Private foundation loses exemption after failing to provide examination records

Plain-English summary

The IRS asked a private foundation to schedule an examination and provide its books, records, and activity information. The request was sent to the address shown on its return, was not returned as undeliverable, and went unanswered for more than two months. The telephone number on the return also was invalid. Without the requested information, the foundation could not establish that it continued to satisfy the section 501(c)(3) operating and reporting requirements. The IRS revoked its exemption under sections 6001 and 6033. Because it was a private foundation when the revocation took effect, it remained a taxable private foundation required to file Form 990-PF until it terminated that status under section 507.

Ruling snapshot

• Question: Did the private foundation maintain section 501(c)(3) status after failing to respond to requests for examination records?
• Outcome: revocation
• Key authorities: IRC §§ 501(c)(3), 507, 6001, and 6033; Treas. Reg. §§ 1.6001-1 and 1.6033-1(h)(2); Rev. Rul. 59-95

Full text (IRS public release)

Department of the Treasury Date:

Internal Revenue Service May 5, 2022
IRS Tax Exempt and Government Entities Taxpayer ID number:
Form:
Tax periods ended:
Release Number: 202247014
Release Date: 11/25/2022 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

. Your determination letter dated , is revoked.

Our adverse determination as to your exempt status was made for the following reasons: You have failed to
produce documents to establish that you are operated exclusively for exempt purposes within the meaning of
IRC Section 501(c)(3), and that no part of your net earnings inures to the benefit of private shareholders or
individuals. You failed to respond to repeated reasonable 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 Rev. Rul. 59-95, 1959-1 C.B. 627.

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.

Because you were a private foundation as of the effective date of the adverse determination, you are considered
to be a taxable private foundation until you terminate your private foundation status under IRC Section 507.

In addition to your income tax return, you must also continue to file Form 990-PF, Return of Private Foundation
or Section 4947(a)(1) Trust Treated as Private Foundation, by the 15th day of the fifth month after the end of
your annual accounting period.

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.

Sincerely,

Lynn A. Brinkley
Acting Director, Exempt Organizations Examinations

Enclosures:
Publication 1
Publication 594
Publication 892

Letter 6337 (12-2020)
Catalog Number 74808E

Department of the Treasury Date:
Internal Revenue Service oe 06/09/2021
IRS Tax Exempt and Government Entities Taxpayer ID number:

Form:
Tax periods ended:

Person to contact:
Name:
ID number:
Telephone:
Fax:
Address:

Manager's contact information:
Name:

ID number:

Telephone:

Response due date:
07/09/2021

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.

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,

Sean O'Reilly
Director, Exempt Organizations Examinations

Enclosures:
Form 6018
Form 4621-A
Form 886-A
Pub 892

Pub 3498

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

886-A Schedule number
Form " or exhibit
(Rev. May 2017) EXPLANATIONS OF ITEMS
Name of taxpayer Tax Identification Number (Last 4 digits) Year/Period ended
Issue:
Whether exemption under the Internal Revenue Code (IRC) Section 501(c)(3) should be revoked for the
to ( ) for failure to

meet the reporting requirements under IRC Section 6001 and 6033.

Facts:

The was incorporated in the state of on as a nonprofit corporation. It was
formed exclusively for charitable purposes within the meaning of IRC Section 501(c)(3).

The was given exemption as a private foundation under IRC Section 501(c)(3) within the
meaning of Section 509(a) effective on

The mailing address on record is the same as its address on the Form which is at

On , Letter 3611 along with Form 4564 — Information Document Request both dated

were mailed to the requesting an appointment to examine books and records and activities
related to the Form . Letter 3611 asks the to respond by . No
response has been received from the more than two months since Letter 3611 was first mailed.

There has been no Undeliverable notice received from the US Postal Service to indicate that the address is
not valid.

Phone number listed on the Form is not valid.

Law:

IRC Section 6001 provides that every person liable for any tax imposed by the IRC, or for the collection
thereof, shall keep adequate records as the Secretary of the Treasury or his delegate may from time to
time prescribe.

IRC Section 6033(a)(1) provides, except as provided in Section 6033(a)(2), 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.

Reg. Section 1.6001-1(a) in conjunction with Section 1.6001-1(c) provides that every organization exempt
from tax under IRC § 501(a) and subject to the tax imposed by IRC § 511 on its unrelated business income
must keep such permanent books or accounts or records, including inventories, as are sufficient to
establish the amount of gross income, deduction, credits, or other matters required to be shown by such
person in any return of such tax. Such organization shall also keep such books and records as are required
to substantiate the information required by IRC § 6033.

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


Schedule number
Form 886-A EXPLANATIONS OF ITEMS or exhibit
(Rev. May 2017)
Name of taxpayer Tax Identification Number (Last 4 digits) Year/Period ended

Reg. Section 1.6001-1(e) states that the books or records required by this section shall be kept at all times
available for inspection by authorized Internal Revenue officers or employees, and shall be retained as long
as the contents thereof may be material in the administration of any Internal Revenue law.

Reg. Section 1.6033-1(h)(2) provides that every organization which has established its right to exemption
from tax, whether or not it is required to file an annual return of information, shall submit such additional
information as may be required by the 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 IRC § 6033.

Rev. Rul. 59-95, 1959-1 C.B. 627, concerns an exempt organization that 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 of IRC § 6033 and
the regulations which implement it, may result in the termination of the exempt status of an organization
previously held exempt, on the grounds that the organization has not established that it is observing the
conditions required for the continuation of exempt status.

Taxpayer's Position:
Taxpayer’s position is unknown at this time.

Government's Position:

Under IRC Section 6001 and 6033, an organization 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 in accordance with
its tax-exempt purposes.

Because the fails to respond to the Service’s request for information to verify its
continuing qualification for exempt status as required under Reg. Section 1.6033-1(h)(2), its
exempt status should be revoked, similar to the treatment described in Rev. Rul. 59-95.

Conclusion:

The exemption under IRC Section 501(c)(3) should be revoked due to its failure to meet
the reporting requirements under IRC Section 6001 and 6033. Proposed date of revocation

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