Inactive school's section 501(c)(3) status revoked

Plain-English summary

The IRS revoked the section 501(c)(3) status of an organization that had previously been classified as a school under section 170(b)(1)(A)(ii). The organization stopped operating during the COVID-19 pandemic and remained inactive for several years. An IRS site visit found an abandoned-looking building, empty dormitories, and no signs of activity, and the organization did not document claims that it was providing help elsewhere. Its representatives acknowledged that it had no operational or financial activity and lacked a faculty, regular student body, and curriculum. Because the organization no longer operated for its exempt purposes or met the requirements for classification as a school, the IRS revoked its exemption and ended the deductibility of contributions.

Ruling snapshot

• Question: Did an inactive organization without a faculty, curriculum, or regularly enrolled student body continue to qualify under IRC § 501(c)(3) and § 170(b)(1)(A)(ii)?
• Outcome: Revocation
• Key authorities: IRC §§ 170(b)(1)(A)(ii) and 501(c)(3); Treas. Reg. §§ 1.170A-9(c)(1) and 1.501(c)(3)-1(a)(1), (c)(1), and (d)(i); Rev. Rul. 58-617

Full text (IRS public release)

Department of the Treasury                                      Date:
Internal Revenue Service                                        August 30, 2023
IRS Tax Exempt and Government Entities                          Taxpayer ID number (last 4 digits):

Release Number: 202347016                                       Tax periods ended:
Release Date: 11/24/2023
UIL Code: 501.03-00                                             Person to contact:
                                                                Name:
                                                                ID number:
                                                                Telephone:
                                                                Fax:
                                                                Last day to file petition with United States
                                                                Tax Court:
                                                                Tuesday, November 28, 2023

Form:

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 been
inactive for several years and you do not have a faculty, full body of student, and curriculum. As such, you no
longer meet the operational requirements to continue your exemption status under Internal Revenue Code (IRC)
Section 501(c)(3) and IRC Section 170(b)(1)(A)(ii).

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

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.

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

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:

Internal Revenue Service

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 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.

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

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,

Lynn A. Brinkley
Director, Exempt Organizations Examinations

Enclosures:
Publication 1
Publication 594
Publication 892

cc:

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

Department of the Treasury                                      Date:
Internal Revenue Service                                        06/07/2023
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:
CERTIFIED MAIL - Return Receipt Requested                       Telephone
                                                                Response due date:
                                                                July 07, 2023
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.

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. 8-2019)
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,

for Lynn A. Brinkley
Director, Exempt Organizations Examinations

Enclosures:
Form 886-A, Form 6018
Publication 5, Publication 892, Publication 3498

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

Form 886A                 Department of the Treasury - Internal Revenue Service          Schedule No. or
                                      Explanation of Items                                Exhibit 1
Name of Taxpayer                                                                   Year/Period
                                                                                   Ended

ISSUE:

Whether                         continues to qualify for exemption as an
organization described in the Internal Revenue Code (IRC) Section 501(c)(3) and
170(b)(1)(A)(ii) because of no operation or activity since                         which
includes the year of examination.

FACTS:

                         was incorporated under the laws of the State of
                         as a non-profit corporation on                         , for the purpose of the
following:

The corporation is organized under the nonprofit public benefit corporation law for:
charitable purposes. The specific purpose of this corporation is to
                         .

On                         , the                         was recognized to be exempt from federal income
tax as an organization described in IRC Section 501(c)(3) and 170(b)(1)(A)(ii). The
                         immediately conducted renovations on the building located at
                         from                         to                         . The
organization conducted operations with                         for a set of                         at
$          per person                         on a                         in                         . This
operation lasted for                         during                         . The                         was out of operation in
                         due to Covid-19 and has continued to be out of operation in                         and
                         . The agent visited the                         location on                         and saw where the building was
abandoned and the toilets were developing rust, boxes were packed up in the
gymnasium and the dormitories were empty showing no signs of activities. Finally,
                         of the                         stated that the                         has been sending its                         to
                         to help people of                         to                         and                         . The
agent requested proof,                         did not provided documentation but agreed to accept
the position of revocation to regroup and potentially move the organization to
                         .

During telephone discussion on                         , the organization's representative
stated the history of the organization:

In the interview dated                         , the organization's representative responded to
the                         agent, “
                         of COVID19 and has not restarted since                         . Additionally, In                         the                         held
about                         before Covid-19 hit and they had to close down. The
board is thinking about conducting their                         given the risks of person to
person                         with Covid-19 still around.

During the                         interview on                         , the board member                         stated:

LAW:

IRC § 501(c)(3) exempts from federal income tax organizations which are organized
and operated exclusively for religious, charitable, scientific, testing for public safety,
literary, or educational purposes, or to foster national or international amateur sports
competition (but only if no part of its activities involve the provision of athletic facilities
or equipment), or for the prevention of cruelty to children or animals, no part of the
net earnings of which inures to the benefit of any private shareholder or individual, no
substantial part of the activities of which is carrying on propaganda, or otherwise
attempting, to influence legislation (except as otherwise provided in subsection (h)),
and which does not participate in, or intervene in (including the publishing or
distributing of statements), any political campaign on behalf of (or in opposition to)
any candidate for public office.

Tax Reg. § 1.501(c)(3)-1(d)(i) states that an organization may be exempt as an
organization described in 501(c)(3) if it is organized and operated exclusively for one
or more of the following purposes: religious, charitable, scientific, testing for public
safety, literary, educational, or prevention of cruelty to children or animals.

Tax Reg. § 1.501(c)(3)-1(a)(1) of the regulations provides that in order to be exempt
as an organization described in section 501(c)(3) of the Code, the organization must
be one that is both organized and operated exclusively for one or more of the
purposes specified in that section.

Tax Reg. § 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)

Tax Reg. § 1.170A-9(c)(1) of the regulations provides institutions such as primary,
secondary, preparatory, or high schools, and colleges and universities. Section
170(b)(1)(A)(ii) organizations, commonly known as “schools,” must:

• Present formal instruction as its primary function,

• Normally maintain a regular faculty and curriculum, and

• Normally have a regularly enrolled body of pupils or students in attendance at the
  place where its educational activities are regularly carried on.

Normally - A Section 170(b)(1)(A)(ii) organization must normally maintain a regular
faculty and curriculum and normally have a regularly enrolled body of pupils or
students in attendance at the place where its educational activities are regularly
carried on. Where a new organization is taking reasonable steps that lead to
operation as a Section 170(b)(1)(A)(ii) organization, it may be treated as "normally"
meeting the requirements of Section 170(b)(1)(A)(ii).

Revenue Ruling 58-617, 1958-2 CB 260, (Jan. 01, 1958) Rulings and determinations
letters granting exemption from federal income tax to an organization described in
section 501(a) of the Internal Revenue Code of 1954, to which contributions are
deductible by donors in computing their taxable income in the manner and to the extent
provided by section 170 of the Code, are effective only so long as there are no material
changes in the character of the organization, the purposes for which it was organized,
or its methods of operation. Failure to comply with this requirement may result in
serious consequences to the organization for the reason that the ruling or determination
letter holding the organization exempt may be revoked retroactively to the date of the
changes affecting its exempt status, depending upon the circumstances involved, and
subject to the limitations on retroactivity of revocation found in section 503 of the Code.

TAXPAYER'S POSITION:

The organization's representative                         declared that the organization has no
operational or financial activities. Additionally,                         a board member, agreed
that the                         does not have a faculty, full body of student and curriculum when the
organization was actively operating in                         and is not considered as a                         . The
representative                         on                         verbally agreed to the revocation as the
organization is no longer operating for its exempt purposes.

GOVERNMENT'S POSITION AND CONCLUSION:

As demonstrated in Rev. Rul. 58-617, an organization's exempt status will remain in
effect only so long as there are no material changes in the character of the
organization, the purposes for which it was organized, or its methods of operation. In
the case of                         Inc. the organization has been inactive for                         years and there
have been no activities conducted. The sole activity of the                         is, the                         was
                         by
                         . However, the
organization has not been in operation since                         . As such,                         fails to meet the
operational requirements to continue its exemption status under IRC 501(c)(3) and
170(b)(1)(A)(ii). Therefore, the effective revocation date will be                         .