IRS revokes a nonprofit's 501(c)(3) status after it ignored an audit and never filed a required charter amendment

Plain-English summary

This is the IRS's final determination revoking a nonprofit corporation's tax-exempt status under section 501(c)(3). The organization, whose name hinted at a link to a well-known charity network (it had none), had been recognized as a public charity based on its Form 1023 application. The IRS later selected it for examination and asked for basic financial records: a general ledger, bank statements, canceled checks, board minutes, and similar items. The organization never produced them, even after the IRS granted extra time for the Covid-19 pandemic, and it stopped answering the phone. Separately, the IRS found that the organization had affirmed amending its articles of incorporation (to add the purpose and dissolution clauses that 501(c)(3) requires) but never actually filed the amendment, and the state had administratively dissolved the corporation for failing to file annual reports. On those facts the IRS held that the organization failed both the organizational test and the operational test, and did not meet the recordkeeping duties of sections 6001 and 6033. Exemption was revoked and contributions are no longer deductible under section 170. The document bundles the final adverse letter (Letter 6337), the earlier proposed revocation (Letter 3618), and the Form 886-A revenue agent report.

Ruling snapshot

• Question: Does the organization still qualify for exemption under IRC § 501(a) as a § 501(c)(3) charity after failing to respond to an examination and never filing the required organizing-document amendment?
• Outcome: revocation (fails both the organizational and operational tests)
• Key authorities: IRC § 501(c)(3); IRC §§ 6001, 6033; IRC § 170; Treas. Reg. §§ 1.501(c)(3)-1(b) and (c), 1.6001-1, 1.6033-2; Rev. Proc. 82-2; Rev. Rul. 59-95

Full text (IRS public release)

Department of the Treasury Date:
Internal Revenue Service 03/28/2023
IRS Tax Exempt and Government Entities Taxpayer ID number (last 4 digits):

Number: 202336016
Release Date: 9/8/2023

Form:
Tax periods ended:

Person to contact
Name:

ID number:
Telephone:

Fax:
UIL: 501.03-00 Last day to file petition with United States
Tax Court:

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: Organizations
described in IRC Section 501(c)(3) and exempt under IRC Section 501(a) must be both organized and operated
exclusively for charitable, educational, or other exempt purposes within the meaning of IRC Section 501(c)(3).
You have not demonstrated that you are operated exclusively for charitable, educational, or other exempt
purposes within the meaning of IRC Section 501(c)(3) and that no part of your net earnings inure 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, 6033(a)(1) and Rev. Rul. 59-95, 1959-1 C.B. 627. Further, you are not
organized exclusively for exempt purposes as required by Treas. Reg. Section 1.501(c)(3)-1(b)(1), nor are your
assets dedicated exclusively to exempt purposes as required by Treas. Reg. Section 1.501(c)(3)-1(b)(4).

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 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 can file an action for declaratory judgment under the provisions
of Section 7428 of the Code in either:

* The United States Tax Court,
* The United States Court of Federal Claims, or
* The United States District Court for the District of Columbia

Letter 6337 (Rev. 8-2022)
Catalog Number 74808E

You must file a petition or complaint in one of these three courts within 90 days from the date we mailed this
determination letter to you. You can download a fillable petition or complaint form and get information about
filing at each respective court's website listed below or by contacting the Office of the Clerk of the Court at one
of the addresses below. Be sure to include a copy of this letter and any attachments and the applicable filing fee
with the petition or complaint.

You can eFile your completed U.S. Tax Court petition by following the instructions and user guides available
on the Tax Court website at ustaxcourt.gov/dawson.html. You will need to register for a DAWSON account to
do so. You may also file your petition at the address below:

United States Tax Court
400 Second Street, NW
Washington, DC 20217
ustaxcourt.gov

The websites of the U.S. Court of Federal Claims and the U.S. District Court for the District of Columbia contain
instructions about how to file your completed complaint electronically. You may also file your complaint at one of
the addresses below:

US Court of Federal Claims
717 Madison Place, NW
Washington, DC 20439
uscfc.uscourts.gov

US District Court for the District of Columbia
333 Constitution Avenue, NW
Washington, DC 20001
dcd.uscourts.gov

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:

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.

Letter 6337 (Rev. 8-2022)
Catalog Number 74808E


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 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.

You may fax your documents to the fax number shown above, using either a fax machine or online fax service.
Protect yourself when sending digital data by understanding the fax service's privacy and security policies.

Keep the original letter for your records.

Sincerely,

[illegible signature]
Lynn A. Brinkley
Director, Exempt Organizations Examinations

Enclosures:
Publication 1
Publication 594
Publication 892

Letter 6337 (Rev. 8-2022)
Catalog Number 74808E

Date:

Department of the Treasury May 17, 2022

Internal Revenue Service Taxpayer ID number:
IRS Tax Exempt and Government Entities

Exempt Organizations Examinations Form:

Tax periods ended:

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

Manager's contact information:
Name:
ID number:

Telephone:
Response due date:

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

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


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.

. 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.

Sincerely,
[illegible signature]

Lynn A. Brinkley

Acting Director

Exempt Organizations Examinations
Enclosures:
Form 886-A and Attachments
Form 6018

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


Form 886-A Department of the Treasury — Internal Revenue Service Schedule number
Explanations of Items or exhibit

Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended
Issue:
Whether ( continues to qualify for
exemption from Federal income tax under section 501(a) of the Internal Revenue Code (Code) as
a charitable organization described in Code section 501(c)(3).

Facts:

was incorporated in the on , under the state's not-for-
profit corporation law. Article III of Electronic Articles of Incorporation provides that the
specific purpose for which was formed is to

Articles of Incorporation identifies the incorporator as is
also identified as the registered agent for with an address of ~
. There are directors listed in organizing
document. is designated as the President (P) and the other directors each have
the title of Vice-President.

in filed Form 1023, Application for Recognition of Exemption Under
Section 501(c)(3) of the Internal Revenue Code, with the Internal Revenue Service (IRS). The
Form 1023 application is signed by as the Managing Director according to
the declaration on page _ of the Form 1023 application. is of
individuals listed as officers and directors in Part V of Form 1023, which requires applicant
organizations to list the names, titles and mailing addresses of all officers, directors, and
trustees. Similar to Articles of Incorporation, and the officers/directors
all have the same mailing address —

The Form 1023 application is accompanied by a conformed copy of Articles of
Incorporation and several attachments providing narrative responses to certain questions in
Form 1023. According to the attachment providing a narrative description of past, present, and
planned activities as requested in Part IV of Form 1023, states the following:
The IRS determination specialist who reviewed Form 1023 application issued a letter to
the organization dated requesting that amend its Articles of Incorporation
to include adequate purpose and dissolution clauses to satisfy the organizational test
requirements under section 501(c)(3) of the Code and the applicable regulations.
furnished a reply signed by which states that the organizing document was amended

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


Form 886-A Department of the Treasury — Internal Revenue Service Schedule number
Explanations of Items or exhibit

Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended

to include the provisions referenced by the IRS specialist. was not required to furnish a
copy of the amended Articles of Incorporation but only to affirm that the amendment was filed. A
copy of response to the IRS determinations specialist is appended as Exhibit A.

Based on its Form 1023 application and accompanying records including statement
affirming the filing of an amendment, the IRS issued a favorable determination letter in
granting recognition of exemption under section 501(c)(3) of the Code. was
classified as a public charity under sections 509(a)(1) and 170(b)(1)(A)(vi) of the Code based on
its planned fundraising programs and projected financial support.

IRS records show that filed Form 990-N, Electronic Notice (e-Postcard), beginning
with the . filed Form 990-N in lieu of a Form 990 or Form 990-EZ
return. The organization indicated on Form 990-N that its gross receipts are normally $
reported a new address for the organization when it filed its Form 990-N
with the IRS in The new address reported on Form 990-N filed for and
is as follows:
The address furnished by on Forms 990-N corresponds to a
( retail store which offers mailbox services. A copy of the pertinent website
content posted by or on behalf of the store is appended as Exhibit B.

As described in Exhibit B, the following mailbox services are offered by at its
retail in

* Package and mail receipt notifications
* Mail holding and forwarding
* Call-in mail check

In the Tax Exempt and Governmental Entities (TE/GE) division of the IRS selected
for examination of its books and records covering the . The notice of
examination package, which is dated , consists of IRS letter #6031, Form
4564, Information Document Request (IDR), Publication 1, Your Rights as a Taxpayer, Notice
609, Privacy Act Notice, and Publication 3498-A, The Examination Process (Audits by Mail).

The notice of examination package was mailed to at the last known address on file for the
organization which is as follows:

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

Form 886-A Department of the Treasury — Internal Revenue Service Schedule number
Explanations of Items or exhibit

Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended

As noted on IDR issued with the examination notice, the examination of
books and records is intended to verify that the organization:

1. Operates in accordance with section 501(c)(3) of the Code

2. Is eligible to file Form 990-N based on gross receipts, and

3. Filed all required returns including information returns.

As part of standard audit procedures, the IRS examiner requested that furnish certain
records and information needed to determine whether the organization is operating in furtherance
of charitable and other exempt purposes described in section 501(c)(3) of the Code. IDR
issued to on , requests copies of the following records and information
covering the calendar year under examination:

* Chart of accounts

* General ledger

* Adjusted trial balance

* Cash disbursements journal.

* Monthly bank statements for primary operating (checking) account together with
canceled checks or check images furnished by the bank.

* Monthly statements for all credit cards that may have been issued to
* Minutes of meetings held by Board of Directors and committees of the Board.
* Internal policies and procedures regarding the handling and recording of cash donations.

* Lease agreements and other information relating to any office or other facility used by
conduct activities.

* Contracts and other arrangements with individuals and/or organizations which solicit and raise
funds for including, but not limited to, professional fundraising organizations.

* The organization's website address, if any, and the identity of the party that hosts the website.

* Information regarding the accounting software used by for preparation of its books and
records.
Due to the Covid-19 pandemic, was given additional time to compile and furnish the
records and information requested by the IRS examiner. The response due date on the IDR was

On the IRS examiner's group manager received a telephone call from an
officer of With consent, the group manager
conferenced in the IRS examiner assigned to the case. acknowledged receipt of the
IRS notice of examination package for However, he did not discuss the finances or

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


Form 886-A Department of the Treasury — Internal Revenue Service Schedule number
Explanations of Items or exhibit

Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended

activities of the organization. Instead, he described circumstances that he believed warranted an
extension of time to compile records and respond to the initial IDR. The group manager granted
an extension to

did not respond to the IDR or otherwise contact the IRS examiner or the group manager
by the extended due date. In early , the group manager attempted to contact
by telephone using the contact telephone numbers that he provided. did not
answer the phone and the group manager did not subsequently receive a return call. Neither the
IRS examiner nor the group manager subsequently received any of the requested records and
information from or any other officer or director of

In accordance with established IRS procedures, a follow-up "Delinquency Notice" letter was
issued to with a copy of IDR The delinquency notice states, in
part, that if the organization does not fully respond to the IDR by the response due date, the IRS
will propose revocation of exempt status. did not respond to the delinquency
notice or otherwise contact the IRS examiner. The delinquency notice was not returned by the
post office as undeliverable.

A search of the corporate database, which provides information on the status of
entities incorporated under , shows that was
administratively dissolved effective for failure to file its annual report. See
Exhibit C. Furthermore, the IRS examiner found no record of having filed any amendment
to its Articles of Incorporation with the state. of Exhibit C shows that Articles of
Incorporation is the only document available for viewing on the state website.
Despite its name, there is no evidence that is an affiliate or chapter of the
network of charities that operate within the . The
organization maintains a website which allows users to search for
is not among the listed. The Form 990-N filed by
with the IRS in does not identify any website address in section E.
Applicable Law:

Section 501(c)(3) of the Code provides that an organization organized and operated exclusively
for charitable or educational purposes is exempt from Federal income tax, provided no part of its
net earnings inures to the benefit of any private shareholder or individual.

Section 1.501(c)(3)-1(a)(1) of the Treasury Regulations states that 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 - charitable, religious,
educational, scientific, literary, testing for public safety, or for the prevention of cruelty to children
or animals. If an organization fails to meet either the organizational test or the operational test, it
is not exempt.

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


Form 886-A Department of the Treasury — Internal Revenue Service Schedule number
Explanations of Items or exhibit

Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended

Section 1.501(c)(3)-1(b)(1)(i) of the regulations provides that an organization is organized
exclusively for one or more exempt purposes only if its articles of organization (as defined in
subparagraph (2)) limit its purposes to one or more exempt purposes and do not expressly
empower it to engage, otherwise than as an insubstantial part of its activities, in activities which in
themselves are not in furtherance of one or more exempt purposes.

Section 1.501(c)(3)-1(b)(1)(iv) of the regulations provides that in no case shall an organization be
considered to be organized exclusively for one or more exempt purposes if, by the terms of its
articles, the purposes for which such organization is created are broader than the purposes
specified in section 501(c)(3). The fact that the actual operations of such an organization have
been exclusively in furtherance of one or more exempt purposes shall not be sufficient to permit
the organization to meet the organizational test. Similarly, such an organization will not meet the
organizational test as a result of statements or other evidence that the members thereof intend to
operate only in furtherance of one or more exempt purposes.

Section 1.501(c)(3)-1(b)(2) of the regulations provides that the term "articles of organization" or
"articles" includes the trust instrument, the corporate charter, the articles of association, or any
other written instrument by which an organization is created.

Section 1.501(c)(3)-1(b)(4) of the regulations provides that an organization is not organized
exclusively for one or more exempt purposes unless its assets are dedicated to an exempt
purpose. An organization's assets will be considered dedicated to an exempt purpose, for
example, if, upon dissolution, such assets would, by reason of a provision in the organization's
articles or by operation of law, be distributed for one or more exempt purposes, or to the Federal
government, or to a State or local government, for a public purpose, or would be distributed by a
court to another organization to be used in such manner as in the judgment of the court will best
accomplish the general purposes for which the dissolved organization was organized. However,
an organization does not meet the organizational test if its articles or the law of the State in which
it was created provide that its assets would, upon dissolution, be distributed to its members or
shareholders.

Rev. Proc. 82-2, 1982-1 C.B. 367 identifies the states and the circumstances in which the IRS will
not require an express provision for the distribution of assets upon dissolution in an exempt
organization's articles of organization to satisfy the organizational test requirement described in
section 1.501(c)(3)-1(b)(4) of the regulations. Section 3.03 of the revenue procedure lists eight
states which have statutes applicable to nonprofit charitable corporations that will satisfy the
provisions of regulations section 1.501(c)(3)-1(b)(4). The State of is not included among
the eight listed states. Section 3.03 of Rev. Proc. 82-2 further provides that a nonprofit
corporation in a jurisdiction not listed needs an adequate dissolution provision in its organizing
document to satisfy section 1.501(c)(3)-1(b)(4).

Section 1.501(c)(3)-1(c) of the regulations describes the operational test requirements for
501(c)(3) exemption. The operational test focuses on how the organization is actually operated,
regardless of whether it is properly organized for tax-exempt purposes.

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


Form 886-A Department of the Treasury — Internal Revenue Service Schedule number
Explanations of Items or exhibit

Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended

Section 1.501(c)(3)-1(c)(1) of the regulations 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 or more of such exempt purposes specified in section 501(c)(3). An
organization will not be so regarded if more than an insubstantial part of its activities is not in
furtherance of an exempt purpose. This is referred to as the "primary activities" test.

Section 1.501(c)(3)-1(c)(2) of the regulations provides that an organization is not operated
exclusively for one or more exempt purposes if its net earnings inure in whole or in part to the
benefit of private shareholders or individuals.

Section 511 of the Code imposes a tax at corporate rates under section 11 on the unrelated
business taxable income of certain tax-exempt organizations.

Section 6001 of the Code provides, in part, that 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 whether or not such
person is liable for tax under this title.

Section 1.6001-1(c) of the regulations provides that in addition to such permanent books and
records as are required by paragraph (a) of this section with respect to the tax imposed by section
511 on unrelated business income of certain exempt organizations, every organization exempt
from tax under section 501(a) shall keep such permanent books of account or records, including
inventories, as are sufficient to show specifically the items of gross income, receipts and
disbursements. Such organizations shall also keep such books and records as are required to
substantiate the information required by section 6033. See section 6033 and regulations sections
1.6033-1 through 1.6033-3.

Section 1.6001-1(e) of the regulations provides 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.

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

Catalog Number 20810W Page 6 www.irs.gov Form 886-A (Rev. 5-


Form 886-A Department of the Treasury — Internal Revenue Service Schedule number
Explanations of Items or exhibit

Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended

Section 6033 of the Code provides an exception to the annual filing requirement in the case of an
organization described in section 501(c) (other than a private foundation or a supporting
organization described in section 509(a)(3)) the gross receipts of which in each taxable year are
normally not more than $50,000. See section 1.6033-2(g)(1)(iii) of the regulations.

Section 1.6033-2(g)(5) of the regulations provide that an organization that is not required to file an
annual return by virtue of the gross receipts exception must submit an annual electronic notice
notification as described in section 6033(i) of the Code.

Section 1.6033-2(i)(2) of the regulations provides that every organization which is exempt from
tax, whether or not it is required to file an annual information return, shall submit such additional
information as may be required by the Internal Revenue Service for the purpose of inquiring into
its exempt status and administering the provisions of subchapter F (section 501 and following),
chapter 1 of subtitle A of the Code and section 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 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, on
the grounds that 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:

Analysis
The facts indicate received recognition of exemption under section 501(c)(3) of the
that Code in based on information presented in its Form 1023 application including
accompanying attachments and supplemental correspondence with the IRS determination
specialist.

is currently recognized as exempt under section 501(c)(3) of the Code. Accordingly,
must be both organized and operated exclusively for charitable and/or other purposes
specified in such section. See section 1.501(c)(3)-1(a)(1) of the regulations. The TE/GE division
of the IRS maintains an examination program for exempt organizations to determine whether they
are complying with statutory requirements regarding their tax-exempt status.

Catalog Number 20810W Page 7 www.irs.gov Form 886-A (Rev. 5-

Form 886-A Department of the Treasury — Internal Revenue Service Schedule number
Explanations of Items or exhibit

Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended

Organizational Test Not Met

was incorporated in the as evidenced by the Articles of Incorporation
submitted by with its Form 1023 application. corporate purpose as specified in
its organizing document is to actively assist individuals, who
during their
and recovery Such purpose is broader than the exempt purposes specified
in Code section 501(c)(3) and can be accomplished by activities that are not exclusively charitable
in nature. Taxpayer's organizing document contains no provision that limits its purposes or
activities to those exempt purposes described in section 501(c)(3) of the Code. See sections
1.501(c)(3)-1(b)(1)(i) and (iv) of the regulations.

An organization is not organized exclusively for one or more exempt purposes unless its assets
are dedicated to an exempt purpose. See section 1.501(c)(3)-1(b)(4) of the regulations. The issue
of the applicability of state law in relation to Reg. 1.501(c)(3)-1(b)(4) as to a particular organization
arises only where the organization itself has not provided for the distribution of its assets upon
dissolution in its organizing document. See Rev. Proc. 82-2 cited above. As a nonprofit
corporation organized in the needs an adequate dissolution provision in
its organizing document to satisfy section 1.501(c)(3)-1(b)(4). An organizing document can be
amended only in accordance with State law which generally requires the filing of the amendments
with the applicable governmental authority.

The IRS determination specialist who reviewed the 1023 application correctly identified the
deficiencies in organizing document and requested that the organization amend its
Articles of Incorporation to include adequate purpose and dissolution language to satisfy the
organizational test requirements set forth in section 1.501(c)(3)-1(b) of the regulations. The
President signed off on a statement affirming the filing of an amendment to its organizing
document. See Exhibit A. However, the IRS examiner assigned to examine
books and records could find no evidence of an amendment having been filed with the
Absent evidence to the contrary, the IRS asserts that organizing document fails
the organizational test described in regulations section 1.501(c)(3)-1(b).

Operational Test Not Met

was selected for audit to ensure that the organization's activities and operations align with
their approved exempt status and to verify whether was eligible to file Form 990-N based
on gross receipts. As part of standard audit procedures, the IRS examiner requested basic
financial records including books of account, minutes of Board meetings and records and
information pertaining to activities. Such records and information are needed to verify
whether continues to be operated exclusively for one or more of the exempt purposes
specified in section 501(c)(3) of the Code.

Section 6001 of the Code and the regulations thereunder impose requirements on exempt
organizations to keep books and records to substantiate information required under section 6033

Catalog Number 20810W Page 8 www.irs.gov Form 886-A (Rev. 5-


Form 886-A Department of the Treasury — Internal Revenue Service Schedule number
Explanations of Items or exhibit

Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended

of the Code. Although filed an electronic notice in lieu of a return, the organization is
nevertheless required to produce records and other information requested by the IRS to verify that
it operates in furtherance of its exempt purpose. See regulations section 1.6033-2(i)(2).

failed to respond to repeated reasonable requests to allow the IRS to examine its books
and records including its receipts, disbursements, and other items required to be kept and
maintained pursuant to sections 6001 and 6033(a)(1) of the Code.

Accordingly, has failed to meet the requirements of section 501(c)(3) of the Code and
sections 1.501(c)(3)-1(a) and 1.501(c)(3)-1(c) of the regulations, in that the organization has not
established that it is operated exclusively for exempt purposes and that no part of its net earnings
inures to the benefit of private shareholders or individuals. See also Rev. Rul. 59-95, 1959-1 C.B.
627.

Conclusion:

For the reasons stated above, the IRS has determined that is no longer exempt from
Federal income tax under section 501(a) of the Code as an organization described in Code
section 501(c)(3). The IRS is proposing to revoke 501(c)(3) tax-exempt status effective
the of the calendar year under examination.

Please note that this Form 886-A, Explanation of Items, which is also known as the revenue agent
report (RAR), constitutes an integral part of the attached letter #3618. Please refer to the
attached letter #3618 for additional information including appeals rights and other options
available to the organization and, the instructions for how to respond.

Catalog Number 20810W Page 9 www.irs.gov Form 886-A (Rev. 5-