Blockchain and token enterprise denied charitable exemption

Plain-English summary

An organization applied for section 501(c)(3) status claiming that it would research rising healthcare costs and publish information for consumers, providers, and policymakers. Its websites and whitepaper, however, described a blockchain platform for healthcare claims, a token or coin offering, governance and development of the commercial platform, token holdings expected to appreciate, and overlapping control with a wholly owned for-profit S corporation. The IRS concluded that providing and promoting the blockchain technology was a commercial enterprise and unrelated trade or business, not educational activity or scientific research carried on in the public interest. The organization also furthered the private interests of the for-profit subsidiary and token stakeholders. The IRS denied exemption, and the decision became final after no protest was filed.

Ruling snapshot

• Question: Did the healthcare-blockchain organization operate exclusively for educational, scientific, or charitable purposes under section 501(c)(3)?
• Outcome: denied because substantial commercial activities and private benefit displaced the asserted exempt purposes
• Key authorities: IRC §§ 501(c)(3), 513; Treas. Reg. § 1.501(c)(3)-1; Rev. Rul. 54-305; Rev. Rul. 69-528; Rev. Rul. 72-369; Rev. Rul. 76-206

Full text (IRS public release)

Scanned document; transcription proofread page by page from the official IRS scan. Clear OCR errors were corrected, including bullet markers, regulation paragraph labels, spaced section references, and a stray quotation mark; wording is otherwise verbatim.

Department of the Treasury
Internal Revenue Service

P.O. Box 2508
IRS Cincinnati, OH 45201

Date:

February 5, 2019
Release Number: 201918019 Employer ID number:
Release Date: 5/3/2019
UIL Code: 501.00-00, 501.35-00, 501.36-00 Contact person/ID number:

Contact telephone number:
Form you must file:

Tax years:

Dear

This letter is our final determination that you don’t qualify for tax-exempt status under Section 501(c)(3) of the
Internal Revenue Code (the Code). Recently, we sent you a proposed adverse determination in response to your
application. The proposed adverse determination explained the facts, law, and basis for our conclusion, and it
gave you 30 days to file a protest. Because we didn’t receive a protest within the required 30 days, the proposed
determination is now final.

Because you don’t qualify as a tax-exempt organization under Section 501(c)(3) of the Code, donors can’t
deduct contributions to you under Section 170 of the Code. You must file federal income tax returns for the tax
years listed at the top of this letter using the required form (also listed at the top of this letter) within 30 days of
this letter unless you request an extension of time to file.

We’ll make this final adverse determination letter and the proposed adverse determination letter available for
public inspection (as required under Section 6110 of the Code) 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 the Notice
437 on how to notify us. If you agree with our deletions, you don’t need to take any further action.

We’ll also notify the appropriate state officials of our determination by sending them a copy of this final letter
and the proposed determination letter (under Section 6104(c) of the Code). You should contact your state
officials if you have questions about how this determination will affect your state responsibilities and
requirements.

Letter 4038 (Rev. 7-2014)
Catalog Number 47632S

If you have questions about this letter, you can contact the person listed at the top of this letter. If you have
questions about your federal income tax status and responsibilities, call our customer service number at
1-800-829-1040 (TTY 1-800-829-4933 for deaf or hard of hearing) or customer service for businesses at
1-800-829-4933.

Sincerely,

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements

Enclosures:

Notice 437

Redacted Letter 4036, Proposed Adverse Determination Under IRC Section 501(c)(3)
Redacted Letter 4038, Final Adverse Determination Under IRC Section 501(c)(3) - No Protest

Letter 4038 (Rev. 7-2014)
Catalog Number 47632S

Department of the Treasury
Internal Revenue Service
Cincinnati, OH 45201
Date:

November 19, 2018
Employer ID number:

Contact person/ID number:
Contact telephone number:

Contact fax number:

Legend: UIL:

R = State 501.00-00
S = Date 501.35-00
T=Term 501.36-00
V=Term

W = Term

X = Organization

y = Number

Dear

We considered your application for recognition of exemption from federal income tax under Section 501(a) of
the Internal Revenue Code (the Code). Based on the information provided, we determined that you don’t qualify
for exemption under Section 501(c)(3) of the Code. This letter explains the basis for our conclusion. Please
keep it for your records.

Issues
Do you qualify for exemption under Section 501(c)(3) of the Code? No, for the reasons stated below.

Facts

You incorporated in the state of R on S. According to your Articles of Incorporation, you are organized
exclusively for charitable, religious, educational, and scientific purposes as specified in Section 501(c)(3) of the
Code. Upon dissolution, your Board of Directors shall, after paying or making provision for the payment of all
of the liabilities of the Corporation, distribute all the assets of the Corporation to one or more organizations then
qualified under Section 501(c)(3).

According to your application, you hope to advance the availability and quality of healthcare through research,
education and increased transparency that facilitates leadership development, quality outcomes, and informed
investment decisions in the healthcare delivery system.

You assert that, despite rising healthcare costs and costs to finance Medicare, Medicaid and other public health
programs, there is insufficient information that can be used to help consumers, policymakers, and healthcare
providers understand the underlying cost drivers of healthcare to determine how best to reduce such costs.

Your stated mission is to promote and conduct independent research and analyses on the causes of rising health
spending and to provide stakeholders with better, more transparent information on what is driving health care
costs, with the goal of discovering ways to reduce them. Ultimately, you would like the results to be used to
help consumers, health care providers, states and the federal government control spending while improving
health care access, efficiency and outcomes.

You hope to study various characteristics of health care costs, such as medical costs, insurance coverage,
reimbursement models, and consumer health care expenses and distribute this information to improve overall
health care. The study you want to design would use the results of your research, along with existing data sets,
to study and help others study the health care system, evaluate existing and new ways to contain costs, and
assess quality.

Your initial research will focus on the healthcare claims process — the costs associated with the process and how
improvements can impact access to healthcare. Research will be primarily conducted, under supervision of a
lead researcher, by your research assistants who will use multiple inputs such as: data sets provided by The
Centers for Medicare and Medicaid and data sets available from commercial insurers; interviews with providers
and payers to identify areas of deficiency; and online polling to providers and consumers.

The research assistants will conduct literature and data reviews and then design the research study, collecting
and analyzing the various modes of data. They will prepare the interview questions, identify and interview
subjects, and maintain records of interviews. They will provide this information to their lead researcher and/or
supervisor. Results of the research will be summarized and published electronically on your website, as well as
sent to a subscription user base via email.

You will be operated primarily by volunteers except for the researchers who will be paid as independent
contractors and eventually as employees. You hope to obtain funding through grants and donations. Any monies
raised will be used to pay the researchers and to educate policy makers, consumers and providers about the
results of your research.

You provided your website address. Your website states that you are a non-profit organization that hopes to
advance the availability and quality of healthcare for Americans through research, education, and increased
transparency. It also states you are focused on connecting payers with providers, thereby reducing healthcare
expenses. Your website also includes information about you that substantially departs from the information you
provided in your application. The website states that you will provide a blockchain platform that enables all
stakeholders to share information in a secure environment.

Your website provides a direct link to another website, which has the same web address as yours with a
different domain suffix. This second website provides more information about blockchain technology. The
second website states that the problem is that traditional, centralized systems are slow, redundant, and
expensive. Providers and payers must each employ their own staff and maintain separate software stacks to
facilitate their medical claims processes. These isolated systems make the sharing of basic information not only
difficult and costly, but prone to errors and fraud.

The second website describes a T platform which is advantageous over the current information systems because
it uses smart contracts and blockchain technology designed to service the healthcare industry. Specifically, the

Letter 4036 (Rev. 7-2014)
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3

blockchain provides four advantages: no central agent is required to approve transactions; transactions can’t be
altered or deleted once added to the chain via consensus; all nodes contain a copy of the blockchain data,
removing a central point of failure; and transactions in the blockchain are visible to all parties with appropriate
access to decrypt and review.

The website also explains why you are a non-profit organization. You feel strongly the only effective way to
solve the challenges in administrative expenses within the healthcare industry is to have an organization with
characteristics that match the blockchain as best possible. For this reason, the best current business entity for
this is a non-profit. Having a non-profit business structure allows for transparency and stakeholder feedback
through a board of directors comprised of healthcare payers, providers, and financial institutions. This will
provide the strong governance model required for the continuing development and maintenance of a blockchain
that also allows industry stakeholders a chance to collaborate and drive down expenses while meeting their
common needs.

Information posted on the second website states that there is an S-Corp incorporated in R and fully held by you.
The corporation is governed by you, as a non-profit entity, to ensure strong governance. Financials will all roll
up to you, and you are bound by strict financial reporting requirements providing a high level of financial
transparency.

The second website contains a whitepaper that states the T business model, combined with blockchain
technology, will increase the efficiency and effectiveness of the healthcare industry as a whole. Your vision is
to reduce costs of authorization and settlement services while providing insurers current data for actuarial
models and increasing the use of Healthcare Savings Accounts managed by banks.

The whitepaper describes you as the business entity which creates, maintain, and provides updates to the public
T blockchain. It explains that you are a non-profit entity whose core objective is the establishment of the T
platform to reduce the cost of healthcare and make it more affordable to patients. It further explains that your
board contains stakeholders from the banking, payer, and provider space to drive adoption of the T platform
while conforming to the industries’ specific needs. It further states that the software is free to use. The only
expense to an organization wishing to utilize the platform is the initial purchase of digital assets. When the
platform is launched, a relatively insignificant expense would be incurred for a stakeholder. As the platform is
more fully utilized the shares must be purchased at market value and should thus increase in value as demand
for the shares increases. The shares themselves behave as an asset of the business.

The whitepaper describes the process of obtaining healthcare services and the number of steps involved in
claims processing. The multiple steps and involvement of each individual stakeholders’ internal processes
results in a costly system, the expenses of which are passed on to subscribers of the healthcare plan. You assert
that no intermediary has been able to provide a solution to address the expenses of the claims submission
process, because the need for trust and control is too great for a traditional business model to meet. T addresses
this by providing a blockchain platform, governed by a non-profit business entity responsible for developing
and maintaining the platform.

This platform is freely available to all parties and uses a V concept. V allows for a blockchain participant to
‘prove’ they are a member of the decentralized blockchain by possessing tokens (or coins) that represent their
‘stake’ in the blockchain. This V provides for voting rights, smart contract creation/alteration, authorization of
funding methods, and generation of ‘gas’ to process transactions on the chain. Basing the technology solution

Letter 4036 (Rev. 7-2014)
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4

on V allows T to then adapt a non-profit organizational business model to provide an equal level of
transparency and governance that is provided by the technology platform.

The purpose of T as a business entity is to update the publicly available software used for the blockchain under
the recommendations of the advisory board members who are representative of all three stakeholder types:
payers, providers, and financial institutions. You are the business entity which creates, maintains, and provides
updates to the public T blockchain. You are a non-profit entity whose core objective is the establishment of the
T platform to reduce the costs of healthcare and make it more affordable to patients.

You provided additional information as part of the application process, in which you explained that all activities
related to the blockchain are occurring in a fully held subsidiary S-Corporation formed in the state of R under
the name X. You state that neither creating nor deploying blockchain technology is part of your mission or
operating activities. You will, however, use any data produced by the platform for educational and research
related work.

The website states that you will initially fund yourself and the development of the blockchain from the proceeds
of an initial crowd sale or initial coin offering (“ICO”). The website also indicates that a full crowd sale for you
is open. X’s revenue comes from the appreciating value of the shares. Possession of W allows for the T end user
to ‘vote’ on proposed software changes. In this manner, the shares act as a proxy for stock in the organization.
Ancillary revenue streams are possible through patient opt-in of record sharing with drug manufacturers and
medical device manufacturers.

You said that the confusion between your website and the second website should be resolved when X moves
from the second website to a third one that has yet to be created. The second website will forward users to the
third website. You also state that you have corrected the language which indicated that you will fund yourself
from an ICO; X will fund itself this way.

You assert your role to X is to provide oversight with a higher level of financial transparency than is required
from privately held firms. You said that many entities operating in the blockchain space are either fraudulent, or
at best, deceiving those who have participated in the creation of their platforms. You feel that the non-profit
filing requirements are the most transparent way to reveal financial information available to you. Thus, you
interact with X in the following ways:

a) Your board of directors will also serve as the board of directors for X. This provides a method of public
acknowledgement through annual 990 filings of any compensation to directors due to X.

b) You will hold y million W. These will be held and distributed to participants and developers on the
platform. Since you will be holding these instead of X, this will provide transparency to other
participants in the blockchain.

You said that you have not generated any revenue to date. You expect that whitepapers on your research will be
sold to interested parties and you will generate fees from speaking engagements and seminars. The subsidiary
organization, X, has also not generated any revenue. Expectations are that adoption of a functional blockchain
will create an economic ecosystem wherein holding digital assets will become a proxy for the value of the
system. Alternate streams of revenue are also being explored.

Letter 4036 (Rev. 7-2014)
Catalog Number 47630W

Law

Section 501(c)(3) of the Code provides for exemption from federal income tax of organizations organized and
operated exclusively for charitable, educational, scientific, and other purposes, provided that no part of the net
earnings inures to the benefit of any private shareholder or individual.

Section 513(a) of the Code defines the term "unrelated trade or business" as any trade or business the conduct of
which is not substantially related (aside from the need of the organization for income or funds or the use it
makes of the profits derived) to the exercise or performance by such organization of its exempt purpose or
function.

Section 513(c) of the Code provides that the term "trade or business" includes any activity which is carried on
for the production of income from the sale of goods or the performance of services. An activity does not lose its
identity as a trade or business merely because it is carried on within a larger aggregate of similar activities or
within a larger complex of other endeavors which may or may not be related to the exempt purposes of the
organization.

Treasury Regulation Section 1.501(c)(3)-1(a)(1) provides that, in order to be exempt as an organization
described in Section 501(c)(3) of the Code, an organization must be both organized and operated exclusively for
one or more of the purposes specified in such section. If an organization fails to meet either the organizational
test or the operational test, it is not exempt.

Treas. Reg. 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 of more of
such exempt purposes specified in Section 501(c)(3) of the Code. An organization will not be so regarded if
more than an insubstantial part of its activities is not in furtherance of an exempt purpose.

Treas. Reg. Section 1.501(c)(3)-1(d)(1)(ii) states that an organization is not operated exclusively for one or
more exempt purposes unless it serves a public rather than a private interest. It must not be operated for the
benefit of designated individuals or the persons who created it.

Treas. Reg. Section 1.501(c)(3)-1(d)(3)(i) defines the term educational as the instruction or training of the
individual for the purpose of improving or developing his capabilities or the instruction of the public on subjects
useful to the individual and beneficial to the community.

Treas. Reg. Section 1.501(c)(3)-1(d)(5)(i) provides that an organization may meet the requirements of Section
501(c)(3) only if it serves a public rather than a private interest. A ‘scientific’ organization must be organized
and operated in the public interest. The term ‘scientific’ therefore includes the carrying on of scientific research
in the public interest.

Treas. Reg. Section 1.501(c)(3)-1(d)(5)(ii) further provides that scientific research does not include activities of
a type ordinarily carried on as an incident to commercial or industrial operations, as, for example, the ordinary
testing or inspection of materials or products or the designing or construction of equipment, buildings, etc.

Treas. Reg. Section 1.501(c)(3)-1(d)(5)(iii) provides, in part, that scientific research will be regarded as carried
on in the public interest if the results of such research (including any patents, copyrights, processes, or formulae

Letter 4036 (Rev. 7-2014)
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6

resulting from such research) are made available to the public on a nondiscriminatory basis and such research is
directed toward benefiting the public.

Treas. Reg. Section 1.501(c)(3)-1(e)(1) provides that an organization may meet the requirements of Section
501(c)(3) although it operates a trade or business as a substantial part of its activities, if the operation of such
trade or business is in furtherance of the organization's exempt purpose or purposes and if the organization is
not organized or operated for the primary purpose of carrying on an unrelated trade or business, as defined in
Section 513. In determining the existence or nonexistence of such primary purpose, all the circumstances must
be considered, including the size and extent of the trade or business and the size and extent of the activities
which are in furtherance of one or more exempt purposes. An organization which is organized and operated for
the primary purpose of carrying on an unrelated trade or business is not exempt under Section 501(c)(3).

Revenue Ruling 54-305, 1954-2 C.B. 127, concerns an organization whose purposes are to secure for hospitals
and other charitable institutions the advantages of cooperation in establishing uniform standards as to quality
and kind of supplies and the purchasing of the same, and to promote the economical and efficient administration
of hospitals and other institution and to establish and maintain a central purchasing agency. The ruling holds
that operating and maintaining a purchasing agency for the benefit of otherwise unrelated members who are
exempt from federal income tax as charitable organizations would be unrelated activities if carried on by any
one of the tax-exempt organizations served. Therefore, the organization is not entitled to exemption under
Section 101 (the precursor of Section 501(c)(3)).

Rev. Rul. 69-528, 1969-2 C.B. 127, found that “an organization regularly carrying on an investment service
business that would be unrelated trade or business if carried on by any of the exempt organizations on whose
behalf it operates, is not exempt under Section 501(a).” This organization was, “free from the control of the
participants and [had] the absolute and uncontrolled discretion in (1) investment of the property, (2) sale of
investments and reinvestment of the proceeds, (3) payment of taxes and liens, (4) distributions of income and
principal or the addition of accumulated income to principal, and (5) dealing with the property and managing
the funds as if it were absolute owner thereof.”

Rev. Rul. 72-369, 1972-2 C.B. 245, concerns an organization formed to provide managerial and consulting
services for nonprofit organizations exempt under Section 501(c)(3) of the Code to improve the administration
of their charitable programs. The organization enters into agreements with unrelated nonprofit organizations to
furnish managerial and consulting services on a cost basis. The ruling states that the provision of managerial
and consulting services on a regular basis for a fee is a trade or business ordinarily carried on for profit. The fact
that the services in this case are provided at cost and solely for exempt organizations is not sufficient to
characterize this activity as charitable within the meaning of Section 501(c)(3). Furnishing the services at cost
lacks the donative element necessary to establish this activity as charitable. Accordingly, the ruling holds that
the organization's activities are not charitable and, therefore, the organization does not qualify for exemption
under Section 501(c)(3).

Rev. Rul. 76-206, 1976-1 C.B. 154, considered an organization formed to promote broadcasting of classical
music in a particular community. The organization carried on a variety of activities designed to stimulate public
interest in the classical music programs of a for-profit radio station, and thereby enable the station to continue
broadcasting such music. The activities included soliciting sponsors, soliciting subscriptions to the station's
program guide, and distributing pamphlets and bumper stickers encouraging people to listen to the station. The
organization's board of directors represented the community at large and did not include any representatives of

Letter 4036 (Rev. 7-2014)
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7

the for-profit radio station. The ruling concludes that the organization's activities enable the radio station to
increase its total revenues and therefore benefit the for-profit radio station in more than an incidental way.
Therefore, the organization is serving a private rather than a public interest and does not qualify for exemption.

In Better Business Bureau of Washington, D.C. Inc. v. United States, 326 U.S. 279 (1945), the Supreme Court
determined that, while some activities of the organization were educational, a substantial purpose of the
organization was to promote business, and thus the organization was not operating exclusively for educational
purposes. It held 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 Parker v. Commissioner, 365 F.2d 792. 799 (8th Cir. 1963), the Court of Appeals affirmed the findings of
Tax Court that foundation was pursuing a substantially non-exempt purpose in the publication and commercial
exploitation of the writings of the founder, director and prime functionary of foundation. The founder had
control of the foundation's day to day activities, complete control of its finances and the founder’s personal
funds were to a degree commingled with the funds of the foundation, and that the evidence clearly supported
the finding that the foundation was pursuing a substantial non-exempt purpose.

Application of law

You are not described under Section 501(c)(3) of the Code or Treas. Reg. Section 1.501(c)(3)-1(a)(1) because
you do not meet the operational test. A substantial part of your activities does not further exempt purposes. You
create, maintain, develop, promote, and provide governance and direction to the development of blockchain
technology as a commercial enterprise. As stated in Treas. Reg. Section 1.501(c)(3)-1(c)(1), an organization is
operated exclusively for one or more exempt purposes only if it primarily engages in activities which
accomplish such exempt purposes.

Providing blockchain technology to payers, providers, and financial institutions for use in the conduct of their
businesses is not educational within the meaning of Treas. Reg. Section 1.501(c)(3)-1(d)(3)(i). To qualify as a
scientific organization under Section 501(c)(3) of the Code, an organization must serve a public rather than a
private interest as described in Treas. Reg. Section 1.501(c)(3)-1(d)(5)(i). Your activities are aimed at
promoting a type of technology to benefit payers, providers, and financial institutions. Your activities are also
not considered scientific research as described in Treas. Reg. Section 1.501(c)(3)-1(d)(5)(ii), because it
excludes activities ordinarily carried on in a commercial manner. For the above reasons you do not meet the
qualifications for conducting scientific research per the regulations.

Treas. Reg. Section 1.501(c)(3)-1(e) infers that an organization that is organized and operated for the primary
purpose of carrying on an unrelated trade or business does not meet the requirements of Section 501(c)(3) of the
Code, as illustrated in Rev. Rul. 54-305. Providing blockchain technology, engaging in the public offering of W
to finance the technology, and providing a means to increase the value of W to holders is an activity which is
carried on for the production of income from the sale of goods or the performance of services, as defined in
Section 513(a) and 513(c) of the Code. You are engaged in such activities would be deemed organized and
operated for the primary purpose of carrying on an unrelated trade or business, and, consequently, would fail to
meet the requirements of Section 501(c)(3).

Your activities are like those described in Rev. Rul. 69-528. This ruling held that if a tax-exempt organization
provides investment services for a fee to another unrelated tax-exempt organization, such activity would
constitute an unrelated trade or business. Thus, it was reasoned that an organization formed for the sole purpose

Letter 4036 (Rev. 7-2014)
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8

of providing such services is not described in Section 501(c)(3) of the Code because it is organized and operated
for the primary purpose of carrying on an unrelated trade or business.

You are like the organization described in Rev. Rul. 72-369 because your services are not inherently charitable.
You do not qualify for exemption under Section 501(c)(3) of the Code because you operate in a manner similar
to a trade or business ordinarily carried on for profit. Although you said you aren’t conducting the blockchain
activities, have provided no evidence that these are activities being carried out by any other entity other than
yourself. Your website and all the links and whitepapers contained therein indistinguishably entangles your
activities with the activities of X. Even if you were to provide documentation that these activities are being
conducted through the wholly-held subsidiary, you are still providing governance and direction to the
commercial operation, you are holding ownership of the enterprise through possession of y million shares of W,
you are offering these W for sale to the public, and you intend to report the financial transactions through your
990 returns. In effect, these activities are attributable to you.

Like the organization in Rev. Rul. 76-206, because you are furthering the business interests of a for-profit
enterprise, you are serving a private rather than a public interest. Treas. Reg. Section 1.501(c)(3)-1(d)(1)(ii)
states an organization is not operated exclusively for exempt purposes unless is serves a public rather than a
private interest. As in Parker, your activities of publishing a whitepaper and hosting a website that advertises
and promotes the T blockchain technology, as well as offering W for sale, are commingled to such a degree
with a for-profit subsidiary, that they are furthering a private, non-exempt purpose. Per Better Business Bureau
of Washington, D.C. Inc., a substantial non-exempt purpose will destroy exemption regardless of the number or
importance of truly exempt purposes.

Conclusion

Based on the above facts and analysis you do not qualify for exemption under Section 501(c)(3) of the Code
because you are not operated exclusively for exempt purposes. The facts show you are engaging in non-exempt
operations to a substantial degree and benefitting a private interest, a for-profit enterprise, rather than a public
interest. Accordingly, we conclude you do not qualify for exemption under Section 501(c)(3).

If you don’t agree
You have a right to file a protest if you don’t agree with our proposed adverse determination. To do so, you
must send a statement to us within 30 days of the date of this letter. The statement must include:

• Your name, address, employer identification number (EIN), and a daytime phone
number

• A copy of this letter highlighting the findings you disagree with
• An explanation of why you disagree, including any supporting documents
• The law or authority, if any, you are relying on

• The signature of an officer, director, trustee, or other official who is authorized to sign for the
organization, or your authorized representative

• One of the following declarations:

Letter 4036 (Rev. 7-2014)
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9

For an officer, director, trustee, or other official who is authorized to sign for the organization:
Under penalties of perjury, I declare that I examined this protest statement, including

accompanying documents, and to the best of my knowledge and belief, the statement contains all
relevant facts and such facts are true, correct, and complete.

For authorized representatives:

Under penalties of perjury, I declare that I prepared this protest statement, including
accompanying documents, and to the best of my knowledge and belief, the statement contains all
relevant facts and such facts are true, correct, and complete.

Your representative (attorney, certified public accountant, or other individual enrolled to practice before the
IRS) must file a Form 2848, Power of Attorney and Declaration of Representative, with us if he or she hasn’t
already done so. You can find more information about representation in Publication 947, Practice Before the
IRS and Power of Attorney.

We’ll review your protest statement and decide if you provided a basis for us to reconsider our determination. If
so, we'll continue to process your case considering the information you provided. If you haven’t provided a
basis for reconsideration, we’ll forward your case to the Office of Appeals and notify you. You can find more
information about the role of the Appeals Office in Publication 892, How to Appeal an IRS Decision on Tax-
Exempt Status.

If you don’t file a protest within 30 days, you can’t seek a declaratory judgment in court at a later date because
the law requires that you use the IRS administrative process first (Section 7428(b)(2) of the Code).

Where to send your protest
Please send your protest statement, Form 2848, if needed, and any supporting documents to the applicable

address:

U.S. mail: Street address for delivery service:
Internal Revenue Service Internal Revenue Service

EO Determinations Quality Assurance EO Determinations Quality Assurance
Room 7-008 550 Main Street, Room 7-008

P.O. Box 2508 Cincinnati, OH 45202

Cincinnati, OH 45201

You can also fax your statement and supporting documents to the fax number listed at the top of this letter. If
you fax your statement, please contact the person listed at the top of this letter to confirm that he or she received
it.

If you agree

If you agree with our proposed adverse determination, you don’t need to do anything. If we don’t hear from you
within 30 days, we’ll issue a final adverse determination letter. That letter will provide information on your
income tax filing requirements.

Letter 4036 (Rev. 7-2014)
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10

You can find all forms and publications mentioned in this letter on our website at www.irs.gov/formspubs. If
you have questions, you can contact the person listed at the top of this letter.

Sincerely,

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements

Enclosure:
Publication 892

Letter 4036 (Rev. 7-2014)
Catalog Number 47630W