Exemption was revoked for missing records and no shown exempt activity

Plain-English summary

An educational charity was examined after filing returns that, according to the IRS, showed little or no spending on exempt program services. A former officer also reported a dispute involving alleged misuse of the officer's identity and nonprofit funding, but the organization did not provide records that would let the IRS verify its operations. The IRS repeatedly requested financial statements, governing documents, minutes, director lists, and other materials by mail and phone, and also summoned bank accounts. The organization failed to establish that it operated primarily for exempt purposes and failed to keep its records available for examination. The IRS revoked its Section 501(c)(3) status and required corporate income-tax returns from the effective revocation date.

Ruling snapshot

• Question: Did the organization continue to qualify under Section 501(c)(3) when it showed little exempt activity and failed to provide examination records?
• Outcome: revoked
• Key authorities: IRC §§ 501(c)(3), 6001, and 6033(a)(1); 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 10/18/2023
Tax Exempt and Government Entities Taxpayer ID number (last 4 digits):

Form:

Release Number: 202409021 Tax periods ended:
Release Date: 3/1/2024
UIL Code: 501.03-08

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

Last day to file petition with United States
Tax Court:

1/16/2024
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 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 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 and 6033(a)(1) as well as 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 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:

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.

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,
Lynn A. Brinkley
Director, Exempt Organizations Examinations

Enclosures:
Publication 1
Publication 594
Publication 892

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

Department of the Treasury

Internal Revenue Service

Tax Exempt and Government Entities
Exempt Organizations Examinations

CERTIFIED MAIL — Return Receipt Requested

Dear
Why you’re receiving this letter

If you agree

Date:
05/31/2023

Taxpayer ID number:
Form:
Tax periods ended:

Person to contact:

Name:

ID number:

Telephone:

Fax:

Address:

Department of the Treasury

Internal Revenue Service

Tax Exempt and Government Entities
Division

Exempt Organizations Examinations

Manager's contact information:
Name:
ID number:
Telephone:

Response due date:

06/29/2023

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.

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,
fin 4. latins

hn A Matias, Supervisory, Internal Revenue Agent for
yon A. Brinkley

Director, Exempt Organizations Examinations

Enclosures:
Form 886-A
Form 6018

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

Form 886-A Department of the Treasury — Internal Revenue Service Schedule number
(May 2017) Explanations of Items

Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended
Issue:
Whether qualifies for exemption under Section 501(c)(3) of the Internal Revenue
Code.
Facts:
The EO was granted tax-exempt status on , , under Internal Revenue Code
Section § 501(a) as an organization described in § 501(c)(3). The organization conducted its
operations out of , . According to its determination

application dated ' , the purposes of the EO are as follows.

To instill within the confidence to be themselves,
but at a , through mentoring, education, and other support.
The organization filed Form year ended on
Income
Contribution $
Expenses

Professional Fees $C,

Occupancy, rent, utilities, and maintenance $ ,

Printing, publication, postage, and shipping $

Other expenses $ ,

Total Expenses $

Net Loss $ ,
We began an examination in . Spoke with the former secretary and

explained that in left the organization due to disagreement. The
founder/president applied for Loan { ) under the secretary’s
name with consent, but realized that false information was provided in the application.
The incident report # that filed at County
Department on \ , when received the initial letter from us on

Catalog Number 20810W Page 14 Www.irs.gov Form 886-A (Rev. 5-2017)

Form 886-A Department of the Treasury — Internal Revenue Service alec number
(May 2017) Explanations of Items
Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended
COUNTY DEPARTMENT SUMMARY INCIDENT REPORT

REPORT NUMBER:

INCIDENT INFORMATION

INCIDENT COGE [INCIDENT TYPE INITIAL fx JDATEFIME STARTEO we ENDED perenne REPORTED
| SUPP

REP ED FROM a WORBER [SEATON UF GCCURRENCE APPROVES BY:

LOCATION TYPE wr TYPE i GF ENTRY ee OF EXI7 i OF ENTRY PY GF EXIT _ iGG

PROPERTY LISTINGS

INVE TEM QUANTITY [BRAND MODEL
T a
' SERIAL NG WNER APPLIED NO COLOR MKT VALUE DMG VALUE
$ $

DESCRIPTION

REPORT NUMBER:

NARRATIVE
I was introduced to by a mutual friend in . asked me to help with her nonprofit in . I assisted

with mailing out letters to prospective donors as well as was helping organize community events. However, in

, | discovered fraudulent activity by with the nonprofit funding and separated myself from and

nonprofit on . According to Secretary of State website, used my name and a previous address
of mine without my knowledge or consent and dumped nonprofit, . into my name on .
signed documents filed with the Secretary of State acknowledging did so. illegally named me as the CEO, CFO, and
Secretary. I have filed fraud reports with the and attorney general. | believe used a previous address of mine so
that | would not be notified of what had done. knew this was not a current address for me because when | separated
myself from organization in . came to my current address to pick up a printer and documents I had gathered
at the last community event | had assisted with organizing.

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
(May 2017) Explanations of Items
Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended
The secretary decided to withdraw the funding and issued $ . money orders and
returned the funding back to ( ). On , , the
founder/president booth updated corporation statement of information through the

Secretary of State and listing the secretary as a director with old address at
; as the EO new address.

The founder/president submitted Form with signature dated , , and the
agency received the form on ; . The founder on , , updated the EO
address with secretary new address at , in the IRS data
base. We spoke with founder/president, was uncooperative and stated has not .
worked at the organization for years but Form indicated was the president
that signed the documents. Left a message ; , requesting address to send the
information document request (IDR) and did not respond.

We were able to locate an address in and issued a request for information on

; . The request was for financial and organizational for the year under examination. Mailed
as certified mail and the information was due back to us by ; . The organization
failed to respond to the request.

We issued delinquency notice on \ and mailed certified mail. The information was
due back to us by ; . On , , we received returned certified mail

that was mailed on , . We summons bank accounts
on ; and received email for the summon on ;
To date, we have not received financials, organizational information, meeting minutes, board
director lists, and other documents requested on

Law:

IRC § 501(c)(3) exempts from Federal income tax corporations, and any community chest, fund,
or foundation, organized and operated exclusively for religious, charitable, scientific, testing for
public safety, literary, or educational purposes, 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 and which does not participate in, or intervene in (including the

publishing or distributing of statements), any political campaign on behalf of any candidate for
public office.

IRC § 6001 states 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

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

: hibit
(May 2017) Explanations of Items or exhibit

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

the Secretary deems sufficient to show whether or not such person is liable for tax under this title.
The only records which an employer shall be required to keep under this section in connection
with charged tips shall be charge receipts, records necessary to comply with section 6053(c), and
copies of statements furnished by employees under section 6053(a).

Treas. Reg. § 1.6001-1(c) states 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 §§ 1.6033-1 through -3.

Treas. Reg. § 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 Service officers or employees
and shall be retained as long as the contents thereof may be material in the administration of any
Internal Revenue law.

In accordance with the above cited provisions of the Code and Regulations under IRC § 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.

Government’s Position:

Failure to Meet the Operational Test

The EO has failed to show us that they meet the operational test for a § 501(c)(3) organization for
the year under examination. In order to meet the operational test, they must show that they
engage primarily in activities which accomplish one or more of such exempt purposes specified in
section § 501(c)(3). We will not regard an organization as having met this test if more than an
insubstantial part of its activities is not in furtherance of an exempt purpose.

The evidence of their failure to operate for exempt purposes, we reviewed the Form filings
and found little or no support for exempt operations. The filed Form tor does not
show that they spent the $ of expenses on their exempt function program services. In fact,
they explicitly stated in Part that ($ ) of their expenses were for program services. The
return that they submitted Form and the subsequent year returns also submitted Form

. Clearly, they have not been performing exempt purpose activities for , which is required for

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

Form 886-A Department of the Treasury — Internal Revenue Service Schedule number

" or exhibit
(May 2017) Explanations of Items
Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended

a § 501(c)(3) organization to keep their tax-exempt status. We are proposing revocation because
they do not operate for exempt purposes.

Failure to Provide Records

The EO has failed to provide records as is required in Code § 6033(a)(1) and Regulation §
1.6033-1(h)(2). They failed to provide any organizational or financial information that we requested
during the examination. We attempted to obtain these records numerous times by mail and phone.
Without the EO’s records, we cannot verify that they are operating according to their exempt
purpose. Our position is that the organization not operating for exempt purposes.

Taxpayer's Position:

The taxpayer's position is unknown at this time.

Conclusion:

By not complying with the Code and Regulations, the organization has jeopardized its exempt
status. The tax year filing that organization provided us failed to show that they are operating
for exempt purposes. They have also failed to provide required documentation, thereby failing to
be complaint with the Code, and failing to show any evidence of their exempt activities. We have
no reason to believe that the EO is operating for exempt purposes.

As a result of the examination, we have determined that the EO is not operating for exempt
purposes as a §501(c)(3) organization. They have not provided any information to the disagree,
since the organization failed to operate primarily for exempt purposes, we are proposing
revocation of their tax-exempt status, effective ,
Since the organization will no longer have tax-exempt status beginning , they are liable for
filing Form 1120, U.S. Corporation Income Tax Return, as of that date.

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