IRS revokes an inactive civic organization's tax exemption

Plain-English summary

The IRS revoked a civic organization's exemption under IRC § 501(c)(4). The examination found that the organization had discontinued operations and therefore failed the operational test for social-welfare organizations. The revocation was made effective January 1 of the redacted year. The organization had signed a consent to the proposed action.

Ruling snapshot

• Question: Did the inactive organization continue to qualify for exemption under IRC § 501(c)(4)?
• Outcome: Revocation of exemption, effective January 1 of the redacted year.
• Key authorities: IRC § 501(c)(4); IRC § 7428.

Full text (IRS public release)

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

504-04.00
TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION Date:
Release Number: 201333017
Release Date: 8/16/2013
LEGEND April 11, 2013
ORG - Organization name Taxpayer Identification Number:

XX - Date Address - address Form:
Tax Year(s) Ended:
Person to Contact/ID Number:
Contact Number:
ORG Group Manager Contact Number:
ADDRESS

CERTIFIED MAIL — RETURN RECEIPT REQUESTED
Dear

In a determination letter dated August 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
letter with regard to your exempt status.

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 September
13, 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 for 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. 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.
Thank you for your cooperation.

Sincerely,

Nanette M. Downing
Director, EO Examinations

Enclosure:
Publication 892

Internal Revenue Service Department of the Treasury
Tax Exempt and Government Entities Division

Exempt Organizations: Examinations

625 Fulton Street, 5th Floor

Brooklyn, NY 11231

Date: 9/13/2012 Taxpayer Identification Number:
Form:
Tax Year(s) Ended:
ORG Person to Contact/ID Number:
ADDRESS 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 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.

You may also request that we refer this matter for technical advice as explained in Publication
892, Exempt Organization Appeal Procedures for Unagreed Issues. If a 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 revoking your 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

Letter 3610 (Rev 11-2003)
Catalog Number 34801V

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
Form 6018

Report of Examination
Envelope

2 Letter 3610 (Rev 11-2003)
Catalog Number 34801V

Form 886-A Schedule number or exhibit
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number | Year/Period ended

ORG EIN 20XX12

During our examination of your books and records, for the year ended December 31, 20XX, it
was noted that the organization discontinued operations as of December 31, 200XX.

In order to be exempt under IRC 501(c)(4), an organization must not be organized for profit but
operated exclusively for the promotion of social welfare. The concept of social welfare implies a
service or program directed at benefiting the community rather than a private group of
individuals.

As a result of your continued inactivity, we have determined that you fail to meet the operational test. Accordingly, we propose to revoke your exemption from Federal income tax as an
organization described in section 501(c)(4) of the Internal Revenue Code effective January 1,
20XX.

If you accept our findings, please sign and return the enclosed Form 6018,
Consent to Proposed Action — Section 7428.

Form 886-A (1-1994) Catalog Number 20810W Page publish.no.irs.gov Department of the Treasury-Internal Revenue Service