IRS revokes a charity's 501(c)(3) status after it went silent during an audit

Plain-English summary

The IRS selected a § 501(c)(3) charity for examination and repeatedly tried to
reach it by mail and phone, but the organization never produced its records. The
group appeared to have dissolved with the state. Because tax law (IRC §§ 6001 and
6033) requires exempt organizations to keep records and let the IRS examine them,
and because the charity did not establish that it was still operated exclusively
for exempt purposes with no private benefit, the IRS revoked its exemption
effective January 1 of a redacted year. As a result, contributions to the
organization are no longer deductible under § 170, and it must file corporate
income tax returns (Form 1120) going forward. This document bundles the final
revocation (Letter 6337), the proposed revocation (Letter 3618), and the Form
886-A audit report documenting the unanswered correspondence. Names, dates, and
identifying details were redacted by the IRS.

Ruling snapshot

• Question: Should a charity's § 501(c)(3) exemption be revoked when it fails to respond to the IRS or produce records for examination?
• Outcome: Revocation (final adverse determination)
• Key authorities: IRC §§ 501(c)(3), 6001, 6033(a)(1), 170; Treas. Reg. §§ 1.501(c)(3)-1, 1.6033-1(h)(2); Rev. Rul. 59-95

Full text (IRS public release)

Department of the Treasury                          Date: May 10, 2021
Internal Revenue Service
Tax Exempt and Government Entities

IRS Taxpayer ID number:

Form:

Tax periods ended:

Release Number: 202233016

Release Date: 8/19/2022                             Person to contact:
UIL Code: 501.03-00                                 Name:
                                                    ID number:
                                                    Telephone:
                                                    Fax:

CERTIFIED MAIL - RETURN RECEIPT REQUESTED
Dear

Why we are sending you this letter

This is a final determination that you don't qualify for exemption from federal income tax under Internal
Revenue Code (IRC) Section 501(a) as an organization described in IRC Section 501(c)(3), effective
January 1, 20__. Your determination letter dated May 12, 20__, is revoked.

Our adverse determination as to your exempt status was made for the following reasons: Organizations
described in Internal Revenue Code (IRC) Section 501(c)(3) and exempt from tax under section 501(a) must
be both organized and operated exclusively for exempt purposes. You have failed to produce documents or
otherwise establish that you are operated exclusively for exempt purposes and that no part of your net earnings
inure to the benefit of private shareholders or individuals. You failed to respond to requests to allow the
Internal Revenue Service to examine your records regarding your receipts, expenditures, or activities as
required by IRC Sections 6001 and 6033(a)(1) and the regulations thereunder. As such, you failed to meet the
requirements of IRC Section 501(c)(3) and Treasury Regulations Section 1.501(c)(3)-1(a), in that you have
not established that you were organized and operated exclusively for exempt purposes and that no part of your
earnings inured to the benefit of private shareholders or individuals.

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.

Contributions to your organization are no longer deductible under IRC Section 170.

What you must do if you disagree with this determination
If you want to contest our final determination, you have 90 days from the date this determination letter was
mailed to you to file a petition or complaint in one of the three federal courts listed below.

How to file your action for declaratory judgment

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.

Letter 6337 (12-2020)
Catalog Number 74808E

Please contact the clerk of the appropriate court for rules and the appropriate forms for filing an action for
declaratory judgment by referring to the enclosed Publication 892, How to Appeal an IRS Determination on
Tax-Exempt Status. You may write to the courts at the following addresses:

United States Tax Court        U.S. Court of Federal Claims    U.S. District Court for the District of Columbia
400 Second Street, NW          717 Madison Place, NW           333 Constitution Ave., N.W.
Washington, DC 20217           Washington, DC 20439            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.

We'll notify the appropriate state officials (as permitted by law) of our determination that you aren't an
organization described in IRC Section 501(c)(3).

Information about the IRS Taxpayer Advocate Service

The IRS office whose phone number appears at the top of the notice can best address and access your tax
information and help get you answers. However, you may be eligible for free help from the Taxpayer Advocate
Service (TAS) if you can't resolve your tax problem with the IRS, or you believe an IRS procedure just isn't
working as it should. TAS is an independent organization within the IRS that helps taxpayers and protects
taxpayer rights. Contact your local Taxpayer Advocate Office at:

Internal Revenue Service
Taxpayer Advocate Office

Or call TAS at 877-777-4778. For more information about TAS and your rights under the Taxpayer Bill of Rights,
go to taxpayeradvocate.irs.gov. Do not send your federal court pleading to the TAS address listed above. Use
the applicable federal court address provided earlier in the letter. Contacting TAS does not extend the time to
file an action for declaratory judgment.

Where you can find more information
Enclosed are Publication 1, Your Rights as a Taxpayer, and Publication 594, The IRS Collection Process, for
more comprehensive information.
Find tax forms or publications by visiting www.irs.gov/forms or calling 800-TAX-FORM (800-829-3676).
If you have questions, you can call the person shown at the top of this letter.

If you prefer to write, use the address shown at the top of this letter. Include your telephone number, the best
time to call, and a copy of this letter.

Keep the original letter for your records.

[illegible signature]

Sean E. O'Reilly
Director, Exempt Organizations Examinations

Enclosures:
Publication 1
Publication 594
Publication 892

Letter 6337 (12-2020)
Catalog Number 74808E

Department of the Treasury                          Date: [illegible] 6, 2020
Internal Revenue Service                            Taxpayer ID number:
IRS Tax Exempt and Government Entities
                                                    Form:

                                                    Tax periods ended:

                                                    Person to contact:
                                                    Name:
                                                    ID number:
                                                    Telephone:
                                                    Fax:
                                                    Manager's contact information:
                                                    Name:
                                                    ID number:
                                                    Telephone:
                                                    Response due date:
                                                    March 8, 2020

CERTIFIED MAIL — Return Receipt Requested
Dear

Why you're receiving this letter

We enclosed a copy of our audit report, Form 886-A, Explanation of Items, explaining that we propose to
revoke your tax-exempt status as an organization described in Internal Revenue Code (IRC) Section
501(c)(3).

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)(3) for the periods above.

After we issue the final adverse determination letter, we'll announce that your organization is no longer
eligible to receive tax deductible contributions under IRC Section 170.

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.

Letter 3618 (Rev. 8-2019)
Catalog Number 34809F

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

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.

For 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.

[illegible signature]

for Maria Hoke
Director, Exempt Organizations
Examinations

Sincerely,

Enclosures:

Form 886-A

Form 6018

Form 4621A
Publication 892
Publication 3498A

Letter 3618 (Rev. 8-2019)
Catalog Number 34809F

Form 886-A          Department of the Treasury — Internal Revenue Service          Schedule number or
                                                                                   exhibit
Explanations of Items
Name of taxpayer          Tax Identification Number (last 4 digits)  |  Year/Period ended
Date of Notice:
ISSUE
Whether                , (hereinafter "the organization"), which qualified for
exemption from Federal income tax under Internal Revenue Code (IRC) § 501(c)(3) of the Internal
Revenue Code, should be revoked due to its failure to respond and produce records?

FACTS

The organization applied for tax-exempt status by filing the Form          ,
on          . They were granted tax-exempt status as a 501(c)(3) on          , with an
effective date of          . A copy of these documents was provided to the organization on

The organization was selected for the examination to ensure the activities and operations align
with their approved exempt status. The organization failed to respond to the Internal Revenue
Service's attempts to obtain information to perform an examination of Form          for the tax
year

The Form          application list the phone number of          for the CEO of the
organization,          . Per the State of          website, the organization is listed as
"dissolved". A copy of the dissolution document was provided to the organization on

Correspondence for the examination was as follows:

•          : Letter 3606 (Rev. 6-2012) with attachments, was mailed to the organization
with a response date of          . This letter was not returned by the post office as
being undeliverable.

•          : Letter 3844-A (Rev. 12-2015) with attachments, was mailed certified to
the organization with a response date of          . This letter was returned
unclaimed.

•          : Letter 5077-B (01-2017), TE/GE IDR Delinquency Notice, was mailed
to the organization with a respond date of          . This letter was not
returned by the post office as being undeliverable.

•          : Letter 5077-B (01-2017), TE/GE IDR Delinquency Notice, was mailed
to the organization via certified mail to the following:

Certified Mail Receipt:
    [illegible] Returned to sender

Catalog Number 20810W          Page 1          www.irs.gov          Form 886-A (Rev. 5-2017)

Form 886-A          Department of the Treasury — Internal Revenue Service          Schedule number or
                                                                                   exhibit
Explanations of Items
Name of taxpayer          Tax Identification Number (last 4 digits)  |  Year/Period ended

Certified Mail Receipt:
    [illegible] Delivered

Certified Mail Receipt:
    [illegible] Delivered

Certified Mail Receipt:
    [illegible] Returned to sender

•          : Draft report mailed to the following via certified mail with return receipt
requested:

Certified Mail Receipt:
    [illegible] Returned to sender

Certified Mail Receipt:
    [illegible] Delivered

Certified Mail Receipt:
    [illegible] Returned to sender

Certified Mail Receipt:

Postal Tracers were prepared and mailed to the respective Postmasters. Mail is delivered to the
following addresses given. No new addresses reported, no forwarding addresses provided.

          ) Council

Telephone contact for the examination was as follows:

•          : Tax Compliance Officer (TCO) called          and reached the
voicemail of          . TCO called the number again to ensure the number was
keyed in correctly and spoke with          .          stated the organization is

Catalog Number 20810W          Page 2          www.irs.gov          Form 886-A (Rev. 5-2017)

Form 886-A          Department of the Treasury — Internal Revenue Service          Schedule number or
                                                                                   exhibit
Explanations of Items
Name of taxpayer          Tax Identification Number (last 4 digits)  |  Year/Period ended
reorganizing and they haven't had recent activities. TCO provided          with the TCO's
phone and fax number. TCO verbally provided a deadline of
•          : TCO called          and left a voicemail.
•          : TCO conducted additional research and located a possible number for
          . TCO made outcall. The person who answered the phone stated it was a
wrong number. No phone number was located for          , the CFO.
•          : TCO called          and left a voicemail.
LAW

IRC § 6001: Every person liable for any tax imposed by this title, or for the collection thereof, shall
keep such records, render such statements, make such returns, and comply with such rules and
regulations as the Secretary may from time to time prescribe. Whenever in the judgment of the
Secretary it is necessary, he may require any person, by notice served upon such person or by
regulations, to make such returns, render such statements, or keep such records, as the Secretary
deems sufficient to show if such person is liable for tax under this title.

IRC § 6033(a)(1): Every organization exempt from tax 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 purposes of carrying out the internal revenue laws as the Secretary may by
forms or regulations prescribe, and keep such records, render under oath such statements, make
such other returns, and comply with such rules and regulations as the Secretary may from time to
time prescribe.

Treasury Regulation § 1.501(c)(3)-1: To be exempt under § 501(c)(3) the organization must be
both organized and operated exclusively for one or more of the purposes specified in the section
(religious, charitable, scientific, testing for public safety, literary or educational).

Treasury Regulation § 1.501(c)(3)-1(a)(1): To be exempt as an organization described in section
501(c)(3), 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.

Treasury Regulation § 1.6033-1(h)(2): Every organization which has established its right to
exemption from tax, if it is required to file an annual return of information, shall submit such
additional information as may be required by the district director for the purpose of enabling him to
inquire further into its exempt status and to administer the provisions of subchapter F (section 501
and the following), chapter 1 of the Code and section 6033.

Rev. Rul. 59-95, 1959-1 C.B. 627: An exempt organization was requested to produce a financial
statement and statement of its operations for a certain year. However, its records were so
incomplete that the organization was unable to furnish such statements. The Service held that the
failure or inability to file the required information return or otherwise to comply with the provisions

Catalog Number 20810W          Page 3          www.irs.gov          Form 886-A (Rev. 5-2017)

Form 886-A          Department of the Treasury — Internal Revenue Service          Schedule number or
                                                                                   exhibit
Explanations of Items
Name of taxpayer          Tax Identification Number (last 4 digits)  |  Year/Period ended

of section 6033 of the Code and the regulations which implement it, may result in the termination
of the exempt status of an organization previously held exempt, because the organization has not
established that it is observing the conditions required for the continuation of exempt status.

ORGANIZATION'S POSITION
Taxpayer's position is unknown at this time.
GOVERNMENT'S POSITION

Based on the above facts, the organization did not respond to verify that they are organized and
operated exclusively for one or more of the purposes specified in IRC § 501(c)(3). If an
organization fails to meet either the organizational test or the operational test, it is not exempt.

In accordance with the above-cited provisions of the Code and regulations under § 6001 and
6033, organizations recognized as exempt from federal income tax must meet certain reporting
requirements. These requirements relate to the filing of a complete and accurate annual
information (and other required federal tax forms) and the retention of records sufficient to
determine whether such entity is operated for the purposes for which it was granted tax-exempt
status and to determine its liability for any unrelated business income tax.

Treasury Regulation § 1.6033-1(h)(2) specifically states the exempt organizations shall submit
additional information for the purpose on enabling the Internal Revenue Service to inquire further
into its exempt status.

Using the rationale that was developed in Revenue Ruling 59-95, the Organization's failure to
provide requested information should result in the termination of exempt status.

CONCLUSION

Based on the foregoing reasons, the organization does not qualify for exemption under section
501(c)(3) and its tax-exempt status should be revoked.

Form 1120, U.S. Corporation Income Tax Return, should be filed for the tax periods after

Catalog Number 20810W          Page 4          www.irs.gov          Form 886-A (Rev. 5-2017)