Dealer advertising cooperative loses section 501(c)(6) exemption

Plain-English summary

A self-declared association of automobile dealerships pooled dealer contributions to fund advertising for vehicles from one manufacturer in a defined television market. The IRS concluded that the association had a common business interest and meaningful member support, and it found no inurement. But its sole meaningful activity was advertising one branded family of vehicles, which performed particular services for members instead of improving conditions for the automobile industry as a whole. Under section 501(c)(6) and Treasury Regulation section 1.501(c)(6)-1, that single-brand focus prevented business-league status. Because the organization had never applied on Form 1024 or received recognition, the examination report said its status technically could not be revoked, but the PATH Act required treating the determination as a revocation for section 7428 declaratory-judgment purposes. The final letter revoked its self-declared status effective January 1 of the redacted year.

Ruling snapshot

• Question: Did the dealer advertising cooperative qualify as a business league under section 501(c)(6)?
• Outcome: revocation
• Key authorities: IRC §§ 501(a), 501(c)(6), 6033, and 7428; Treas. Reg. § 1.501(c)(6)-1; P.L. 114-113, § 406; Rev. Rul. 67-77

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
1100 Commerce Street, MC 4920
Dallas, TX 75242

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

Date: 10/20/2016

Release Number: 201706018
Release Date: 2/10/2017

UIL Code: 501.03-00 Taxpayer Identification Number:

Tax Period Ended:
December 31, 20XX

Person to Contact:
Identification Number:
Contact Information:

Telephone:
Fax:

CERTIFIED MAIL — Return Receipt Requested

Dear

This is a final determination that you do not qualify for exemption from Federal income tax under
Internal Revenue Code (the “Code”) section 501(a) as an organization described in Code section
501(c)(6) for the tax period(s) above.

Your exempt status is hereby revoked effective January 1, 20XX.
Our adverse determination as to your exempt status was made for the following reason(s):

An organization exempt under Code section 501(c)(6) must provide for the exemption of business
leagues and similar organizations. Treasury Regulations 1.501(c)(6)-1, defines a business league as an
association of persons having a common interest, whose purpose is to promote a common business
interest. It has been determined that you are not operated exclusively for the promotion of common
business interests of your members and you are not an organization described in section 501(c)(6).

If you decide to contest this determination, you may file an action for declaratory judgment under the
provisions of section 7428 of the Code in one of the following three venues:

1) United States Tax Court,
2) the United States Court of Federal Claims, or

3) the United States District Court for the District of Columbia. A petition or complaint in one of
these three courts must be filed within 90 days from the

date this determination letter was mailed to you. Please contact the clerk of the appropriate court for
rules and the appropriate forms for filing petitions for declaratory judgment by referring to the enclosed
Publication 892. You may write to the courts at the following addresses:

United States Tax Court
400 Second Street, N.W.
Washington, D.C. 20217

U.S. Court of Federal Claims
717 Madison Place, N.W.
Washington, D.C. 20439

U.S. District Court for the District of Columbia
33 Constitution Ave., N.W.
Washington, D.C. 20001

Processing of income tax returns and assessment of any taxes due will not be delayed should a petition
for declaratory judgment be filed under section 7428 of the Internal Revenue Code.

You may also be eligible for help from the Taxpayer Advocate Service (TAS). TAS is an independent
organization within the IRS that can help protect your taxpayer rights. TAS can offer you help if your
tax problem is causing a hardship, or you've tried but haven't been able to resolve your problem with the
IRS. If you qualify for TAS assistance, which is always free, TAS will do everything possible to help
you. Visit www.taxpayeradvocate.irs.gov or call 1-877-777-4778.

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

Sincerely yours,

Enclosures:
Publication 892
Envelope

Margaret Von Lienen
Director, EO Examinations

Department of the Treasury
Internal Revenue Service
Tax Exempt and Government Entities
IRS Exempt Organizations Examinations
1100 Commerce St, MC 4957 DAL
Dallas, TX 75242-1100

Date:
May 20, 2016
Taxpayer Identification Number:

Form:
990
Tax Year(s) Ended:

December 31, 20XX
Person to Contact / ID Number:

Contact Numbers:
Telephone:
Fax:
Manager's Name / ID Number:

Manager's Contact Number:
Telephone:

Response due date:
June 24, 20XX

Certified Mail-Return Receipt Requested

Dear

Why you are receiving this letter
We propose to revoke your status as an organization described in section 501(c)(6) of the

Internal Revenue Code (Code). Enclosed is our report of examination explaining the proposed
action.

What you need to do if you agree
If you agree with our proposal, please sign the enclosed Form 6018, Consent to Proposed Action

- Section 7428, and return it to the contact person at the address listed above (unless you have
already provided us a signed Form 6018). We'll issue a final revocation letter determining that
you aren't an organization described in section 501(c)(6).

Effect of revocation status
If you receive a final revocation letter, you'll be required to file federal income tax returns for the

tax year(s) shown above as well as for subsequent tax years.

What you need to do if you disagree with the proposed revocation

If you disagree with our proposed revocation, you may request a meeting or telephone
conference with the supervisor of the IRS contact identified in the heading of this letter. You also
may file a protest with the IRS Appeals office by submitting a written request to the contact
person at the address listed above within 30 calendar days from the date of this letter.

The Appeals office is independent of the Exempt Organizations division and resolves most

disputes informally.

For your protest to be valid, it must contain certain specific information including a statement of
the facts, the applicable law, and arguments in support of your position. For specific information
needed for a valid protest, please refer to page one of the enclosed Publication 892, How to
Appeal an IRS Decision on Tax-Exempt Status, and page six of the enclosed Publication 3498,

The Examination Process. Publication 3498 also includes information on your rights as a
taxpayer and the IRS collection process. Please note that Fast Track Mediation referred to in

Publication 3498 generally doesn't apply after we issue this letter.

You also may request that we refer this matter for technical advice as explained in Publication

892. Please contact the individual identified on the first page of this letter if you are considering
requesting technical advice. If we issue a determination letter to you based on a technical
advice memorandum issued by the Exempt Organizations Rulings and Agreements office, no
further IRS administrative appeal will be available to you.

Contacting the Taxpayer Advocate Office is a taxpayer right
You have the right to contact the office of the Taxpayer Advocate. Their assistance isn't a
substitute for established IRS procedures, such as the formal appeals process. The Taxpayer
Advocate can't reverse a legally correct tax determination or extend the time you have (fixed by
law) to file a petition in a United States court. They can, however, see that a tax matter that
hasn't 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:

Internal Revenue Service
Office of the Taxpayer Advocate

For additional information
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,

Margaret Von Lienen
Director, EO Examinations

Enclosures:

Report of Examination
Form 6018
Publication 892
Publication 3498

Schedule number or exhibit

Form 886-A
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Year/Period ended
Dec. 31, 20XX

ISSUE:

Whether qualifies for

recognition of tax exempt status under section 501(c)(6) of the Internal Revenue Code (hereinafter
‘Code’) for the calendar year tax period ending December 31, 20XX.

FACTS:

is an association of authorized (hereinafter ‘ ’) automobile dealerships in
the of that sell automobiles within the — family of vehicles (
, or some combination thereof). It was organized to function as a — a term
that originates from and is defined by

The is a program designed by in order to leverage
advertising and promotional efforts on a market-by-market basis. Its goal is to improve new-vehicle,
retail and wholesale parts, service, accessories, and certified used/pre-owned retail sales and market
share in participating markets. offers participating dealers a complete portfolio of group and
individual dealer retail programs.

The group component of this program is also known as a

requires each of its to be individually incorporated and to fit within the geographic boundaries of
a designated market area defined by the Nielsen Company. Dealership participation is not compulsory.
A dealership may choose to enroll in the group component of

depending on its own business needs and applicable market conditions.

Upon meeting the basic requirements to qualify as an , each must choose whether to adopt a
turnkey approach or a custom approach. With a turnkey approach, the chooses to retain the
preferred retail marketing agency and pays a X percent administration fee to . With the custom
approach, the chooses to hire any qualifying retail advertising agency to handle all account
coordination, creative, production, and media activities. With this approach, collects a X.XX percent
administration fee.

If a dealership enrolls in an , an incremental contribution amount is added to the invoice for each
new car purchased from . Each dealership participating in the pays the same contribution
rate. The Board of Directors of each elects to contribute to the at a rate between a minimum

of X.X percent to a maximum of X percent of Manufacturers Suggested Retail Price (MSRP) of each
eligible vehicle invoiced to the dealer. The received funds are pooled in a cooperative advertising
account. sends a weekly report to each participating dealership which details the amount of
contributions made to date. After an individual dealer has made a contribution to an , it forfeits any
right or interest in the contributions. at its sole discretion may, based on business or market
considerations, decide to cap or eliminate contributions for certain vehicle models or trims.

Subject to program guidelines, the Board of Directors has the authority to decide on which media
expenses, creative and production expenses, and authorized non-media expenses the will incur.
Specifically, each has control over its own advertising content, as well as the ability to hire its own
advertising, media planning, and purchasing agencies. Up to XX percent of net contributions for each

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


Schedule number or exhibit

Form 886-A
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Year/Period ended

Dec. 31, 20XX

calendar year may be used to fund authorized non-media expenditures. encourages to
spend program funds on non-media expenditures only when substantial media levels are being
obtained. has the right to terminate or cancel any or the entire group component of at
any time, for any reason, upon 30 days’ prior written notice to all affected dealers. If the in a
designated market area is terminated by , any remaining contributions will be spent on media
in accordance with guidelines.

Since is the group component of for one particular market area, its dealerships make
contributions through new car invoices in the same manner required of other . The contributions
of the dealerships in the less administrative fees were deposited into a cooperative advertising
account.

used the turnkey approach for the relevant tax period. Under this approach, agreed
to use the advertising agency endorsed by ; , for its advertising campaigns.
is a division of , a publicly traded global marketing and corporate communications
company. is not a party to a written contract with or because
negotiates the terms of this contract for all that use the turnkey approach.

The only bank account used by is the cooperative advertising account. is the
recipient of substantially all disbursements paid from this account. Physical custody of

financial records is maintained by despite no agents or representatives of

serving on governing board.

has not submitted Form 1024, Application for Recognition of Exemption under Section 501(a),
or received a favorable ruling or determination letter granting recognition of tax-exempt status.

has filed Form 990, Return of Organization Exempt from Income Tax, for every tax period
starting in 20XX to current date. On these returns, it has declared itself to meet the criteria to be
described as exempt under section 501(c)(6) of the Code.

LAW:

Section 6033 of the Code provides that every organization (subject to certain exceptions) exempt from
taxation under section 501(a) shall file an annual return, stating specifically the items of gross income,
receipts, and disbursements, and such other information for the purpose of carrying out the Internal
Revenue laws as the Secretary may by forms or regulations prescribe.

Section 501(a) of the Code provides that certain organizations described in sections 501(c), 501(d), or
401(a) shall be exempt from taxation unless exemption is denied under another Code section.

Section 501(c)(6) of the Code exempts from Federal income tax organizations seeking to operate as
business leagues. The primary activity for these organizations must be improving business conditions
in one or more lines of business.

Section 1.501(c)(6)-1 of the Treasury Regulations defines a business league as an association of
persons having a common business interest, whose purpose is to promote the common business
interest and not to engage in a regular business of a kind ordinarily carried on for profit. Its activities are

Form 886-A (1-1994) Catalog Number 20810W Page 2 publish.no.irs.gov Department of the Treasury-Internal Revenue Service

Schedule number or exhibit

Form 886-A
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Year/Period ended

Dec. 31, 20XX

directed to the improvement of business conditions of one or more lines of business rather than the
performance of particular services for individual persons.

In Associated Industries of Cleveland v. Commissioner, 7 T.C. 1449, 1465 (1946), acq. 1947-1 C.B. 1
the Tax Court ruled that for purposes of section 501(c)(6) of the Code, the term “business” is construed
broadly. Interpreting the meaning of “business” under the predecessor of section 501(c)(6), "the term
‘business' is very comprehensive and embraces everything about which a person can be employed."

Rev. Rul. 55-444, 1955-2, C.B. 258 provides that an organization formed to promote the business of a
particular industry and that conducted a general advertising campaign to encourage the use of products
and services of the industry as a whole qualified for IRC 501(c)(6) exempt status notwithstanding that
such advertising to a minor extent constituted the performance of particular services for its members.

In Washington State Apples, Inc. v. Commissioner, 46 B.T.A. 64 (1942), acq., 1942-1 C.B. 17 an
association of apple growers that engaged in promoting the sale of apples grown in the state was held
exempt under the predecessor of IRC 501(c)(6) since its purpose was to promote the industry as a
whole and not members of the organization and to improve a line of business, even though its benefits
were limited to a particular geographic area.

Rev. Rul. 70-80, 1970-1 C.B. 130 provides that a nonprofit trade association of manufacturers, whose
principal activity was the promotion of its members' products under the association's required
trademark, did not qualify under IRC 501(c)(6).

Rev. Rul. 58-294, 1958-1 C.B. 244 provides that an association of licensed dealers in a certain type of
patented product did not qualify as a business league where the association owned the controlling
interest in a corporation holding the basic patent, was engaged mainly in furthering the business
interests of its member-dealers, and did not benefit people who manufacture competing products of the
same type covered by the patent.

Rev. Rul. 67-77, 1967-1 C.B. 138 provides that an association of dealers which sold a particular make

of automobile and that engaged in financing general advertising campaigns to promote the sale of that

make was not exempt because it performed particular services for its members rather than promoting a
line of business; i.e., the automotive industry as a whole.

Rev. Rul. 83-164, 1983-2 C.B. 95 provides that an organization whose members represented
diversified businesses that own, rent, or leased computers produced by a single computer
manufacturer did not qualify for exemption under IRC 501(c)(6).

Rev. Rul. 74-147, 1974-1 C.B. 136 provides that an organization that directed its activities to users of
computers made by diverse and competing manufacturers, had a common business interest
concerning the use of computers.

In National Muffler Dealers Association v. United States, 440 U.S. 472 (1979), the Supreme Court held
that an association of a particular brand name of muffler dealers did not qualify for IRC 501(c)(6) status
because it was not engaged in the improvement of business conditions of a line of business.

Form 886-A (1-1994) Catalog Number 20810W Page 3 publish.no.irs.gov Department of the Treasury-Internal Revenue Service

Schedule number or exhibit

Form 886-A
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Year/Period ended

Dec. 31, 20XX

In Pepsi-Cola Bottlers' Association, Inc. v. United States, 369 F.2d 250 (7th Cir. 1966), the Seventh
Circuit had concluded that that an association of the bottlers of a particular brand of soft drink was
promoting a line of business. The government had contended that it was not promoting a line of
business since the entire soft drink industry, rather than a particular brand, was the line of business.
The Service subsequently reiterated its position in Rev. Rul. 68-182, 1968-1 C.B. 263.

Rev. Rul. 68-182, 1968-1 C.B. 263 provides that it is the position of the Service that an organization
promoting a single brand or product within a line of business did not qualify for exemption from Federal
income tax under section 501(c)(6) of the Code.

In National Prime Users Group, Inc. v. United States, 667 F. Supp. 250 (D.C. Md. 1987), the court held
that an organization that served the needs of users of a specific brand of computer promoted only a
segment of a line of business and was not exempt under IRC 501(c)(6).

In Guide International Corporation v. United States, 948 F.2d 360 (7th Cir. 1991), the court concluded
that an association of computer users did not qualify for exemption under IRC 501(c)(6) because it
essentially benefitted only users of I.B.M. equipment.

In Automotive Electric Association v. Commissioner, 168 F.2d 366 (6th Cir. 1948) exemption under
section 501(c)(6) of the Code was denied to an association that published catalogues that listed only
products manufactured by the members.

The Protecting Americans from Tax Hikes Act of 2015 (PATH Act), P.L. 114-113, Section 406, expands
declaratory judgment rights under section 7428 to all section 501(c) and 501(d) organizations. As a
result of these expanded rights, the IRS will revoke (or treat as a revocation for declaratory judgment
purposes) any organization that no longer qualifies under the Code section for which tax-exemption
was granted or self-declared.

Section 7428 of the Code explains declaratory judgment relating to the status and classification of
exempt organizations. Declaratory judgment is a form of legally binding preventive adjudication in which
a party involved in an actual or possible legal matter can ask a court to conclusively rule on.

ANALYSIS AND POSITION:

has not applied with IRS to be recognized as exempt from Federal income taxes. Therefore,
IRS has not previously given consideration whether or not it qualifies for recognition of exempt
status. Its filing of Form 990 returns for calendar year 20XX was intended to fulfil its duty under section
6033 of the Code to file an annual information return with gross income and expenses. On each of its
returns, self-declared it meets the requisite criteria to be described in section 501(c)(6) of the
Code.

Section 501(c)(6) organizations are typically business leagues, chambers of commerce, boards of
trade, and similar organizations. In order to qualify for exemption under IRC section 501(c)(6) and
Treas. Reg. section 501(c)(6)-1, an organization must meet the following criteria:
• It must be an association of persons having a common business interest, and its purpose must
be to promote this common business interest

Form 886-A (1-1994) Catalog Number 20810W Page 4 publish.no.irs.gov Department of the Treasury-Internal Revenue Service

Schedule number or exhibit

Form 886-A
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Year/Period ended

Dec. 31, 20XX

• Its activities must be directed to the improvement of business conditions of one or more lines of
business as distinguished from the performance of particular services for individual members

• It must not be engaged in a regular business of a kind ordinarily carried on for profit

• No part of its net earnings may inure to the benefit of any private shareholder or individual

• Its primary activity cannot be performing particular services for members

• It must be a membership organization and have a meaningful extent of membership support

The starting point for analysis in determining whether there is a common business interest among
members of an organization is whether the organization serves a business purpose for its members.
is organized to promote the sale of branded automobiles in via tailored
advertising campaigns. Its members all operate from the same television market and have agreed to
pool resources to produce television advertising that benefits each. In Associated Industries of
Cleveland v. Commissioner, the term “business” is comprehensive. The promotion of automobiles

available for sale is one such “business” included within the meaning of this term. members
have a common business interest to promote the sale of automobiles within its designated advertising
market in

An organization properly described in section 501(c)(6) of the Code is also required to be funded to a
meaningful extent by its members. Because is funded exclusively by membership dues, it
has more than a meaningful amount of membership support.

An organization properly described in section 501(c)(6) of the Code is also not permitted to allow its net
earnings to inure to the benefit of a private individual. Despite its strict prohibition, neither the Internal
Revenue Code nor the Treasury Regulations specifically defines inurement. Nevertheless, its meaning
can be discerned by looking at related provisions. Section 1.501(c)(3)-1(c)(2) of the regulations states
that an organization is not exclusively operated for one or more exempt purposes if its net earnings

inure in whole or in part to the benefit of private shareholders or individuals. does not have
disbursements of funds to individual officers or members; it does not allow its net earnings to inure to
others.

The activities of an organization properly described in section 501(c)(6) of the Code must be directed to
the improvement of business conditions of one or more lines of business. This aspect must be
distinguished from the performance of particular services for individual members. The performance of
particular services for members does not preclude recognition of exemption unless it becomes the
primary activity. In Rev. Rul. 55-444, an organization formed to promote the business of a particular
industry and that conducted a general advertising campaign to encourage the use of products and
services of the industry as a whole qualified for IRC 501(c)(6) exempt status. Nevertheless, such
advertising to a minor extent constituted the performance of particular services for its members, which
is not an exempt purpose.

In Washington State Apples, Inc. v. Commissioner, an association of apple growers that engaged in
promoting the sale of apples grown was held exempt because it promoted the industry as a whole and
not its members. The association was limited to a particular geographic area but its membership was
not limited to a particular brand or by other intellectual property [trademarks, patents, industrial design
rights].

Form 886-A (1-1994) Catalog Number 20810W Page 5 publish.no.irs.gov Department of the Treasury-Internal Revenue Service

Schedule number or exhibit

Form 886-A
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Year/Period ended
Dec. 31, 20XX
principal activity is advertising; it is the sole purpose for which the organization was formed. Its
delegation of financial record-keeping to , its contracted marketing agency, supports that it
does not have additional meaningful activities aside from advertising. The advertising activity is
designed to increase sales of branded automobiles at dealerships in the relevant market.
Advertisements are limited to branded automobiles and claim the types of accolades ordinarily

seen in television and print advertising. In Rev. Rul. 70-80 an association of manufacturers, whose
principal activity was the promotion of its members’ products under the association's required
trademark, did not qualify under IRC 501(c)(6) because the association's principal activity was the
promotion of these products through various advertising media. The advertising claimed the superior
quality of the trademarked products and made no mention of comparable non-trademarked products.

A series of public administrative rulings have been issued for associations that limit their business
interest to certain products encumbered by intellectual property rights. In Rev. Rul. 58-294 an
association did not qualify for exemption under section 501(c)(6) in part because it did not benefit
people who manufactured competing products of the same type in the same line of business. In Rev.
Rul. 68-182 an association which promoted a single brand or product within a line of business did not
qualify for exemption as a business league. In Rev. Rul. 83-164 an organization whose members
promoted computer sales and service of products produced by a single computer manufacturer did not
qualify for exemption. In contrast, in Rev. Rul. 74-147 an organization directed its activities to users of
computers made by diverse and competing manufacturers. The common business interest was not
limited by trademark, patent, industrial design right, or other intellectual property.

Historically there have been similar associations which have attempted to limit their business interest
and membership to a particular brand. In National Muffler Dealers Association v. United States, the
Supreme Court held that an association of one particular brand name of muffler dealers did not qualify
as a business league. In Pepsi-Cola Bottlers’ Association, Inc. v. United States the court concluded that
an association of bottlers of one particular brand of soft drink was promoting a line of businesses. The
association’s line of business was promoting one particular brand of drink instead of promoting the soft
drink industry as a whole. In National Prime Users Group, Inc. v. United States the court held that an
organization that served only the needs of users of one specific brand of computer was not exempt as a
business league. In Guide International Corporation v. United States the court determined that an
association of computer users does not qualify for exemption as a business league because it
benefitted users of only one computer company. In Automotive Electric Association v. Commissioner
the court denied section 501(c)(6) exemption because it produced advertising that listed only products
manufactured by its members.

In Rev. Rul. 67-77 an association of automobile dealers which sold a particular make of automobile
engaged in financing general advertising campaigns to promote the sale of that particular make. The
association was determined not to be exempt because it was performing particular services for its
members rather than promoting the automobile industry as a whole. This set of circumstances is quite
similar to the facts at hand. is an association of automobile dealers which is limited to a
particular make of branded vehicles and which finances general advertising campaigns to promote
the sale of automobiles. This activity is geared towards the performance of particular services for
individual members. It is not directed to the improvement of business conditions for the automobile
industry in at-large.

Form 886-A (1-1994) Catalog Number 20810W Page 6 publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Schedule number or exhibit

Form 886-A
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Year/Period ended

Dec. 31, 20XX

Therefore, on the basis of its advertising being limited to branded vehicles, and having no other
meaningful activities, it is the position of the government that does not meet the requisite
criteria to qualify for exempt status under section 501(c)(6) of the Code. Its primary activity is
performing particular services for individual members.

The IRS does not recognize as tax exempt organizations that self-certify themselves to qualify for tax
exemption under section 501(c)(6) unless they have first submitted an application to request
recognition using Form 1024. Since is not recognized because it did not submit an
application, its tax exempt status cannot be revoked. However, under P.L. 114-113, section 406,

will be treated as if its tax exempt status were revoked for declaratory judgment purposes.

TAXPAYER’S POSITION:

agrees it does not qualify for exempt status under section 501(c)(6) of the Code for the
specific tax year in question.

CONCLUSION:

Based on the facts and application of the law, does not qualify for exempt status under
section 501(c)(6) of the Code for the specific tax year in question. Since IRS did not previously
recognize as tax-exempt, its tax exempt status cannot be revoked. However, it will be treated
as if its tax exempt status were revoked for declaratory judgment purposes.

Form 886-A (1-1994) Catalog Number 20810W Page 7 publish.no.irs.gov Department of the Treasury-Internal Revenue Service