IRS revokes 501(c)(8) status of a fraternal society that stopped responding

Plain-English summary

The IRS revoked the tax-exempt status of a fraternal beneficiary society that
had been exempt under Section 501(c)(8). To keep that status, a group must be a
fraternal organization operated under the lodge system that provides life,
sick, accident, or other benefits to its members. During an employment-tax and
information-return examination, the organization never responded to letters or
calls and produced no records. Because it did not show it was a qualifying
fraternal society, and did not keep or provide the records that Sections 6001
and 6033 require, the IRS proposed and then finalized revocation. The
governing authority for revoking a silent organization is Revenue Ruling 59-95,
which lets the IRS end exemption when a group will not establish that it still
meets the conditions for exemption. The organization can contest the decision
in Tax Court, the Court of Federal Claims, or the U.S. District Court for the
District of Columbia under Section 7428.

Ruling snapshot

• Question: Should a 501(c)(8) fraternal society lose its exemption when it fails to show it provides fraternal benefits and does not keep records or respond to the IRS?
• Outcome: Revocation of exempt status
• Key authorities: IRC § 501(c)(8); Treas. Reg. § 1.501(c)(8)-1(a); IRC § 6001; IRC § 6033(a)(1); Treas. Reg. § 1.6001-1; Treas. Reg. § 1.6033-1(h)(2); Rev. Rul. 59-95, 1959-1 C.B. 627; IRC § 7428

Full text (IRS public release)

Department of the Treasury                          Date: May 31, 2024
Internal Revenue Service

Tax Exempt and Government Entities                  Taxpayer ID number (last 4 digits):
Exempt Organizations Examinations
                                                    Form:
Release Number: 202425016                           Tax periods ended:
Release Date: 6/21/2024
UIL Code: 501.03-00                                 Person to contact:
                                                      Name:
                                                      ID number:
                                                      Telephone:
                                                      Fax:

                                                    Last day to file petition with United States
                                                    Tax Court: August 29, 2024

CERTIFIED MAIL - Return Receipt Requested

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)(8), for the tax
periods above. Your determination letter dated          is revoked.

Our adverse determination as to your exempt status was made for the following reasons: Organizations exempt
from tax under section 501(c)(8) of the Internal Revenue Code must be fraternal beneficial societies, orders, or
associations, operated under the lodge system, which provide life, sick, accident, or other benefits to their
members or their dependents. See Treas. Reg. § 1.501(c)(8)-1(a). You have not demonstrated that you are a
fraternal organization, or that you provide life, sick, accident or other benefits required by I.R.C. § 501(c)(8).
Further, you have not kept sufficient records to establish that you are observing the conditions of your tax-
exempt status. See Treas. Reg. § 1.6033-1; Rev. Rul. 59-95.

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.

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. 3-2024)
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.

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 if 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. Visit TaxpayerAdvocate.IRS.gov/contact-us or call 877-777-4778 (TTY/TDD 800-829-4059)
to find the location and phone number of your local advocate. Learn more about TAS and your rights under the
Taxpayer Bill of Rights at TaxpayerAdvocate.IRS.gov. Do not send your Tax Court petition to TAS. Use the
Tax Court address provided earlier in the letter. Contacting TAS does not extend the time to file a petition.

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.

Letter 6337 (Rev. 3-2024)
Catalog Number 74808E

Keep the original letter for your records.

Sincerely,

[signature]

Lynn A. Brinkley
Director, Exempt Organizations Examinations

Enclosures:
Publication 1
Publication 594
Publication 892

Letter 6337 (Rev. 3-2024)
Catalog Number 74808E

---

Department of the Treasury                          Date: 12/29/2023
Internal Revenue Service                            Taxpayer ID number:
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:
                                                    1/5/2024

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)(8).

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)(8) 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

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

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.

4. Request technical advice from the Office of Associate Chief Counsel (Tax Exempt
   Government Entities) if you feel the issue hasn't been addressed in published precedent
   or has been treated inconsistently by the IRS.

If you're considering requesting technical advice, contact the person shown at the top of
this letter. If you disagree with the technical advice decision, you will be able to appeal to
the IRS Appeals Office, as explained above. A decision made in a technical advice
memorandum, however, generally is final and binding on Appeals.

If we don't hear from you
If you don't respond to this proposal within 30 calendar days from the date of this letter, we'll
issue a final adverse determination letter.

Contacting the Taxpayer Advocate Office is a taxpayer right
The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that can
help protect your taxpayer rights. TAS can offer you help if your tax problem is causing a
hardship, or you've tried but haven't been able to resolve your problem with the IRS. If you
qualify for TAS assistance, which is always free, TAS will do everything possible to help you.
Visit www.taxpayeradvocate.irs.gov or call 877-777-4778.

For additional information
You can get any of the forms and publications mentioned in this letter by visiting our website at
www.irs.gov/forms-pubs or by calling 800-TAX-FORM (800-829-3676).
If you have questions, you can contact the person shown at the top of this letter.

Sincerely,

Michelle Henson signing for
Lynn A. Brinkley
Director, Exempt Organizations Examinations

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

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

ISSUES
1. Whether the organization,          , provided information
   verifying its continued qualification for exempt status under Section 501(c)(8) of the Internal
   Revenue Code (IRC).
2. Whether the exempt status should be revoked for
   failure to provide information verifying its continued qualification for exempt status for the
   tax period ending          .

FACTS
          is a tax-exempt organization under IRC section 501(c)(8).
The organization was granted a tax-exempt status in the month of          under a group
ruling with establishment of          .

On          , the assigned agent began an examination of the organization's Form 941
for tax year ended          . On          , the Internal Revenue Service ("IRS")
sent the organization an initial contact letter requesting books and records, delinquent Forms 941,
or copies of filed Forms 941 for the year, but the lack of responses to the Letter 6031 Initial
Appointment Letter and Form 4564, Information Document Request (IDR) subsequently mailed to
the organization's PO Box and street address led to expanding the examination to the
organization's Form 990 for the fiscal year ending          in order to determine if the
organization is still in existence.

The first postal tracer (Form 4759) to the Postmaster in          was sent on
          . The Postmaster response on          , revealed that the
organization's mail is delivered to the PO Box address. The organization did not respond to any of
the letters and employment tax reports mailed to the organization's PO Box or the street address.

On          , Letter 6031, Publication 1, Notice 609, Publication 5295, and Form 4564,
Information Document Request, for the initial examination letter for the Form 990 was mailed to
the organization's street address at          . The
organization did not respond to the Letter 6031 and Form 4564 (IDR), which had a response due
on          . Form 3011, Domestic Return Receipt, shows that the Letter 6031, Form
4564-IDR, notice, and publications packaged was received and signed on          , by
the organization's          .

On          , the agent called the telephone number listed on the organization's Form
990, but there was no response. Per public records, the phone has been De-Listed in Electronic
Directory Assistance.

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

Form 886-A          Department of the Treasury — Internal Revenue Service          Schedule number
(May 2017)          Explanations of Items                                          or exhibit
Name of taxpayer                          Tax Identification Number (last 4 digits) | Year/Period ended

The second postal tracer (Form 4759) to the Postmaster in          was sent on
          . The Postmaster response received on          , revealed that the
organization's mail is delivered to the PO Box address.
On          , Letter 5077-D TEGE IDR Delinquency Notice -Pre-Summons and Form
4564 was mailed to the organization and there was no response to the letter and IDR.

LAW
IRC Section 6033(a)(1) provides in part that every organization exempt from taxation 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 purpose of carrying out the internal
revenue laws as the Secretary may by forms or 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.

Treasury Regulations Section (Treas. Reg.) 1.6001-1(a) provides in part that any person subject
to tax under Subtitle A of the Code, or any person required to file a return of information with
respect to income, shall keep such permanent books of account or records, including inventories,
as are sufficient to establish the amount of gross income, deductions, credits or other matters
required to be shown by such person in any return of such tax or information.

Treas. Reg. 1.6001-1(c) provides in part that 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.

Treas. Reg. 1.6001-1(d) provides in part that the district director may require any person, by notice
served upon him, to make such returns, render such statements, or keep such specific records as
will enable the district director to determine whether or not such person is liable for tax under
Subtitle A of the Code.

Treas. Reg. 1.6001-1(e) provides in part 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 so long as the contents thereof may become material in the administration of any
internal revenue law.

Treas. 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 district director for the purpose of
enabling him to inquire further into its exempt status and to administer the provisions of
subchapter F (section 501 and the following), chapter 1 of the Code and IRC Section 6033.

Treas. Reg. 1.6033-2(i)(2) provides in part that every organization which is exempt from tax 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,
Chapter 1 of Subtitle A of the Code, section 6033, and Chapter 42 of Subtitle D of the Code.

Revenue Ruling 59-95, 1959-1 C.B. 627 held that failure or inability to file the required information
return or otherwise to comply with the provision 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 an exempt status.

TAXPAYER'S POSITION
The Taxpayer has not provided a position.

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

The organization has failed repeatedly to respond to the Service's request for information in
contrast to section 1.6033-1(h)(2) of the regulations which require an organization to provide
such information as requested to allow the Service to make a determination of that
organization's exempt status.

It is the Service's position that the organization failed to meet the reporting requirements under
IRC Section 6001 and 6033 to be recognized as exempt from federal income tax under
IRC Section 501(c)(8). Accordingly, it is proposed that the organization's exempt status be
revoked effective from the tax year ending          .

No response has been received from the organization, via telephone, mail, nor electronic mail, to
substantiate its qualification for tax-exempt status as indicated on its Forms 990-EZ, nor has any
requests for extensions of time to provide such information been received. The agent made
multiple attempts to contact the organization via phone and mail, with no response.

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

The Taxpayer has not provided information or testimony to assert its qualification for tax
exemption under IRC Section 501(c)(8). The agent is unable to verify that it is organized and
operated exclusively for exempt purposes to justify its tax-exempt status.

CONCLUSION
The organization has failed to provide information verifying its continued qualification for exempt
status under IRC 501(c)(8) and should have its status revoked for the tax period ending
          , effective          .

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