographical area who were of “good moral
character and health” could become members. The organization was essentially a mutual, self-
interest organization whose income provided direct and economic benefits to its members; any
benefit to the larger community was minor and incidental. Similarly, the second organization
facilitated the exchange of personal services among members, operating primarily for the private
benefit of its members. It was a private cooperative enterprise that operated primarily for its members'
economic benefit; the community realized minimal, if any, benefit from the organization.

Similar to the organization in New York State Association of Real Estate Boards Group Insurance
Fund, 54 T.C. 1325, you offer your members access to low cost indemnity benefits. Like the
organization in Rev. Rul. 75-199, you are a mutual, self-interest organization, operating for the
benefit of your members rather than the community as a whole. Your programs are not available to
non-members; the only products non-members can access are the magazine and the information on
your website. “[T]he fact that an organization promotes health care, or is part of the health care
industry, does not, alone, ensure exempt status within the tax code.” Vision Service Plan, 2005 WL
3406321 at 4.

Merely offering membership to anyone in the community does not fulfill the requirement to promote
the common good and social welfare. See Rev. Rul. 73-349. Although you accept all individuals
that apply for membership and pay the appropriate fees, this is not enough to contribute to the social
welfare of the community.

You state that besides providing access to low cost benefits and services to your members, you also
publish a free healthy living magazine, contribute to your § 501(c)(3) foundation and other charitable
organizations, and offer scholarships for medical related studies. In addition to posting the magazine
on your public website, the website also presents information about federal health care laws and
regulations so your members may easily contact their representatives in Washington, DC.

While the above activities are worthy, they are not your primary activities. Your magazine resembles
public relations material more than a medical information magazine. Compared to your gross
revenues, your average amount of charitable contributions from 20-20 is negligible, averaging
less than ** and ** percent. Additionally, the amount of contributions has decreased every one of
the last four years. In 20, your charitable contributions were ** percent (%) of your gross
receipts; 20 contributions were ** percent (%); 20 contributions were ** percent (%); and
in 20, contributions were less than ** percent (%). Even adding in the amounts spent on the
magazine and scholarships, the figures do not noticeably change but merely jump to an average of
** percent (**%) of your gross revenues for that four-year period.

You did not demonstrate that you are “primarily engaged in the promotion of social welfare.” Vision
Service Plan, 2005 WL 3406321 at 8. Rather, you are a “privately-devoted endeavor.” Id. Like the
members of the organization in Vision Service Plan, your members “enjoy the benefit of [the]
services precisely to the extent that members use and pay for the services.” Id. Serving only the
interests of your members is clearly a non-exempt purpose. Additionally, you did not establish that
any benefit the community might derive from your members having access to indemnity benefits and
other discounted services is more than incidental, remote, and tenuous.

Therefore, because your activities benefit only your members, rather than the community as a whole,
you do not operate primarily for bringing about civic betterments and social improvements under
§ 1.501(c)(4)-1(a)(2)(i).

Commerciality

If an organization’s primary activity is carrying on a business with the public in a manner similar to
for-profit organizations, then it does not operate primarily for the promotion of social welfare.
Section 1.501(c)(4)-1(a)(2)(ii). For example, an organization that provided property and casualty
insurance to members of its church was not exempt as a social welfare organization because selling
insurance was its primary activity. Mutual Aid Assoc. of the Church of the Brethren, 759 F.2d at 796.
It operated as a mutual insurance company, not as a church, and carrying on a business similar to a
for-profit business as the primary activity precluded the organization's exempt status.

Likewise, the court found that Vision Service Plan operated for the benefit of its members and in a
similar fashion to for-profit businesses. “VSP’s services are most beneficial to private paying members,
the subscribers and the enrollees. . . . [M]embers of VSP enjoy the benefit of VSP’s services precisely
to the extent that members use and pay for the services. Serving the interests of these private
subscribers is clearly a non-exempt purpose.” See Vision Service Plan, 2005 WL 3406321 at 8.

You operate in a commercial manner by facilitating access for your members to purchase indemnity
benefits and other discounted products and services in exchange for a fee, but you do not provide
the services and products yourself. Additionally, you contract with marketing companies to sell your
memberships to individuals, paying the companies fees based on the membership level sold; only
licensed insurance agents have authorization to sell your memberships. Once a member joins and
chooses an indemnity benefit, you collect the premiums as a part of the membership fee then remit
the premiums to the insurance companies and pay the associated commission to the selling agents.

You are similar to the trust created by a tax-exempt association of schools to provide various kinds of
insurance to its member schools' employees. American Association of Christian Schools Voluntary
Employees Beneficiary Association Welfare Plan Trust v. United States, 850 F.2d 1510. The court
stated that since the trust had “a substantial private purpose to provide insurance in return for
premiums, it [was] not an organization exclusively engaged in the promotion of the social welfare.”

You also provide members the ability to remain in the member programs for three months without
charge when they have lost their job, other than for work-related misconduct or by voluntarily quitting.
However, if a member was unemployed when they joined, they are not eligible for this program. This
program does not promote social welfare as it only benefits your members.

In fiscal years 20-20, you collected an average of $Value1 in fees from your members. During
that same time, you paid an average of $Value2 for member benefits, which included indemnity
benefit premiums and service fees, and an average of $Value3 in commissions to your marketing
organizations, the majority of which went to Marketer. These two expenses combined account for
an average of **% of your total expenses; adding the remaining expenses in, you spend very little on
charitable or social welfare activities.

You operate for a substantial private purpose, selling indemnity benefits and other discounted
services in exchange for a fee, and carry on activities similar to the activities of for-profit businesses.
Because your primary activity is the carrying on of a business in a manner similar to for-profit
organizations, you do not operate primarily for the promotion of social welfare and are not exempt
under § 501(c)(4).

Ruling

Based on the facts and circumstances, we find that you did not establish that you operate primarily
for bringing about civic betterments and social improvements as required by § 1.501(c)(4)-1(a)(2)(i).
Furthermore, you did not distinguish your activities from those carried on by for-profit businesses as
required in § 1.501(c)(4)-1(a)(2)(ii). Because you do not operate exclusively for the promotion of
social welfare as required by § 501(c)(4), you do not qualify for exemption under § 501(a).

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 must include 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. You should make this request
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. You can
find all forms and publications mentioned in this letter at www.irs.gov, Forms and Publications.

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:

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 she
received your fax.

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

Sincerely,

Holly O. Paz
Director, Rulings and Agreements