IRS revokes a business league's exemption for promoting two product brands rather than a whole line of business

Plain-English summary

The IRS revoked an organization's IRC § 501(c)(6) exemption as a business league. The group was an association of independent distributors ("marketers") who were all affiliated by contract with a single products company, and its "associate" members were suppliers who wanted to sell to those marketers. The IRS concluded the organization promoted two particular product brands and served its members' private business interests, rather than improving an entire line of business as section 501(c)(6) requires. It also found the associate members did not share a genuine common business interest with the regular members; they joined mainly to advertise and sell to the marketers through the group's directory and trade show. Relying on Treas. Reg. § 1.501(c)(6)-1, Revenue Rulings 59-391 and 68-182, and the Supreme Court's muffler-dealer decision (Midas franchisees, 440 U.S. 472), the IRS determined that revocation was warranted, so the group's earlier exemption determination is revoked and it must file federal income tax returns.

Ruling snapshot

• Question: Should the organization's exemption as a business league under IRC § 501(c)(6) be revoked?
• Outcome: Revocation.
• Key authorities: IRC §§ 501(a), 501(c)(6), and 7428; Treas. Reg. § 1.501(c)(6)-1; Rev. Ruls. 59-391 and 68-182; Associated Master Barbers & Beauticians v. Commissioner, 69 T.C. 53 (1977); and the Supreme Court decision at 440 U.S. 472 (1979) (muffler dealers franchised by Midas International Corporation).

Full text (IRS public release)

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

TAX EXEMPT AND
DIVISION

Date: April 16, 2020
Taxpayer ID Number:

Number: 202052025
Release Date: 12/24/2020 Form:

UIL: 501-06.00 For Tax Period(s) Ending:
Person to Contact:
Identification Number:
Telephone Number:

Fax Number:

CERTIFIED MAIL — Return Receipt Requested
LAST DAY FOR FILING A PETITION WITH THE TAX COURT:

Dear

This is a final determination that you do not qualify for exemption from federal income tax under
Internal Revenue Code (IRC) Section 501(a) as an organization described in IRC Section
501(c)(6) for the tax period(s) above. Your determination letter dated February 13, 20XX is
revoked.

Our adverse determination as to your exempt status was made for the following reasons:

You have not established that you are organized and operated exclusively for an
exempt purpose within the meaning of IRC Section 501(c)(6). You have not
established that you are an association of persons having common interest, the
purpose of which is to promote such common interest and not to engage in a regular
business of a kind ordinarily carried on for profit.

Organizations that are not exempt under IRC Section 501 generally are required to file federal
income tax returns and pay tax, where applicable. For further instructions, forms, and
information please visit www.irs.gov.

If you decide to contest this determination, you may file an action for declaratory judgment under
the provisions of IRC Section 7428 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 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, NW
Washington, DC 20217

U.S. Court of Federal Claims
717 Madison Place, NW
Washington, DC 20005

U. S. District Court for the District of Columbia
333 Constitution Ave., NW
Washington, DC 20001

Processing of income tax returns and assessments of any taxes due will not be delayed if
you file a petition for declaratory judgment under IRC Section 7428.

You may 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.

Taxpayer Advocate assistance can't be used as substitute for established IRS procedures,
formal appeals processes, etc. The Taxpayer Advocate is not able to reverse legal or
technically correct tax determination, nor extend the time fixed by law that you have to file a
petition in Court. The Taxpayer Advocate can, however, see that a tax matter that may not
have been resolved through normal channels gets prompt and proper handling.

You can get any of the forms or publications mentioned in this letter by calling 800-TAX-FORM
(800-829-3676) or visiting our website at www.irs.gov/forms-pubs.

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.

Sincerely,

Enclosures:
Publication 892

Maria D. Hooke
Director, EO Examinations

Department of the Treasury Date:
Internal Revenue Service 08/23/2018
Tax Exempt and Government Entities Division Taxpayer ID number:
IRS Exempt Organizations Examination

Form:

Tax periods ended:

Person to contact:

Employee ID number:
Telephone number:
Fax:

Address:

Manager's contact information:

Employee ID number:

Telephone number:
Response due date:

CERTIFIED MAIL — Return Receipt Requested
Dear
Why you're receiving this letter

If you agree

If you haven't already, please sign the enclosed Form 6018, Consent to Proposed Action, and return it to the
contact person shown at the top of this letter. We'll issue a final adverse letter determining that you aren't an
organization described in IRC Section 501(c)(6) for the periods above.

If you disagree

1. Request a meeting or telephone conference with the manager shown at the top of this letter.

2. Send any information you want us to consider.

3. File a protest with the IRS Appeals Office. If you request a meeting with the manager or send additional
   information as stated in 1 and 2, above, you'll still be able to file a protest with IRS Appeals Office after
   the meeting or after we consider the information.

The IRS Appeals Office is independent of the Exempt Organizations division and resolves most disputes
informally. If you file a protest, the auditing agent may ask you to sign a consent to extend the period of
limitations for assessing tax. This is to allow the IRS Appeals Office enough time to consider your case.
For your protest to be valid, it must contain certain specific information, including a statement of the
facts, applicable law, and arguments in support of your position. For specific information needed for a
valid protest, refer to Publication 892, How to Appeal an IRS Determination on Tax-Exempt Status.

Fast Track Mediation (FTM) referred to in Publication 3498, The Examination Process, generally doesn't
apply now that we've issued this letter.

Letter 3618 (Rev. 9-2017)
Catalog Number 34809F

4. Request technical advice from the Office of Associate Chief Counsel (Tax Exempt Government Entities)
   if you feel the issue hasn't been addressed in published precedent or has been treated inconsistently by the
   IRS.

If you're considering requesting technical advice, contact the person shown at the top of this letter. If you
disagree with the technical advice decision, you will be able to appeal to the IRS Appeals Office, as
explained above. A decision made in a technical advice memorandum, however, generally is final and
binding on Appeals.

If we don't hear from you
If you don't respond to this proposal within 30 calendar days from the date of this letter, we'll issue a final
adverse determination letter.

Contacting the Taxpayer Advocate Office is a taxpayer right

The Taxpayer Advocate Service (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 877-777-4778.

Additional information
You can get any of the forms and publications mentioned in this letter by visiting our website at
www.irs.gov/forms-pubs or by calling 800-TAX-FORM (800-829-3676).

If you have questions, you can contact the person shown at the top of this letter.

Sincerely,

Maria Hooke
Director, Exempt Organizations Examinations

Enclosures:

Form 886-A

Form 886-A Attachments (A through C)
Form 6018

Publication 892

Publication 3498

Letter 3618 (Rev. 9-2017)
Catalog Number 34809F

Form 886-A Department of the Treasury - Internal Revenue Service Schedule No. or Exhibit:
Explanation of Items
Name of Taxpayer Year/Period Ended
December 31, 20XX

Issues:

1. Whether ("organization") Internal Revenue Code ("IRC") Section ("Sec.")
   501(c)(6) exempt status should be revoked because it's an association of marketers of the
   branded products of a particular corporation.

Facts:

("organization") name is an acronym for

. Per testimony, the organization initially was a for-profit business which
started around 19XX. In 20XX, the organization expanded, solicited membership and operating
committees, and applied for exemption. The testimony coincides with Form 1024, Application
for Recognition of Exemption Under Section 501(a), and Letter 948 ("Letter 948"),
Determination Letter Recognizing Exemption Under IRC 501(a), other than IRC 501(c)(3). Per
Letter 948, the organization was recognized as an exempt organization under Internal Revenue
Code ("IRC") Section ("Sec.") 501(c)(6) as a business league on February 13, 20XX. The
effective date of exemption was December 4, 20XX.

Per the bylaws, the organization is organized for the following:
"A. To promote the interest of its members engaged in the sale and distribution of

B. To foster trade and commerce among and in the interests of those engaged therein

C. To promote and encourage beneficial and friendly relations among those engaged in the
supply, distribution and sale of said products;

D. To acquire and distribute amount its members information and statistics pertaining to the
industry in general, and to keep the consumer informed and advised as to the purchase
and economical and efficient use thereof:

E. To represent the as such before government agencies and other regulatory
bodies having to do with the business of its members:

Form 886-A (Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -1-

Form 886-A Department of the Treasury - Internal Revenue Service Schedule No. or Exhibit:
Explanation of Items
Name of Taxpayer Year/Period Ended
December 31, 20XX

F. To do any and all proper things for the advancement of the legitimate interests and
general welfare of its members;
G. And to promote and foster a high standard of business ethics, friendly cooperation, good
will and sociability among its members."

Per testimony provided on February 28, 20XX ("testimony"), by the Executive Director
(" "), organization has main regions: . The organization has
multiple committees that formulate issues, meet with the supplier (at the source), and
communicate the concerns and/or information affecting marketers. Per , the
organization worked on behalf of its members to address issues with various

Per Attachment A, page 2, under the title "Our Mission," the organization states that its
mission is to "help [their] members grow and prosper in a challenging and rapidly changing
marketplace." Records also show that the organization's objective is said to be an association
that meets with suppliers to discuss issues and come up with mutual beneficial solutions.

Per records, the organization hosts a forum every other year. The organization gets forum
attendants through its membership, email blasts to potential members, and networking. The
organization also invites people in person when possible. At its forums, the organization
provides information to the marketers via presentation from the organization and keynote
speakers, among other sources. Per the organization, the forum is a place where people can
attend, learn, and take back something of value to their business. Per , forums are
open to both members and non-members.

In the year ending December 31, 20XX ("20XX"), organization's activities included
publishing a newsletter and holding conferences to promote the member interest and educate
members, among other things. Attachment A, page 3 through 26, is the organization's newsletter
for December 20XX. Per Attachment A, contents of the newsletter included (but weren't limited
to) the following:

• A letter from the organization's President (" ") stating (in part and paraphrased):

Form 886-A (Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -2-

Form 886-A Department of the Treasury - Internal Revenue Service Schedule No. or Exhibit:
Explanation of Items
Name of Taxpayer Year/Period Ended
December 31, 20XX

o The organization's 20XX focus is on increasing its membership
o During the October 20, 20XX committee meeting, the organization provided "an
opportunity to hear how was going to lay out their plans for the future
and how they were going to move the business forward."
o The forum is focused "current and future issues affecting the relationship
between and marketers."
• A letter from stating (in part and paraphrased):
o That hopes that "20XX has proven to be a successful year for
[member's] business."
• Information regarding point-of-sale ("POS") upgrade.
• advertisements
• Information about a group called the "
• Content explaining the "Cost of Credit" and how " and commercial cards
can make for [members]"
• Summary of the October 20, 20XX committee meeting, which includes (but isn't limited
to) information on the following:
o Analysis specific to
o retail
o relationship with the
o moving forward
o credit card
o incentive payment process
• Summary explaining why uses
• Information about the organization's officers

In 20XX, the organization generated most of its income through membership dues, a
business forum (which is held every 2 years), sponsorships, and advertisements (in the
organization's magazine). As for expenses, the largest expenses were attributed to compensation

Form 886-A (Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -3-

Form 886-A Department of the Treasury - Internal Revenue Service Schedule No. or Exhibit:
Explanation of Items
Name of Taxpayer Year/Period Ended
December 31, 20XX

(e.g.: consultant fees to ), travel and conference expenses, the newsletter, and
accounting.

Members were made up of different classes. Per Attachment B, page 10, under "
" the organization describes - (one of the organization's membership
classes) as [paraphrased]: having a voice that carries weight for the and
marketer business.
In its "Why Join?" link, as shown within Attachment B, page 8, under the title "
." the organization states (in part):

• That members should join because " has developed a strong working
relationship with management and has accomplished several changes on behalf
of all marketers."

• Members benefits include having a "collective voice for communicating business issues
and opportunities from a marketer's perspective to management."

Regarding the (another one of the organization's membership classes),
the organization describes associate members as [paraphrased]: having an exclusive opportunity
to access and market directly to and branded marketers. The organization also
states that the said access and marketing is a valuable business development tool for the
member's companies. This is supported within Attachment B, page 10, under ".

Per Attachment B, page 8, under the title "Marketer Database," the organization states
that ", have exclusive access to our database of retail and commercial
marketers. With over contacts, there are plenty of prospects for your marketing and
sales development activities."

Before changing their website, the first bullet under the title "To Fulfill Our Mission We
Will," previously stated that the organization "[w]ork[s] to profitably grow

". This statement is also reflected on Attachment A, page 2, under the title "To

Form 886-A (Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -4-

Form 886-A Department of the Treasury - Internal Revenue Service Schedule No. or Exhibit:
Explanation of Items
Name of Taxpayer Year/Period Ended
December 31, 20XX

Fulfill Our Mission We Will". Per testimony and Attachment A, page 2, under the
title "Membership", paragraph 1, the organization's membership is said to be:
"(Comprised of both ] While
members are independent distributors of
supplier products, all are affiliated by contract with the
Products Company. Collectively they represent the majority of and
sold throughout the distributor channel in the United States."

Per the "Our Membership" section in Attachment C, the organization also describes its
membership as follows:

" membership is comprised of over 0: and
Marketers are independent distributors of and branded products
affiliated by contract with the Products Company. They collectively represent
more than 0% of all sold through the distributor channel in
the United States.

are suppliers of products and services to
marketers and Products Company. can communicate directly
through annual advertising program. A complete listing of
with contact information and products/services offered is provided in an annual
directory."

Per Attachment C, under the title "Organizational Structure", the organization states (in
part) the following:

"The board of directors is made up of from
around the country representing the and brands. An Executive
Committee, comprised of the association's officers, is elected annually by a vote of the
full board. Each board member also serves on one of operating committees.

Form 886-A (Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -5-

Form 886-A Department of the Treasury - Internal Revenue Service Schedule No. or Exhibit:
Explanation of Items
Name of Taxpayer Year/Period Ended
December 31, 20XX

An Executive Director who conducts the day-to-day business of supports
the board. The Executive Director meets with the board at least twice a year. The full
board including its operating committees also meets regularly with management
to engage in discussions on issues to promote the success of the and
brands within the marketer channel of trade."

Per , the organization only shares research information with a distribution list
and members. Per Attachment C, under the title "Communications", the organization states that
it makes quarterly newsletters, meeting minutes, and other information available through the
membership website. It also states that the organization "conducts periodic membership surveys
to identify areas of concern and interest to marketers. This information provides valuable input to
the board and helps focus the association's discussions with our supplier."

Law:

Internal Revenue Code ("IRC") Section ("Sec.")

IRC Sec. 501(c)(6) describes organizations exempt from federal income tax under IRC Sec.
501(a) that are business leagues, chambers of commerce, real-estate boards, boards of trade, or
professional football leagues (whether or not administering a pension fund for football players),
not organized for profit and no part of the net earnings of which inures to the benefit of any
private shareholder or individual.

Treasury Regulations ("Treas. Reg.")

Treas. Reg. Sec. 1.501(c)(6)-1 provides a business league is an association of persons having
some common business interest, the purpose of which is to promote such common interest and
not to engage in a regular business of a kind ordinarily carried on for profit. Its activities should
be directed to the improvement of business conditions of a one or more lines of business as
distinguished from the performance of particular services for individual persons.

Form 886-A (Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -6-

Form 886-A Department of the Treasury - Internal Revenue Service Schedule No. or Exhibit:
Explanation of Items
Name of Taxpayer Year/Period Ended
December 31, 20XX

Revenue Ruling ("Rev. Rul.")

In Rev. Rul. 59-391, 1959-2 C.B. 151, exemption under 501(c)(6) was denied to an organization
composed of individuals, firms, associations, and corporations, each representing a different
trade, business, occupation, or profession. The organization was created for the purpose of
exchanging information on business prospects and had no common business interest other than a
desire to increase sales of members. The revenue ruling found that the organization's activities
were not directed to the improvement of business conditions of one or more lines of business, but
rather to the promotion of the private interests of its members.

Rev. Rul. 68-182, 1968-1 CB 263 states an organization which promoted a single brand within a
line of business will not qualify for exemption from federal income tax under section 501(c)(6)
of the Code.

Tax Court Case

In Associated Master Barbers & Beauticians v. Commissioner, 69 TC 53, 63 (1977), the court
noted that the statute and regulations establish a series of requirements that an organization must
meet to be described in IRC Sec. 501(c)(6). It stated the requirements as follows:

1. It must be an association of persons having a common business interest,
2. Its purpose must be to promote that common business interest,
3. It must not be organized for profit,
4. It should not be engaged in a regular business of a kind ordinarily conducted for a profit,
5. Its activities should be directed toward the improvement of business conditions of one or
   more lines of business as opposed to the performance of particular services for individual
   persons, and
6. Its net earnings, if any, must not inure to the benefit of any private shareholder or
   individual.

Form 886-A (Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -7-

Form 886-A Department of the Treasury - Internal Revenue Service Schedule No. or Exhibit:
Explanation of Items
Name of Taxpayer Year/Period Ended
December 31, 20XX

If an organization fails to meet any one of these standards, it cannot be recognized as exempt or
maintain its exemption under IRC Sec. 501(c)(6).

In _ Association, Inc. v. United States, 440 U.S. 472, 99 S. Ct. 1304, 59
L. Ed. 2d 519 (1979), 1979-1 CB. 198 (1979), the court held that an organization of muffler
dealers franchised by Midas International Corporation did not qualify for exemption from federal
income tax as a business league under section 501(c)(6) of the Code. The organization's purpose
was too narrow to satisfy the line of business test of section 1.501(c)(6)-1 of the regulations.

Taxpayer's Position:

The Taxpayer's position is unknown at this time.

Government's Position:

1. Whether ("organization") Internal Revenue Code ("IRC") Section ("Sec.")
   501(c)(6) exempt status should be revoked because it's an association of marketers of the
   branded products of a particular corporation.

It's the government's position that the organization doesn't qualify for exemption
under IRC Sec. 501(c)(6) and should be revoked.

Under IRC Sec. 501(c)(6) to be exempt, a business league can't be organized for
profit and no part of the net earnings can inure to the benefit of any private shareholder or
individual. Per Treas. Reg. Sec. 1.501(c)(6)-1 a business league is an association of
persons having common business interest, to promote such common interest and not to
engage in a regular business of a kind ordinarily carried on for profit. Its activities should:
improvement of business conditions of one or more lines of business as distinguished
from the performance of services for individual persons. In Rev. Rul. 59-391, exemption

Form 886-A (Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -8-

Form 886-A Department of the Treasury - Internal Revenue Service Schedule No. or Exhibit:
Explanation of Items
Name of Taxpayer Year/Period Ended
December 31, 20XX

under 501(c)(6) was denied to an organization composed of individuals, firms,
associations, and corporations, each representing a different trade, business, occupation,
or profession. The organization was created for exchanging information on business
prospects and had no common business interest other than a desire to increase sales of
members. The activities weren't directed to business condition improvements, but rather
to the promotion of the private interests of its members. Rev. Rul. 68-182, states an
organization which promoted a single brand within a line of business will not qualify for
exemption from federal income tax under IRC Sec. 501(c)(6). Per Associated Master
Barbers & Beauticians v. Commissioner, to be described in IRC Sec. 501(c)(6), an
organization must meet multiple requirements. Requirements include (but aren't limited
to): being an association of persons having a common business interest, must not be
organized for profit, and shouldn't be engaged in a regular business for a profit. If an
organization fails to meet any one of these standards, it cannot be recognized as exempt
or maintain its exemption under IRC Sec. 501(c)(6). In

Association, Inc. v. United States, the court held that the Corporation didn't qualify for
exemption because the organization's purpose was too narrow.

Here, the organization clearly focuses on making profit, managing a relationship
with the brands and _, as well as, serving the private benefit of members.
This is supported throughout the records provided. Examples include (but aren't limited
to) the organization's: bylaws, mission statement, activities, memberships, and meetings.

Per the bylaws, the organization [paraphrased]:

• Promotes the interest of its members engaged in sale and distribution of related
products specific to the

• Fosters trade and commerce

• Promotes and encourages beneficial relations

• Advances the interest of its members

Form 886-A (Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -9-

Form 886-A Department of the Treasury - Internal Revenue Service Schedule No. or Exhibit:
Explanation of Items
Name of Taxpayer Year/Period Ended
December 31, 20XX

In stating its mission statement (which is to "help [their] members grow and
prosper"), the organization shows that it serves the private interest of its members. As
explained within and , an organization must meet all tests
laid out by the court to qualify as exempt under IRC Sec. 501(c)(6). One of these tests is
that the organization must be directed to improving the business conditions of one or
more lines of business as opposed to the performance of particular services for
individuals. In reviewing the organization's bylaws and mission, it's the government's
position that the organization fails both elements of this test.

Per records provided, the newsletter shows that most of its activities revolve
around and products, direction in business, and philosophy, among
other things.

When explaining why members should join, the organization implies a profit
motive and explains how being a member privately serves to the benefit of the members.

• " has developed a strong working relationship with
management and has accomplished several changes on behalf of all marketers."

• Members have a "collective voice for communicating business issues and
opportunities from a marketer's perspective to management."

• have "an exclusive opportunity to access and market directly
to and branded marketers."

• have exclusive access to [the organization's] database of
retail and commercial marketers. With over contacts, there are plenty
of prospects for [member's] marketing and sales development activities."

Regarding its members, the organization states that "all are
affiliated by contract with the ." As well as that members
collectively "represent the majority of and sold
throughout the distributor channel in the United States."

Form 886-A (Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -10-

Form 886-A Department of the Treasury - Internal Revenue Service Schedule No. or Exhibit:
Explanation of Items
Name of Taxpayer Year/Period Ended
December 31, 20XX

Given the information above, it's the government's position that the organization
operates to improve the business of its members who are all marketers of and
. Like the organization described in Revenue Ruling ("Rev. Rul.") Sec. 68-182, the
organization's members are only marketers of the and , and
represent only a section of the line of business that the and are part of. In
, the court approved of the Commissioner's interpretation of the
statute that denies exemption under section 501(c)(6) to organizations that are devoted to
the promotion of particular product at the expense of others in the industry.

Since the beneficial activities carried out by the organization are directed to its
members that are marketers of and , they can't be directed to the
improvement of the conditions in an entire line of business. They are, through the
restriction of the membership, directed to the segment of the industry represented by
and

In addition, the organization is similar to the organization in the
case (which didn't qualify for exemption under IRC Sec. 501(c)(6)), because it's set up to
help its members effectively compete against other marketers of different brands of the
same products. The case provides an extensive review of the history of the definition of
business league since this IRC Sec. was first included.

IRC Sec. 501(c)(6) allows for associate members who share a common business
interest with the voting members of the organization. For example, students about to
enter a profession have a clear common business interest with the professionals who are
already in that business.

The of the organization are businesses that provide goods and
services to the members. They're included in an annual directory that is available to
members. They may be exhibitors at tradeshow which allows them to interact with
potential customers. They also receive access to a database of the marketer members to
use to develop new business.

These activities are similar to the overall activities of the organization described
in Rev Rul 59-391. In that organization, all the members were parts of different lines of
business and there is no indication that the associate members of the organization have to

Form 886-A (Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -11-

Form 886-A Department of the Treasury - Internal Revenue Service Schedule No. or Exhibit:
Explanation of Items
Name of Taxpayer Year/Period Ended
December 31, 20XX

be in different lines of business. However, their only connection to each other is that they
provide or wish to make connections so to provide some good or service to the members
of the organization and/or to influence and for their benefit. Thus, their
only reason to join is to increase their sales to the members of the organization and/or to
influence and for their benefit. As such, the organization also fails to
meet IRC Sec. 501(c)(6) requirements by providing a particular service to its members.
The organization's activities allow the members to come together to discuss issues related
to their businesses. By promoting the efficiency of the marketers of and ,
these activities benefit and

Per Attachment C, under the organization structure, the organization states that:
"The full board meets regularly with management to engage in discussions on
issues to promote the success of the and brands within the marketer
channel of trade." The organization's activities above show that it also provides
opportunities for the board and/or others to meet with executives at and
with the intent to promote success of and . Thus, failing to promote the
economic interest of a line or lines of business.

Therefore, given the information above, revocation of the organization's IRC Sec.
501(c)(6) exemption is warranted.

Conclusion:

The organization isn't qualified to be an exempt business league under IRC Sec.
501(c)(6) because it doesn't promote the economic interest of a line or lines of business, but
rather promotes two brands of products within its line of business. Per records, the organization's
goal is to help and compete against other brands within the general line of
business, which also provides a particular service to and . An organization under
IRC Sec. 501(c)(6) must benefit a line or lines of business and can't provide particular services
to individual persons.

Form 886-A (Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -12-

Form 886-A Department of the Treasury - Internal Revenue Service Schedule No. or Exhibit:
Explanation of Items
Name of Taxpayer Year/Period Ended
December 31, 20XX

The organization is also not qualified to be an exempt business league under IRC Sec.
501(c)(6) because its associate members don't share a business interest with its regular members.
This is since their interest in being associate members is that it allows them to advertise to the
members in publications and to sell to the members in a trade show and/or by using the member
directory, among other things. Thus, revocation of exemption is warranted.

Form 886-A (Rev.4-68) Department of the Treasury - Internal Revenue Service
Page: -13-