Open-source software promotion fails the operational test

Plain-English summary

An organization sought recognition under IRC § 501(c)(3) for promoting the development and distribution of a free and open-source multimedia player. The IRS found that the organization had not shown how promoting third-party software furthered an exempt purpose. It also concluded that promoting code owned by directors, while linking to a page advertising some directors' paid consulting services, provided prohibited private benefits. The IRS rejected the claim that the software was a public work and found that publishing source code and documentation produced only incidental educational benefits. Because the organization did not protest or request Appeals review, the proposed denial became final.

Ruling snapshot

• Question: Did promoting and distributing an open-source multimedia player qualify the organization for exemption under IRC § 501(c)(3)?
• Outcome: Denied
• Key authorities: IRC § 501(c)(3); Treas. Reg. §§ 1.501(c)(3)-1(a), 1.501(c)(3)-1(c), and 1.501(c)(3)-1(d); Rev. Ruls. 59-310, 66-255, 66-358, 68-489, 70-186, 70-584, 71-29, 75-284, 77-365, 78-310, and 79-19

Full text (IRS public release)

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Release Number: 201505041
Release Date: 1/30/2015
Date: 11/06/2014
UIL Code: 501.00-00
501.03-00

Contact Person:
Identification Number:
Contact Number:
Employer Identification Number:
Form Required To Be Filed:
IRS Form 1120
Tax Years:
2011, 2012, 2013

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)(3). 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. We also sent you
a letter notifying you of your right to request a review of your application by the Appeals Office,
and gave you 30 days to request review in writing. Since we did not receive a protest or request
for review within the requisite 30 days, the proposed adverse determination is now final.

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.

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,

Tamera Ripperda
Director, Exempt Organizations

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: 03/06/2014

Contact Person:
Identification Number:
Contact Number:
FAX Number:
Employer Identification Number:

Legend:

Date =
Player =
State =
Player =
Website =

Dear

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)(3). The basis for our conclusion is set forth
below.

I. FACTS

You were incorporated under the laws of State on Date for § 501(c)(3) purposes. Specifically
your purposes are to coordinate and promote the development, production distribution and use
of Free and Open Source Software useful for recording, converting and playing audio and video,
including the program and the software library together known as Player; to make the software
available for free to the public to use, change, or distribute it as Free and Open Source
Software. Your activities consist of promoting the activities of an association of programmers
whom develop and maintain Player. You spend eighty percent of your time promoting Player,
which includes identifying and supporting important work on multimedia software across
community supported projects. Player records, converts, and streams multimedia files, and
related files. The programmers assemble Player from source and object code licensed by more
than 100 software developers worldwide, including almost all of your directors who are “the
world’s leading experts in the [Player].” Those developers, and your directors, own the code
they authored. Dozens of multimedia applications incorporate Player; many are commercial
programs. Player is downloaded thousands of times per month, but no one tracks who
downloads and uses the Player. Player is “essential to many other free and open source
video-related applications for use with the Linux operating systems, which is a no cost
alternative to expensive proprietary software.”

You describe three components of Player which you claim specifically serve exempt
organizations or other charitable classes. First, is code written to improve Player functionality
for the hearing impaired. Second, is improvements to code for digitally archiving videos used by
government archival agencies and nonprofit libraries. Third, by reverse engineering abandoned
and obscure video formats and building support for them into the Player, you hope Player users
would preserve archival footage and other media that might otherwise be lost forever. These
components are written and owned by private persons. However, you have not provided any
information as to how you support these purposes.

You also state the Player furthers an educational purpose because it “makes the technical
knowledge underlying the software universally available.” By publishing the source code and
documentation on a website anyone can study it. The Player code documentation is not
published on your Website. It is published on the website maintained by the association of
programmers. Your Website links to that website. Your Website does not include any this
documentation.

You connect mentors to students as part of the

and the

. They mentor student software
developers in developing projects related to the Player. A few of your directors and officers also
participate as mentors.

The programmers’ website your Website links to includes a “consulting” page advertising how to
hire any of seven programmers, including four of your directors, as an “expert, i.e. one of the
original developers... [we] highly recommend these people to be hired by your business.” A
brief bio of each describes their technical expertise and provides an e-mail address.

You do not require code licensors to assign to you their copyright, trademark, or other interests
in licensed code, although you may accept such assignments in the future. You will not enforce
copyrights, trademarks, or other intellectual property owned by private persons.

You will fundraise primarily in person, by e-mail, and by applying for grants. Your Website has a
donations page which accepts e-commerce donations. You also plan to persuade other
websites to link to your donation page.

II. LAW

Section 501(c)(3) exempts from taxation any corporation organized and operated exclusively for
religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to
foster national or international amateur sports competition, or for the prevention of cruelty to
children or animals, provided 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) provides that, in order to be exempt as an organization described in
§ 501(c)(3), an organization must be both organized and operated exclusively for one or more of
the purposes specified in § 501(c)(3). If an organization fails to meet either the organizational or
operational test, it is not exempt.

Section 1.501(c)(3)-1(b) provide that an organization is organized exclusively for one or more
exempt purposes only if its articles of organization limit the purposes of such organization to one
or more exempt purposes; and do not expressly empower the organization to engage, otherwise
than as an insubstantial part of its activities, in activities which in themselves are not in
furtherance of one or more exempt purposes.

Section 1.501(c)(3)-1(c)(1) provides that an organization will be regarded as “operated
exclusively” for one or more exempt purposes only if it engages primarily in activities which
accomplish one or more of such exempt purposes specified in § 501(c)(3). 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 1.501(c)(3)-1(d)(2) provides that the term “charitable” is used in § 501(c)(3) in its
generally accepted legal sense and includes, among other things, lessening the burdens of
government, relief of the poor and distressed or of the underprivileged, advancement of
education or science, erection or maintenance of public buildings, monuments, or works, and
promotion of social welfare by organizations designed to accomplish any of the above purposes,
or in part to defend human and civil rights secured by law.

Section 1.501(c)(3)-1(d)(3)(i) provides that the term educational relates to: (a) The instruction or
training of the individual for the purpose of improving or developing his capabilities; or (b) The
instruction of the public on subjects useful to the individual and beneficial to the community.

Section 1.501(c)(3)-1(d)(3)(ii)(Example 2) provides that an educational organization includes an
organization whose activities consist of presenting public discussion groups, forums, panels,
lectures, or other similar programs. Such programs may be on radio or television.

Rev. Rul. 59-310, 1959-2 C.B. 146, held that an organization that established, maintained, and
operated a public swimming pool, playground, and other recreation facilities for the children and
other residents of a community qualified for exemption under § 501(c)(3). Facility users were
primarily low income individuals who could not afford privately sponsored recreation facilities.

Rev. Rul. 66-255, 1966-2 C.B. 210, describes an educational organization providing public
information about a particular method of painless childbirth using meetings, films, forums, and
publications to educate the public. The organization carried out its exempt purpose through (a)
public programs of films followed by discussions with doctors and members of the organization;
(b) presentations on local radio stations; (c) meetings conducted by a doctor or a registered
nurse for expectant parents; and (d) pamphlets, manuals, and books which are distributed to
libraries, hospitals, and obstetricians.

In Rev. Rul. 68-489, 1968-2 C.B. 210, the Service held that an organization making grants to
foreign organizations that are not exempt under § 501(c)(3) does not jeopardize its exemption
where it retains control and discretion as to the use of the funds and maintains records
establishing that the funds granted to foreign organizations were used for its § 501(c)(3)
purposes.

Rev. Rul. 70-186, 1970-1 C.B. 128, held that an organization formed to preserve a lake as a
public recreational facility and to improve the condition of the water in the lake to enhance its
recreational features qualified for exemption under § 501(c)(3) as a charitable organization that
erected or maintained a public work. The ruling determined that, by treating the water,
removing algae, and otherwise improving the condition of the water, the organization ensured
the continued use of the lake for public recreational purposes and therefore performed a
charitable activity. Furthermore, the benefits of the organization's activities flowed principally to
the general public through the maintenance and improvement of public recreational facilities.

Rev. Rul. 70-584, 1970-2 C.B. 114, held that an organization that recruited college students for
government internship programs that related to their course of study qualified for exemption
under § 501(c)(3). The internship program advanced the students’ education because it trained
the individual for the purpose of improving or developing his capabilities in his chosen field of
study.

In Rev. Rul. 71-29, 1971-1 C.B. 150, we held that providing the city transit authority with the
funds necessary to insure that bus service for the city is continued, is a charitable disbursement
furthering exempt purposes. The charitable element in facilitating public transportation is
established in the Statute of Charitable Uses, 43 Eliz. I, c.4 (1601), which recognized as
charitable the ‘repair of bridges, ports, havens, causeways . . . and highways’.

Rev. Rul. 75-284, 1975-2 C.B. 202, held that an organization that provided high school
graduates and college students with uncompensated work experience in selected trades or
professions qualified for exemption under § 501(c)(3).

Rev. Rul. 77-365, 1977-2 C.B. 192, describes an educational organization that conducted
clinics, workshops, lessons, and seminars at municipal parks and recreational areas to instruct
and educate individuals in a particular sport.

Rev. Rul. 78-310, 1978-2 C.B. 173, held that an organization that provided law students with
practical experience in exempt public interest law firms and legal aid societies qualified for
exemption under § 501(c)(3).

In Rev. Rul. 79-19, 1979-1 C.B. 195, the Service held the physically handicapped are distressed
persons within the meaning of § 501(c)(3) and therefore a charitable class.

In Better Business Bureau of Washington, D.C., v. U.S., 326 U.S. 279, 66 S.Ct. 112 U.S. (1945)
the Supreme Court said that in order to fall within the claimed exemption, an organization must
be devoted to exempt purposes exclusively. This plainly means that the presence of a single
non-exempt purpose, if substantial in nature, will destroy the exemption regardless of the
number or importance of truly exempt purposes.

In Retired Teachers Legal Defense Fund v. Commissioner, 78 T.C. 280, 286 (1982) the tax
court defined private benefit to include any "advantage; profit; fruit; privilege; gain or interest."

In Columbia Park and Recreation Ass'n., Inc. v. C.I.R., 88 T.C. No. 1, 88 T.C. 1, pg. 25-26
(1987) the court concluded that an organization that developed and operated facilities and
services for a private real estate development of 100,000 residents, such as pathways (bicycle
and pedestrian), parks, swimming pools, neighborhood and community centers, tennis courts,
golf courses, a zoo, ice rink, boat docks, and athletic clubs, was not exempt because, in part,
control of the organization by residents was a personal interest within the meaning of
§ 1.501(c)(3)-2(c).

In American Campaign Academy v. C.I.R., 92 T.C. No. 66, 92 T.C. 1053 (1989) the court held
that an organization providing private benefit that was not incidental to Republican party entities
was not exempt. The organization trained campaign workers and all known graduates worked
for Republican party entities. The facts that no portion of the organization’s net earnings inured
to the benefit of private shareholders or individuals, and that the Republican entities were
unrelated third parties did not avoid disqualification under § 501(c)(3).

III. RATIONALE

An organization seeking tax-exempt status under § 501(c)(3) must be both organized and
operated exclusively for charitable, scientific, literary, educational, or other exempt purposes
with no part of its net earnings inuring to the benefit of any private shareholder or individual.
See § 1.501(c)(3)-1(a)(1). Purposes and activities with certain effects, such as prohibited
private benefit, more than insubstantial amount of lobbying, and campaign intervention, will
preclude exemption for an organization otherwise described in § 501(c)(3). If an organization
fails to meet either the organizational or operational test, it is not exempt. Based upon a review
of your activities, you are not described as a § 501(c)(3) organization as explained below
because you have a substantial non-exempt purpose.

A. Promoting The Development And Distribution Of Open Source Software Furthers
A Substantial Nonexempt Purpose

You have provided information that you are promoting the development and distribution of open
source compatible licensed software created by another organization. Section 1.501(c)(3)-
1(c)(1) provides that an organization will be regarded as “operated exclusively” for one or more
exempt purposes only if it engages primarily in activities which accomplish one or more of such
exempt purposes specified in § 501(c)(3). An organization will not be so regarded if more than
an insubstantial part of its activities is not in furtherance of an exempt purpose. The Supreme
Court held in Better Business Bureau v. United States, 326 U.S. 279 (1945), that a single
nonexempt purpose, if substantial in nature, would preclude an organization from qualifying
under § 501(c)(3) no matter the number or importance of truly exempt purposes.

Based on the information that you have provided, you have not been able to sufficiently
describe how your activities further exempt purposes as described in § 501(c)(3). You have not
shown that there is an underlying exempt purpose in promoting the third parties multimedia
software as described in § 1.501(c)(3)-1(c)(1) and Better Business Bureau v. United States.

B. Promoting Development And Distribution of Software Owned by Your Directors is
Private Inurement

Because you promote the development and distribution of software code owned by your
directors then you are providing them private inurement. Section 501(c)(3) precludes exemption
unless “no part of the net earnings of which inures to the benefit of any private shareholder or
individual.” No amount of private inurement is permitted. The benefit does not have to be
economic. See American Campaign Academy v. C.I.R., 92 T.C. No. 66, 92 T.C. 1053
(1989)(campaign training accrued to the benefit of unrelated Republican entities and
candidates). In Retired Teachers Legal Defense Fund v. Commissioner, 78 T.C. 280, 286
(1982) the tax court defined private benefit to include any "advantage; profit; fruit; privilege; gain
or interest."

At least four of your board members own code incorporated into Player. Private persons
generally own property for personal purposes which are not per se exempt purposes.
Moreover, your Website links to the association of programmers’ website that has a Consulting
Tab where some of your board members offer their consulting services to the public for a fee as
“the world’s leading experts in the [Software].” Your activities of ‘promoting’ the Player are
marketing activities that provide an “advantage; profit; fruit; privilege; gain or interest" to those
board members who own Player code. Because you provide private inurement within the
meaning of § 501(c)(3) you are not operated exclusively to further § 501(c)(3) exempt purposes.

C. Charitable Purposes: Software Is Not A Public Work

The development and distribution of software is not a public work even if published under open
source or creative commons compatible licenses because software is not a facility ordinarily
provided to the community at public expense. Section 1.501(c)(3)-1(d)(2) defines the term
charitable to include “erecting or maintaining public buildings, monuments, or works.” This
language slightly broadens the original formulation from four centuries ago. The Statute of
Charitable Uses, 43 Eliz. I, c.4 (1601) recognized as charitable the ‘repair of bridges, ports,
havens, causeways . . . and highways’. Quoted in Rev. Rul. 71-29. The regulation language
also closely parallels the synthesis provided by Restatement 3rd Trusts § 28 which defines
charitable to include government or municipal purposes such as the “construction or
maintenance of public buildings, bridges, streets, highways or other public facilities. . .” The
charitable purpose underlying public works is to provide the “community with facilities . . .
ordinarily provided at public expense.” See Comment (k) Restatement 3rd Trusts; Scott and
Ascher on Trusts 5th ed. § 38.6. This same consistency of language is also found in the
ordinary meaning of “public works” defined variously as: “[s]tructures, such as roads or dams
built by the government for public use and paid for by public funds.” Black’s Law Dictionary, 7th
ed.; “[a]ll works of a fixed nature, such as highways, canals, waterworks, docks, etc.,
constructed by public bodies for public use, protection, or enjoyment.” Ballentine’s Law
Dictionary; and, “construction or engineering operations carried out by or for the State or local
government on behalf of the community.” Oxford’s English Dictionary. Our rulings adhere very
closely to these definitions.

In Rev. Rul. 66-358, 1966-2 C.B. 218, the Service reasoned that establishing and maintaining a
public park is an activity similar to the erection or maintenance of public buildings, monuments,
or works and may qualify as charitable within the meaning of § 1.501(c)(3)-1(d)(2). In Rev. Rul.
70-186, 1970-1 C.B. 128, an organization formed to preserve a lake as a public recreational
facility and to improve the condition of the water in the lake to enhance its recreational features
qualified for exemption under § 501(c)(3) as a charitable organization that erected or maintained
a public work. The ruling determined that by treating the water, removing algae, and otherwise
improving the condition of the water, the organization ensured the continued use of the lake for
public recreational purposes and therefore performed a charitable activity. Furthermore, the
benefits of the organization's activities flowed principally to the general public through the
maintenance and improvement of public recreational facilities.

Our other rulings referring to § 1.501(c)(3)-1(d)(2) primarily ground their holdings in the
charitable basis of lessening the burdens of government. See Rev. Rul. 59-310, 1959-2 C.B.
146 (constructing, maintaining, and operating a public beach, playground, and bathing facilities
for the residents of the Cold Harbor School District No. 8 is lessening the burdens of
government where the property is dedicated to public use); Rev. Rul. 71-29, 1971-1 C.B. 150
(grant to city transit authority to facilitate public transportation until city can acquire assets of
privately owned bus company).

The regulations, restatements, treatises, and our rulings are remarkably consistent with the
original formulation in the Statute of Charitable Uses (1601). In the face of such consistency of
the key characteristics over four centuries we are constrained from extending the term public
works to encompass intangibles such as software. Even if we were not so constrained, we also
conclude that software fails several other key characteristics of public works.

You claim that the Player is a public work because it is not closed and proprietary and it benefits
more than the developers and those able to pay for a license to use closed software. The
“software is available freely on terms that allow others to use, study, modify, and even profit
from it without making any payment to [you].” It is part of “a public library that will always be free
to everyone.” The charitable purpose underlying public works is to provide the “community with
facilities . . . ordinarily provided at public expense.” See Restatement 3rd, supra; Scott and
Ascher 5th, supra.

First, software is not a facility. It is not a lake, park, or like any other public work described in
Rev. Rul. Rul. 66-359, Rev. Rul. 70-186, or any of the many other tax and trust authorities we
reviewed. Software is intangible, and by its very nature software is not fixed; its perpetual
existence and access by the public relies upon private persons hosting the code on private
servers, and anyone may alter the Player. Second, software is not “ordinarily provided at public
expense.” It is not something ordinarily constructed by public bodies for use by members of the
public. Third, a public work cannot be owned by private persons. The Player code is owned by
private persons. Fourth, even if the Player were otherwise a public work, the benefits of the
program flow to individuals who use it to watch movies and video for nonpublic purposes.
Anyone can appropriate it or portions of its code for nonpublic uses, which you encourage. We
described above how commercial companies use the Player to conduct their businesses. We
have not found any authority that authorizes a member of the public to use a public work for
nonpublic purposes. Finally, public works must serve a community. You point out that the open
source licensing ensures the Player serves the world. We have not found any authority for the
proposition that the world is a community within the meaning of § 501(c)(3). We think that
proposition untenable because it would include the governments of nations whom are our
enemies. Aiding our enemies does not further an exempt purpose.

Because open source software fails each of these essential tax attributes of public works you do
not qualify under § 501(c)(3) as an organization erecting or maintaining public buildings,
monuments, or works within the meaning of § 1.501(c)(3)-1(d)(2).

D. Educational Purposes

Providing product manuals, how-to guides, and documentation related to the Player does not
make an organization educational. The term “educational”, as used in § 501(c)(3) relates to (a)
the instruction or training of the individual for the purpose of improving or developing his
capabilities; or (b) the instruction of the public on subjects useful to the individual and beneficial
to the community. Section 1.501(c)(3)-1(d)(3)(i). The regulations provide several examples of
organizations that qualify as educational organizations, including “organizations whose activities
consist of presenting public discussion groups, forums, panels, lectures, or other similar
programs.” See § 1.501(c)(3)-1(d)(3)(ii), example (2). In Rev. Rul. 66-255, 1966-2 C.B. 210, an
organization formed to educate the public as to a particular method of painless childbirth carried
out its purpose through (a) public programs of films followed by discussions with doctors and
members of the organization; (b) presentations on local radio stations; (c) meetings conducted
by a doctor or a registered nurse for expectant parents; and (d) pamphlets, manuals, and books
which are distributed to libraries, hospitals, and obstetricians. The educational organization in
Rev. Rul. 77-365, 1977-2 C.B. 192, conducted clinics, workshops, lessons, and seminars at
municipal parks and recreational areas to instruct and educate individuals in a particular sport.

You claim the Player furthers an educational purpose because it “makes the technical
knowledge underlying the software universally available.” Publishing the source code and
documentation on a website is not educational. Any educational benefit people obtain by
independently studying these materials is incidental to the true objective of developing and
distributing a functional product; in this case software. Independent study is not like the
examples recited in the regulations: e.g. public discussion groups, forums, panels, lectures, or
other similar programs. See § 1.501(c)(3)-1(d)(3)(ii), example (2). Even if this were educational
you are merely linking to these materials published on a website of unknown provenance. You
are conducting a de minimis amount of educational activities described in the Revenue Rulings
above.

Your only educational activity is connecting mentors to students as part of the

and the

. They mentor
student software developers in developing projects related to the Player. A few of your directors
and officers also participate as mentors. You also propose to recruit other software
professionals to mentor students in developing projects related to the Player. Educational
organizations have recruited college students to participate in a government internship program
(Rev. Rul. 70-584), provided high school graduates and college students with uncompensated
work experience in selected trades and professions (Rev. Rul. 75-284), and provided law
students with practical experience in exempt public interest law firms and legal aid societies
(Rev. Rul. 78-310).

While connecting students with work experiences is similar to the organizations described
above you have not shown that this activity is a substantial exempt purpose. Therefore you
have not shown that you are operating for a substantial exempt purpose within the meaning of
§ 501(c)(3).

IV. CONCLUSION

Based on the above, we have determined that you fail to meet the requirements necessary to
be recognized as a tax-exempt organization under § 501(c)(3) because you are not operated
exclusively to further exempt purposes. 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:

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

Please send your protest statement, Form 2848 and any supporting documents to this address:

Internal Revenue Service

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

Sincerely,

Kenneth C. Corbin
Acting Director, Exempt Organizations

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