IRS revokes charity for private benefit, poor records, and unsupported activities

Plain-English summary

A charity was recognized to help victims of child sexual abuse and educate the public about its effects. The IRS found little reliable evidence that the organization actually conducted its claimed workshops, support sessions, or other exempt programs, while bank records showed extensive meals, entertainment, medical, product, credit-card, cash-withdrawal, and related expenses. Its president alone controlled the bank accounts, and substantial funds went to her personal credit cards, Schedule C activities, or expenses that could not be distinguished from personal use. The organization also lacked functioning board oversight, dependable books, receipts, calendars, attendance records, and other documents needed to substantiate its activities and spending. The IRS concluded that the organization failed the operational test, allowed private inurement, and did not provide required records, so it revoked exemption effective January 1 of the redacted year.

Ruling snapshot

• Question: Did the organization operate exclusively for exempt purposes, maintain required records, and avoid private inurement to its president?
• Outcome: Revocation
• Key authorities: IRC §§ 501(c)(3), 502, 6001, 6033, and 7428; Treas. Reg. §§ 1.501(c)(3)-1, 1.6001-1, and 1.6033-1; Rev. Rul. 59-95

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
TE/GE: EO Examinations
1100 Commerce Street, MC 4920 DAL
Dallas, TX 75242

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

January 29, 2016

Number: 201620012 Taxpayer Identification Number:

Release Date: 5/13/2016
Person to Contact:

Identification Number:

UIL Code: 501.03-00 Contact Telephone Number:

CERTIFIED MAIL
Dear

This is a final adverse determination regarding your exempt status under section
501(c)(3) of the Internal Revenue Code (the Code). Our favorable determination letter
to you dated August 9, 2011 is hereby revoked and you are no longer exempt under
section 501(a) of the Code effective January 1, 20XX.

The revocation of your exempt status was made for the following reason(s):

You are not operating for any charitable, religious, educational, or other exempt
purpose. Our examination, for the tax years ended December 31, 20XX, December 31,
20XX and December 31, 20XX, reveals that you are not engaged primarily in activities
which accomplish religious, charitable, educational or other exempt purposes as
required by Treas. Req. section 1.501(c)(3)-1(c)(1). Moreover, you failed the
organizational test for exemption because your corporate status has been suspended;
therefore, you are not a corporation, community chest, fund, or foundation as required
by I.R.C. section 501(c)(3).

You failed to establish that you were not operated for the benefit of private interest of
your president as required for continued recognition of exemption pursuant to Treas.
Reg. 1.501(c)(3)-1(d)(1)(ii). Your income inured to the benefit of private shareholders
and individuals.

You failed to keep adequate books and records and 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 I.R.C. sections 6001,


and 6033(a)(1), Treas. Reg. 1.6033-2(i)(2) and Rev. Rul. 59-95, 1959-1 C.B. 627.

Contributions to your organization are no longer deductible under IRC §170 after
January 1, 20XX.

You are required to file income tax returns on Form 1120. These returns should be
filed with the appropriate Service Center for the tax year ending December 31, 20XX
and for all tax years thereafter in accordance with the instructions of the return.

Processing of income tax returns and assessments of any taxes due will not be delayed
should a petition for declaratory judgment be filed under section 7428 of the Internal
Revenue Code.

If you decide to contest this determination under the declaratory judgment provisions of
section 7428 of the Code, a petition to the United States Tax Court, the United States
Claims Court, or the district court of the United States for the District of Columbia must
be filed before the 91st Day after the date this determination was mailed to you. Please
contact the clerk of the appropriate court for rules regarding filing petitions for
declaratory judgments by referring to the enclosed Publication 892. You may write to
these courts at the following addresses:

United States Tax Court United States Court of Federal Claims
400 Second Street, NW 717 Madison Place, NW
Washington, D.C. 20217 Washington, D.C. 20005

United States District Court for the District of Columbia
333 Constitution Avenue, NW
Washington, D.C. 20001

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 taxpayeradvocate.irs.gov
or call 1-877-777-4778.

If you have any questions, please contact the person whose name and telephone
number are shown in the heading of this letter.

Sincerely,
Paul A. Marmolejo
Acting Director, EO Examinations

Enclosure:
Publication 892


Department of the Treasury Date: August 12, 2015
Internal Revenue Service

Taxpayer Identification Number:
Form:
Tax year(s) ended:

Person to contact / ID number:
Contact numbers:
Manager's name / ID number:

Manager's contact number:

Response due date:

Certified Mail - Return Receipt Requested
Dear

Why you are receiving this letter
We propose to revoke your status as an organization described in section 501(c)(3) of the Internal Revenue
Code (Code). Enclosed is our report of examination explaining the proposed action.

What you need to do if you agree

If you agree with our proposal, please sign the enclosed Form 6018, Consent to Proposed Action — Section
7428, and return it to the contact person at the address listed above (unless you have already provided us a
signed Form 6018). We'll issue a final revocation letter determining that you aren't an organization described in
section 501(c)(3).

After we issue the final revocation letter, we’ll announce that your organization is no longer eligible for
contributions deductible under section 170 of the Code.

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
revocation letter. Failing to respond to this proposal will adversely impact your legal standing to seek a
declaratory judgment because you failed to exhaust your administrative remedies.

Effect of revocation status
If you receive a final revocation letter, you'll be required to file federal income tax returns for the tax year(s)
shown above as well as for subsequent tax years.

What you need to do if you disagree with the proposed revocation
If you disagree with our proposed revocation, you may request a meeting or telephone conference with the
supervisor of the IRS contact identified in the heading of this letter. You also may file a protest with the

Letter 3618 (Rev. 6-2012)
Catalog Number 34809F


IRS Appeals office by submitting a written request to the contact person at the address listed above within 30
calendar days from the date of this letter. The Appeals office is independent of the Exempt Organizations
division and resolves most disputes informally.

For your protest to be valid, it must contain certain specific information including a statement of the facts, the
applicable law, and arguments in support of your position. For specific information needed for a valid protest,
please refer to page one of the enclosed Publication 892, How to Appeal an IRS Decision on Tax-Exempt Status,
and page six of the enclosed Publication 3498, The Examination Process. Publication 3498 also includes
information on your rights as a taxpayer and the IRS collection process. Please note that Fast Track Mediation
referred to in Publication 3498 generally doesn’t apply after we issue this letter.

You also may request that we refer this matter for technical advice as explained in Publication 892. Please
contact the individual identified on the first page of this letter if you are considering requesting technical

advice. If we issue a determination letter to you based on a technical advice memorandum issued by the Exempt
Organizations Rulings and Agreements office, no further IRS administrative appeal will be available to you.

Contacting the Taxpayer Advocate Office is a taxpayer right

You have the right to contact the office of the Taxpayer Advocate. Their assistance isn’t a substitute for
established IRS procedures, such as the formal appeals process. The Taxpayer Advocate can't reverse a legally
correct tax determination or extend the time you have (fixed by law) to file a petition in a United States court.
They can, however, see that a tax matter that hasn't been resolved through normal channels gets prompt and
proper handling. You may call toll-free 1-877-777-4778 and ask for Taxpayer Advocate assistance. If you
prefer, you may contact your local Taxpayer Advocate at:

Internal Revenue Service
Office of the Taxpayer Advocate

For additional information

If you have any questions, please call the contact person at the telephone number shown in the heading of this
letter. If you write, please provide a telephone number and the most convenient time to call if we need to
contact you.

Thank you for your cooperation.

Sincerely,

Enclosures:

Report of Examination
Form 6018
Publication 892
Publication 3498

Letter 3618 (Rev. 6-2012)
Catalog Number 34809F

Form number or exhibit

Form 886-A 990
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX

ISSUES
(1) Is ( ) organized and operated exclusively for exempt purposes within
the meaning of Internal Revenue Code section 501(c)(3) (IRC) and the Regulations?
(2) Does the records keeping practice of described below qualify to remain exempt

under section IRC section 501(c)(3)?
(3) Do withdrawals of cash, disbursements for personal expenses, and transferred funds to a
personal business described below inure to the benefit of ( ),
's President?

FACTS

Purpose and exempt status of

was incorporated in January 20XX. The purpose is to enhance the lives of
Americans. Specifically, intends to identify and help victims of child sexual
abuse. In addition, strives to educate the American public about the perils and
destructive consequences and long-term manifestations of child sexual abuse in all aspects
of a person’s individual and family life. initially received recognition of its
exempt status in July 20XX. The exempt status was automatically revoked for failure to file
Form 990-N in three consecutive years. reinstated its exempt status in 20XX.
Internal Revenue Service (IRS) received Forms 990-N from for the 20XX,
20XX, and 20XX tax years on May 15, 20XX, June 15, 20XX, and April 14, 20XX,
respectively.

Board of Directors and Corporate Officers
The following individuals were listed as officers and advisors on ’s Application
for Recognition of Exemption in March XX:

, Founder/CEO

, secretary

, Treasurer

, MD, Adviser

, PhD, Adviser

According to the Bylaws (remain effective since 20XX) attached to the Form 1023, none of
these positions were paid positions. No Forms W-2 or 1099s were issued by in
any of the years at issue.

Referral from SB/SE agent
We received a referral from a Small Business and Self Employed (SB/SE) Division agent,
who examined summonsed documents from a credit union showing the funds from

's bank accounts were transferred into an account of 's Schedule C
business, Administrative & Contract Services ( ). This account was in turn

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W  Page__1 publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A 990
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX

paying many personal expenses. Meanwhile, was making charitable
contributions to that she controls.

Audit and Records of

On December 9, 20XX, we informed of the Form 990 audit for the year ended
December 31, XX and provided an initial Information Document Request (IDR1). On
February 2, 20XX provided the following records:

1. A statement of “Governing instruments not revised since 20XX”

2. A statement of “Minutes, etc. — None officially taken. Meetings that were held were
largely conducted informally, by phone etc., largely due to President’s medical
condition”

3. Lease agreement between and ( ) and monthly
billing statements of June and July 20XX

4. A statement of “Receipts submitted as substitute for receipt journal? with the
following purchase receipts, purchase orders, and order conformations at retail

stores:
a. A purchase order of $ dated 1/29/20XX issued by to
paid by ’s Card
b. A credit card purchase receipt of $ dated 2/25/20XX, issued by
, signed by
c. An order confirmation of 10 t-shirts dated 11/10/20XX billed by to
d. An order confirmation of $ dated 12/13/20XX issued by
to
e. An order confirmation of and business cards dated
8/25/20XX billed by
f. An invoice of #10 envelopes billed by to an unknown customer
(paid by )
g. A purchase receipt of $ at dated 4/25/20XX paid by
Card
h. A purchase receipt of $ at dated 4/22/20XX paid by
Card
i. Five sales receipts at USPS:
i. $ (paid by , other prints were unreadable)
ii. $ (paid by debit card, 1 Ib. 9.9 oz. mailed to on
3/15/20XX)
iii. $ (paid by , 8.7 oz. mailed on
3/17/20XX),
iv. $ (paid by , 1 lb. 3.5 oz. mailed to on
6/19/20XX)
v. $ (paid by , 1 lb. 8.9 oz. mailed to on
8/31/20XX )
Report issued on August 12, 20XX
Form 886-A (1-1994) Catalog Number 20810W Page_2  _publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit
Form 886-A os) EXPLANATIONS OF ITEMS 990
Name of taxpayer Tax Identification Number Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX
j. Two purchase receipts: $ at (paid by ), and
$ at (paid by )
. General Ledger of 20XX (total $ deposit/donation received
and $ expenses) - a five-column spreadsheet ledger with no specific date

of debits and credits with a statement of “This ledger is based on receipts and
statements that could be documented and is a reflection of circumstances at that
time”

. A brief introduction of prepared in 20XX as to its mission and goals
. An invitation issued by - at on December 19,
20XX

. A flyer of fundraiser at the

. A blank order form of cosmetics with a statement of “All profits from your
purchases are donated to: a 501c(3) charitable organization EIN upon
request

10. Seven thank-you letters to donors of issued on February 29, 20XX
11.A blank copy of application for grant-loan- -scholarship
12.Monthly bank statements of 's accounts (Checking #

Saving # ) at from January 20XX through December

20XX( ), the deposits and withdrawals on the bank statements were
listed below:

Funds
transferred to

01/31/XX

Transfer to Meals,
or paid for Personal Entertain.
Trans. Transaction Description of Checking Account Credit Card Cash Office and Misc.

Date (# ) Deposits products Account Withdrawal Expenses Expenses Note
01/12/XX A
01/13/XX
01/17/XX
01/18/XX
01/19/XX 1
01/24/XX 2
01/21/XX 3
01/21/XX 4
01/27/XX 5
01/27/XX
01/30/XX
01/31/XX 6

A

02/01/XX

02/03/XX

02/03/XX

02/04/XX

02/06/XX

02/07/XX

02/07/XX

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 3 publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A 990
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

02/07/XX
02/07/XX c
02/07/XX 8
02/08/XX
02/09/XX
02/15/XX
02/15/XX
02/15/XX
02/15/XX
02/17/XX 9
02/21/XX
02/21/XX
02/21/XX
02/22/XX A
02/24/XX
02/24/XX
02/27/XX
02/27/XX
02/28/XX
02/28/XX
02/29/XX
03/02/XX B
03/02/XX A
03/05/XX
03/05/XX
03/06/XX 1
03/06/XX
03/06/XX
03/07/XX
03/09/XX
03/10/XX
03/10/XX
03/12/XX
03/13/XX
03/15/XX 12
03/15/XX
03/19/XX
03/19/XX
03/19/XX
03/27/XX A
03/28/XX 13
03/30/XX
03/31/XX
03/31/XX
04/03/XX A

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 4 publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A 990

Name of taxpayer Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

04/04/XX
04/06/XX
04/10/XX
04/13/XX
04/16/XX
04/16/XX
04/17/XX
04/19/XX
04/20/XX
04/21/XX
04/23/XX c
05/02/XX - A
05/04/XX
05/05/XX
05/07/XX
05/07/XX
05/07/XX
05/07/XX
05/07/XX
05/10/XX
05/12/XX
05/14/XX
05/15/XX
05/15/XX
05/18/XX
05/18/XX
05/19/XX
05/19/XX D
05/19/XX
05/21/XX
05/21/XX
05/30/XX
06/08/XX A
06/14/XX
06/14/XX
06/15/XX
06/16/XX
06/16/XX
06/20/XX
06/21/XX
06/22/XX
06/23/XX 15
06/27/XX
06/30/XX
07/01/XX

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 5 publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A
(Rev. January 1994) EXPLANATIONS OF ITEMS 990

Name of taxpayer Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

07/03/XX
07/03/XX A
07/09/XX
07/10/XX
07/10/XX 16
07/11/XX
07/11/XX
07/14/XX
07/11/XX
07/11/XX
07/16/XX
07/16/XX
07/18/XX
07/20/XX
07/21/XX
07/25/XX
07/26/XX
07/27/XX
07/28/XX A
07/30/XX
07/30/XX
08/02/XX
08/02/XX
08/04/XX
08/06/XX A
08/08/XX
08/08/XX A
08/08/XX 17
08/10/XX
08/13/XX
08/13/XX
08/15/XX E
08/16/XX
08/16/XX
08/20/XX
08/20/XX
08/20/XX
08/21/XX
08/22/XX
08/22/XX A
08/22/XX 18
08/23/XX
08/24/XX
08/27/XX
08/27/XX

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 6 publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A
(Rev. January 1994) EXPLANATIONS OF ITEMS 990

Name of taxpayer Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

08/27/XX
08/27/XX
08/27/XX
08/27/XX
08/29/XX A
08/31/XX
09/04/XX
09/14/XX
09/17/XX D
09/24/XX
09/28/XX
09/30/XX
10/10/XX A
10/15/XX
10/16/XX
10/18/XX
10/18/XX
10/19/XX
10/20/XX
10/22/XX
10/22/XX
10/22/XX
10/29/XX
10/30/XX
10/31/XX
11/01/XX
11/03/XX
11/03/XX A
11/05/XX
11/05/XX
11/05/XX
11/05/XX
11/05/XX
11/05/XX
11/06/XX
11/06/XX
11/07/XX
11/07/XX
11/07/XX
11/13/XX
11/13/XX
11/13/XX
11/13/XX
11/14/XX
11/14/XX

Report issued on August 12, 20XX
Form 886-A (1-1994) Catalog Number 20810W Page 7 publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A 990
(Rev, January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

11/16/XX
11/16/XX
11/16/XX
11/19/XX
11/19/XX
11/24/XX
11/24/XX
11/23/XX
11/24/XX
11/26/XX
11/26/XX A
11/27/XX
11/27/XX
11/27/XX
11/27/XX
11/27/XX
11/27/XX 19
11/27/XX
11/28/XX 7
11/29/XX
11/30/XX
12/05/XX A
12/07/XX
12/08/XX
12/10/XX
12/10/XX
12/12/XX 17
12/13/XX
12/14/XX
12/14/XX
12/14/XX
12/14/XX
12/15/XX
12/15/XX
12/17/XX A
12/17/XX
12/17/XX
12/19/XX
12/20/XX
12/20/XX
12/20/XX A
12/24/XX
12/24/XX
12/24/XX
12/22/XX

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 8 publish.no.irs.gov. Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A EXPLANATIONS OF ITEMS 990

(Rev. January 1994)

Name of taxpayer Tax Identification Number Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX

12/24/XX

12/26/XX

12/26/XX

12/27/XX

12/27/XX

12/27/XX

12/31/XX D

Funds
transferred to
ee Transfer to Meals,
or paid for Personal Entertain.
Trans. Transaction Description of Saving Account Credit Card Cash Office and Misc.
Date Ce ) Deposits Products Account Withdrawal Expenses Expenses Note
04/20/XX

04/20/XX

04/21/XX

08/13/XX

12/05/XX D

Total
Percentage
Deposits from 's personal
Note All financial charges due to withdrawal overdrawn were not included in the table above.
1 is a people search service that organizes information about people into comprehensive online profiles
that are accessible to consumers, businesses and non-profits.
2 Subscription of
3 The to protect and grow your wealth
4 Customized promotional items
5 was not able to attest whether the mailing expenses paid to were for shipping of products.
6 Customizable Invites. Order
7 Cleaning services
8 Pizza Pasta Salad (deposit for Fundraiser)
9 Food and Beverage Service
10 Jazz Performance/Music event
11 Department of Transportation Parking Violations
12 Celebrate film at
13 Medical marijuana dispensary
15 Celebration of life together
: 16,17 Office rent pay to the order of
) 18 (Prom supplies)
19
A Deposit from President's personal checks
B Checks written from individuals other than President
Cc Records not available to show the source of deposits
D Check was pay to the order of
$______ was donated by to , two $ checks paid to the order of sss — one Of them
E remarked: Products donations

Summary of XX Bank Records
Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 9 publish.no.irs.gov

Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A
(Rev. January 1994) EXPLANATIONS OF ITEMS 990

Name of taxpayer Tax Identification Number Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX

The gross receipts of in 20XX were $ . The total amount of checks written
by or checks paid to the order of her name was $ , which counted for
___%of 's gross receipts. had the following expenses:

° $ transferred to 's account

e $ was paid for products

e $ transferred to 's personal credit cards

e $ cash withdrawn by

e $ office expenses

°e $ meals, grocery, gas, medical, entertainment, and miscellaneous expenses
On February 3, 20XX, a meeting with and (Representative) was held
in ’s office at , Conference Room on 20th Floor, . We

learned the following issues from the information and documents provided above:

Resource Partners of

provided consulting services to small business customers. To demonstrate the
relationship between and provided an invoice (# )
issued by to its customer. The address on the invoice was the same as

’s. The invoice billed ’s customer $ for voice mail services.

claimed that intended to use as a resource partner
whose total profits would have been used to assist daily operations of

also provided an business card, on which shows a notation, “All
profits are donated to: a 501c3 charitable organization’.

Lack of records to substantiate credit card expenses and cash withdrawals

No records were provided to substantiate the purposes of $ in funds transferred from
accounts to 's credit card accounts and $ of cash withdrawals

made by . Some receipts provided on February 2 indicated that paid

for those purchases but submitted for 's expenses.

Unallocated office expenses between and its resource partners
Office supplies, shipping, and promotion items expenses appeared on 's bank
statements. No explanation was given as to how these expenses were related to
business. Some of them were for the business. Some of them were paid by

's credit cards, but they were submitted as 's expenses. No allocation
plan or records were maintained to divide these expenses between '
and selling products.

Meals, entertainment, and miscellaneous expenses

used 's debit card to pay meals, entertainment, gas, medical, and
miscellaneous expenses. The purpose of these expenses, claimed by , Was mostly
for 's clients or potential donors. did not maintain records to

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 10 _ publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A 990
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

substantiate or indicate what was purchased and how these expenses were related to
exempt purposes.

Lack of records substantiate exempt activities
In addition to the invoice and business card, provided two pieces of
colored publication: Prayer Ideas for January 20XX and a brief introduction prepared in 20XX
stating s mission and goals:

The Mission

To identify, protect, and help victims and survivors of child abuse, and educate the

community at large about the perils and destructive consequences and long-term effects

on all aspects of a person’s individual and family life.

The Goals

e Provide classes and workshops on how to identify victims, perpetrators and unsafe
places and situations.
Protect “at-risk’ children by providing safe, interim/transitional shelter:

e Provide counseling, support groups, workshops, and varied outlets encouraging
creative expression of survivors.

e To experience and share infinite possibilities through belief and practice

claimed these publications were distributed to 's clients during
activities conducted in 20XX. However, no records show what activities were held by
and how they were conducted.

On February 9, 20XX, we sent IDR2 to /Representative to verify information given
on February 3, 20XX. On March 15, 20XX, Representative provided the following documents:

1. A transmittal e-mail
2. A cover letter

3. Fictitious Business Name Statements filed in 20XX and 20XX by as
Proprietor/Owner of

4. Copies of subscribed by

5. An e-mail dated March 27, 20XX sent by to Representative

6. A request for VR/Vessel Record Information from to Department of
Motor Vehicle

7. Copies of 17 deposited items into 's bank accounts

8. A flyer of In-House Music for a jazz performance held in Hotel

9. A purchase receipt of $ at paid by

10. 's response, edits, and clarifications on Memorandum of Interview

11. Narratives to items listed on IDR2
We learned the following information from the documents above:

Business ventures of

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 11 publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A 990
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

started using as its resource partner in 20XX. Although
used ’s address on its invoice, denied ’s usage of

office space. issued 12 invoices to its customers in 20XX, which
generated gross revenue of $ in that year. did not specify which transferred
fund from 's account to 's account was related to the invoice in question
(# ), but provided $ was the cost basis (not including cost of marketing).
did not demonstrate how it would receive benefit from the 's business with its
customers. The Fictitious Business Name Statements filed in 2OXX and 20XX by
indicated that she was Owner or Proprietor of started her business
with in 20XX. She did not know how much in sales she made for
products, nor did she maintain the sales/inventory records. She did not contribute to
from sales because she did not earn any profit. An estimate of $ to $ tax
deduction was claimed on her tax return.

Substantiation provided for a couple of expenses
Articles of were provided to substantiate the subscription fees charged on
's bank statements. We asked why paid for the reports when the

beginning balance of bank accounts during the same calendar month was only

(checking) and $__—_—s(saving). Representative stated that in an effort to find
investments for subscribed to these publications for guidance on how
to invest funds. The service was not for the current balance, but for the anticipated
donations and other funds raised.

A purchase receipt of $ at paid by 's Card on
March 30, 20XX was provided. The receipt, remarked with two individual’s names, showed that
chocolates and dinner certificates were purchased. Representative claimed that the purchased
were promotional gifts for two perspective donors. One donated. The individual, who made a
$_____ contribution, appeared on one of thank-you letters issued by on February
29, 20XX.

Unsubstantiated payments for personal credit cards and cash withdrawals
We asked for credit card statements and actual expense receipts for funds transferred to

's credit accounts and cash withdrawals she made. Representative stated that not
enough time was allotted to truly uncover the underlying charges as requested. All cash
withdrawals were claimed to be used for stipends issued to 's clients, except the
$ withdrawal on February 8, 20XX. believed that was used for the February
fundraiser, a receipt was previously provided. However, the receipt, dated
February 25, 20XX, showed total $ expenses, of which $ was paid by

's credit card.

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 12 publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A a
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX

CLIENT M/F AGE GRADE STIPEND SESSIONS
ATTENDED
1 F 17 10 90 Most
2 F 18 11 80 Some
3 F 18 12 110 All
4 F 17 11 100 All
5 F 18 11 90 Most
Unallocated office expenses between and its business ventures
We asked to provide the purpose, recipient, and mail-to/ship-to address of the
following mail/shipments appearing on bank statements, and whether any of them were for
shipping products to ’s customers.
Trans. Date Transaction Description Amount
1/27/XX
2/15/XX
3/9/XX
3/19/XX
3/19/XX
3/31/XX
6/18/XX
8/13/XX
8/23/XX
10/18/XX
10/20/XX
11/3/XX
11/6/XX
12/15/XX
Total
Representative stated that cannot attest to the specific names and addresses to
whom mail was sent on specific days. She claimed the mailings were for the purpose of
promoting , announcing events, soliciting donations,
thanking donors or in some other way furthering business. was not
able to identify whether these shipments were sales, but claimed that
often sent thank-you notes, invitations, solicitations. Mailed invitations would have cost more —
explaining higher postage. However, receipts provided on February 2, 20XX
showed that some shipments were sent to the state of or

Meals, entertainment, and miscellaneous expenses

Report issued on August 12, 20XX
Form 886-A (1-1994) Catalog Number 20810W Page 13  publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A 990
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX

We asked for mileage logs and/or auto maintenance records to show mileage driven in 20XX
for gas expenses. The representative stated that did not keep maintenance

records for the personal vehicle she had in 20XX and she no longer has the vehicle.

We also asked for actual receipts of other expenses shown on bank statements, the purpose of
the purchases, the name and contact information of individuals had meals with.
Representative stated that the debit card expenses were used for either prospective donors or
anonymous clients. Moreover, did not possess the requested receipts, but stated
that the best evidence of the amount of money spent and where is the actual bank statement
that shows dates, amounts, location, etc.

's activities based on ’s best recollection
We asked for the number of group sessions and classes conducted, as well as the
date/time, topic, and class material of each session. Representative stated that there were
approximately 60 various sessions. did not retain calendars, but believed the
information below reflects accurate information based on ’s best recollection and
review of the documents that are available to her. Maintaining the confidentially of meetings
and pursuing the goal of establishing trust with participants would have precluded the taking of
any notes. The number of participants would have varied from 1 to 5. Class hours were
various. Topics included Health/Fitness, Self Worth, School, Dating, Fearful emotions,
Spirituality, Relationships, Recreation, and Finances. However, no records show how

retrieved the information.

February| March April May June | July August September | October November | December

6,19, 113,145.28 | 643,46 | 5,7, 14, 19) 14, 22 [16,113,360] 13, 20, 27, | 6,24 19,22, 24 | 5,13, 21, 8, 10, £7, 18,

24 28 23, 24,26, | 21, 26,27

27,29

We asked how received information of foster children, who became s
clients. Representative stated that spoke with . During the course of her
investigation, has been unable to verify Ms. ’s true title. Ms.
is deceased.
No application for grant/loan/scholarship received
We also asked whether had ever received applications for grant/loan/scholarship,
and what criteria were used to measure and approve the grant/loan/ scholarship. Representative

stated that did not receive any official application.

Fundraising and recruiting flyers

We asked for the number of participants, the funds raised, and names of workers/volunteers as to
's activities or flyers provided. Representative stated that no one attended and no

funds were raised for the event held on December 19, 20XX. Two flyers were for events in 20XX,

but inadvertently submitted. That was outside of audit scope.

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 14 _ publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A 990
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

Treatments for clients struggling in trauma from violence/childhood abuse

We asked for the expense receipts at and how they were related to
business. Representative stated that a licensed clinical psychotherapist believed that the
services similar to those offered by can be extremely beneficial in the treatment of
mental health problems resulting from mental traumas and personal tragedies.

S

We also asked how evaluate the progress and effectiveness of Ss
classes, group sessions, incentives offered (cash, meals, and grocery), treatment (prescription,
message, and entertainment) to clients because did not hire or pay any
professional therapist or consultant for its operations and programs offered to its clients.
Representative stated that the best evidence of the effectiveness would have been the
participants’ own statements, recounts (in group sessions, etc.), attendance, interactions with their
mentor & other participants, and willingness to continue in the voluntary program. However, no
clients’ statements, recounts, records of attendance and interaction with their mentor & other
participants were provided.

Official Website

We browsed 's official website on December 1, 20XX, March 17, 20XX and August
10, 20XX (see Attachment 1). did not make event calendar or similar information
available on its official website to broadcast its coming events.

Statute extension solicited
A statute extension request sent on February 27, 20XX has been solicited from
declined to extend the statute of limitations.

Audit expanded to subsequent years

The audit was expanded to years 20XX and 20XX. A meeting was scheduled on April 7, 20XX
for additional information and documents. Representative did not show up for the meeting.
Instead, she orally withdrew her representation for and stated that is
terminally ill. also declined to attend the meeting because of her medical reasons.
She partially provided the bank statements of 's bank accounts — Page 1 and Page
3 of every ’s monthly bank statement from April 20XX through December 20XX,
with a statement that she had done her best with all the information requested.

Summonsed records from

We summonsed bank statements, deposit items, and cancelled checks of

account at . The deposits and withdrawals of 's accounts at
for 20XX are listed below:

Report issued on August 12, 20XX

’ Form 886-A (1-1994) Catalog Number 20810W Page _15 _ publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form 886-A

(Rev. January 1994)

EXPLANATIONS OF ITEMS

Form number or exhibit

990

Name of taxpayer

Tax Identification Number

Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

Trans.
Date

Transaction Description of checking account

Deposits

Funds
transferred
to

__ or paid
for

Products

Transfer to
Personal
Credit Card
Account

Cash
Withdrawal

Meals
Entertain.

Office and Misc.
Expenses Expenses

Note

01/03/XX

01/04/XX

01/04/XX

01/04/XX

01/09/XX

>

01/09/XX

01/09/XX

01/11/XX

01/14/XX

01/15/XX

01/16/XX

01/22/XX

01/23/XX

01/24/XX

01/25/XX

01/25/XX

01/26/XX

01/28/XX

01/28/XX

01/29/XX

01/31/XX

01/31/XX

02/08/XX

02/11/XX

02/12/XX

02/13/XX

02/13/XX

02/13/XX

02/14/XX

02/14/XX

02/15/XX

02/16/XX

02/16/XX

02/19/XX

02/19/XX

02/19/XX

02/19/XX

02/19/XX

02/19/XX

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 16

publish.no.irs.gov

Department of the Treasury-Internal Revenue Service


Form 886-A
(Rev. January 1994)

EXPLANATIONS OF ITEMS

Form number or exhibit

990

Name of taxpayer

Tax Identification Number

Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

02/20/XX

02/20/XX

02/21/XX

02/22/XX

02/23/XX

02/25/XX

02/25/XX

02/25/XX

02/28/XX

02/28/XX

02/28/XX

03/04/XX

03/05/XX

03/06/XX

03/06/XX

03/11/XX

03/11/XX

03/11/XX

03/12/XX

03/13/XX

03/14/XX

03/14/XX

03/14/XX

03/18/XX

03/18/XX

03/18/XX

03/18/XX

03/18/XX

03/20/XX

03/20/XX

03/20/XX

03/21/XX

03/21/XX

03/21/XX

10

03/22/XX

03/25/XX

03/25/XX

03/25/XX

03/25/XX

03/27/XX

03/29/XX

11

03/30/XX

04/01/XX

04/01/XX

04/05/XX

Report issued on August 12, 20XX

Form 886-A (1-1994)

Catalog Number 20810W

Page 17 publish.no.irs.gov

Department of the Treasury-Internal Revenue Service


Form 886-A
(Rev. January 1994)

EXPLANATIONS OF ITEMS

Form number or exhibit

990

Name of taxpayer

Tax Identification Number

Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

04/05/XX

04/06/XX

04/07/XX

04/09/XX

04/10/XX

04/10/XX

04/10/XX

04/10/XX

04/11/XX

04/12/XX

04/12/XX

04/13/XX

04/15/XX

04/16/XX

04/17/XX

04/20/XX

04/22/XX

04/22/XX

04/22/XX

04/26/XX

04/26/XX

12

04/26/XX

04/27/XX

04/29/XX

05/06/XX

05/07/XX

05/08/XX

05/09/XX

05/09/XX

05/10/XX

05/10/XX

05/11/XX

05/13/XX

05/14/XX

05/16/XX

05/17/XX

05/18/XX

05/18/XX

05/20/XX

05/20/XX

05/28/XX

05/28/XX

05/28/XX

05/28/XX

05/28/XX

Report issued on August 12, 20XX

Form 886-A (1-1994)

Catalog Number 20810W

Page 18 publish.no.irs.gov

Department of the Treasury-Internal Revenue Service


Form 886-A
(Rev. January 1994)

Form number or exhibit

EXPLANATIONS OF ITEMS 990

Name of taxpayer

Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

05/29/XX

05/30/XX

06/02/XX

06/06/XX

06/06/XX

06/07/XX

06/07/XX

06/12/XX

06/14/XX

06/19/XX

06/20/XX

06/21/XX

06/24/XX

06/28/XX

06/28/XX

06/29/XX

06/30/XX

07/01/XX

07/01/XX

07/01/XX

07/01/XX

07/01/XX

07/02/XX

07/02/XX

07/03/XX

07/03/XX

07/03/XX

07/03/XX

07/03/XX

07/05/XX

07/05/XX

07/05/XX

07/08/XX

07/08/XX

07/08/XX

07/08/XX

07/08/XX

07/08/XX

07/08/XX

07/08/XX

07/08/XX

07/09/XX

07/10/XX

07/10/XX

07/10/XX

Report issued on August 12, 20XX

Form 886-A (1-1994)

Catalog Number 20810W

Page 19 publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A
(Rev. January 1994) EXPLANATIONS OF ITEMS 990

Name of taxpayer Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

07/11/XX

07/11/XX

07/12/XX

07/12/XX

07/13/XX

07/13/XX

07/13/XX

07/15/XX

07/16/XX

07/16/XX

07/16/XX

07/17/XX

07/17/XX

07/17/XX

07/17/XX

07/18/XX

07/18/XX

07/19/XX

07/19/XX

07/19/XX

07/20/XX

07/20/XX

07/22/XX

07/22/XX

07/22/XX

07/23/XX

07/24/XX

07/24/XX Cc

07/25/XX

07/25/XX

07/26/XX

07/26/XX

07/26/XX

07/27/XX

07/27/XX

07/29/XX

07/29/XX

07/29/XX

07/29/XX

07/30/XX

07/30/XX

07/30/XX

07/30/XX

07/31/XX

07/31/XX

Report issued on August 12, 20XX
Form 886-A (1-1994) Catalog Number 20810W Page 20 _ publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form 886-A
(Rev. January 1994)

EXPLANATIONS OF ITEMS

Form number or exhibit

990

Name of taxpayer

Tax Identification Number

Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

08/01/XX

08/01/XX

08/02/XX

08/02/XX

08/02/XX

08/02/XX

08/02/XX

14

08/03/XX

08/05/XX

08/05/XX

08/06/XX

08/07/XX

08/07/XX

08/09/XX

08/10/XX

08/10/XX

08/12/XX

08/12/XX

08/14/XX

08/14/XX

08/16/XX

08/16/XX

08/17/XX

08/19/XX

08/19/XX

08/19/XX

08/20/XX

08/21/XX

08/26/XX

08/27/XX

08/29/XX

09/01/XX

09/03/XX

09/03/XX

09/11/XX

09/16/XX

09/16/XX

09/17/XX

09/18/XX

09/18/XX

09/19/XX

09/20/XX

09/20/XX

09/21/XX

09/21/XX

Report issued on August 12, 20XX

Form 886-A (1-1994)

Catalog Number 20810W Page 21 publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A
(Rev. January 1994) EXPLANATIONS OF ITEMS 990

Name of taxpayer ; Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

09/23/XX

09/23/XX

09/23/XX

09/30/XX

09/30/XX

10/01/XX Cc

10/05/XX

10/07/XX

10/12/XX

10/14/XX

10/15/XX

10/15/XX

10/16/XX c

10/16/XX

10/16/XX

10/17/XX

10/17/XX

10/21/XX

10/21/XX

10/22/XX

10/22/XX

10/23/XX

10/23/XX

10/23/XX

10/24/XX

10/24/XX

10/24/XX

10/25/XX

10/25/XX

10/25/XX E

10/25/XX

10/26/XX

10/28/XX

10/28/XX

10/28/XX

10/28/XX

10/29/XX

10/29/XX

10/29/XX

10/29/XX

11/01/XX

11/14/XX

11/18/XX

11/19/XX

11/19/XX

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 22 publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form 886-A
(Rev. January 1994)

EXPLANATIONS OF ITEMS

Form number or exhibit

990

Name of taxpayer

Tax Identification Number

Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

11/20/XX

11/20/XX

11/20/XX

11/20/XX

11/21/XX

11/22/XX

11/22/XX

11/22/XX

11/22/XX

11/23/XX

17

11/23/XX

11/23/XX

11/25/XX

11/25/XX

11/27/XX

11/27/XX

11/27/XX

11/29/XX

11/30/XX

11/30/XX

11/30/XX

11/30/XX

12/01/XX

12/02/XX

12/03/XX

12/04/XX

12/07/XX

12/07/XX

12/09/XX

19

12/09/XX

12/09/XX

12/12/XX

12/13/XX

12/15/XX

12/16/XX

12/16/XX

12/18/XX

12/18/XX

12/19/XX

12/19/XX

12/20/XX

12/20/XX

12/21/XX

12/23/XX

12/23/XX

Report issued on August 12, 20XX

Form 886-A (1-1994)

Catalog Number 20810W Page 23 publish.no.irs.gov

Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A 990
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

12/23/XX

12/23/XX

12/23/XX

12/27/XX

12/30/XX

12/30/XX

12/30/XX

12/30/XX

12/31/XX

Funds
transferred
to

___ OF paid Transfer to
for President's Meals
Personal Entertain.
Trans. _ Credit Card Cash Office and Misc.
Date Transaction Description of Saving Account Deposits Products Account Withdrawal Expenses Expenses Note

01/08/XX

02/13/XX D

02/13/XX D

04/17/XX

04/17/XX

04/18/XX

05/09/XX Cc

05/17/XX D

05/18/XX

05/18/XX

05/18/XX

05/28/XX

05/28/XX A

05/28/XX

09/03/XX

10/29/XX

10/31/XX

10/31/XX

11/23/XX Cc

12/04/XX

Deposits from President

Summary of 20XX bank records .
The gross receipts of in 20XX were $ . The total amount of checks written
by or checks paid to the order of her name was $ , which counted for
% of 's gross receipts. had the following expenses:
e $ transferred to s account, " personal account, or
paid for products

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 24 _publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form 886-A

(Rev. January 1994)

EXPLANATIONS OF ITEMS

Form number or exhibit

990

Name of taxpayer

Tax Identification Number

Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

• $ transferred to 's personal credit cards
• $ cash withdrawn by
• $ office expenses
• $ meals, grocery, gas, medical, entertainment, and miscellaneous expenses

The deposits and withdrawals of

below:

's accounts at

for 20XX are listed

Trans.
Date

Transaction Description of Checking Account

Deposits

Funds
transferred
to
_ or paid for

Products

Transfer to
Personal
Credit Card
Account

Cash
Withdrawal

Office
Expense

Meals
Entertain.
and Misc.
Expenses

Note

01/02/XX

01/03/XX

01/03/XX

01/03/XX

01/04/XX

01/04/XX

01/06/XX

01/06/XX

01/06/XX

01/06/XX

01/07/XX

01/07/XX

01/09/XX

15

01/11/XX

01/13/XX

01/13/XX

01/13/XX

01/14/XX

01/14/XX

01/15/XX

01/15/XX

01/15/XX

01/21/XX

01/21/XX

01/21/XX

01/21/XX

01/21/XX

01/21/XX

01/21/XX

01/21/XX

01/22/XX

01/22/XX

01/23/XX

Report issued on August 12, 20XX

Form 886-A (1-

1994) Catalog Number 20810W Page 25

publish.no.irs.gov

Department of the Treasury-Internal Revenue Service


Form 886-A
(Rev. January 1994)

EXPLANATIONS OF ITEMS

Form number or exhibit

990

Name of taxpayer

Tax Identification Number

Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

01/23/XX

01/24/XX

01/25/XX

01/25/XX

01/27/XX

01/28/XX

01/28/XX

01/28/XX

01/28/XX

01/28/XX

01/29/XX

01/30/XX

01/31/XX

02/03/XX

02/03/XX

02/03/XX

02/04/XX

02/05/XX

02/05/XX

02/06/XX

02/06/XX

02/06/XX

02/07/XX

02/10/XX

02/11/XX

02/12/XX

02/12/XX

02/12/XX

02/12/XX

02/12/XX

02/14/XX

02/14/XX

02/14/XX

02/14/XX

02/15/XX

02/15/XX

02/18/XX

02/18/XX

02/18/XX

02/18/XX

02/21/XX

10

02/26/XX

02/28/XX

02/28/XX

02/28/XX

Report issued on August 12, 20XX

Form 886-A (1-1994)

Catalog Number 20810W

Page 26 publish.no.irs.gov

Department of the Treasury-Internal Revenue Service


Form 886-A
(Rev. January 1994)

EXPLANATIONS OF ITEMS

Form number or exhibit

990

Name of taxpayer

Tax Identification Number

Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

03/01/XX

03/01/XX

03/05/XX

03/06/XX

03/06/XX

03/06/XX

03/07/XX

03/07/XX

11

03/08/XX

03/08/XX

03/08/XX

03/08/XX

03/08/XX

03/10/XX

03/10/XX

03/10/XX

03/12/XX

03/12/XX

03/13/XX

03/13/XX

03/14/XX

03/14/XX

03/17/XX

03/17/XX

03/18/XX

03/19/XX

03/19/XX

03/19/XX

03/19/XX

03/20/XX

03/20/XX

13

03/24/XX

14

03/21/XX

03/21/XX

03/21/XX

03/28/XX

03/28/XX

03/29/XX

03/31/XX

03/31/XX

04/03/XX

16

04/03/XX

04/03/XX

04/03/XX

04/04/XX

Report issued on August 12, 20XX

Form 886-A (1-1994)

Catalog Number 20810W

Page 27 publish.no.irs.gov

Department of the Treasury-Internal Revenue Service


Form 886-A
(Rev. January 1994)

Form number or exhibit

EXPLANATIONS OF ITEMS 990

Name of taxpayer

Tax Identification Number

Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

04/04/XX

04/04/XX

04/05/XX

04/05/XX

04/05/XX

04/07/XX

04/07/XX

04/07/XX

04/07/XX

04/07/XX

04/07/XX

04/07/XX

04/08/XX

04/08/XX

04/09/XX

04/10/XX

04/11/XX

04/11/XX

04/11/XX

04/11/XX

04/11/XX

04/12/XX

04/12/XX

04/12/XX

04/14/XX

04/14/XX

04/14/XX

04/15/XX

04/15/XX

04/15/XX

04/19/XX

04/21/XX

04/21/XX

04/22/XX

04/24/XX

04/28/XX

05/01/XX

18

05/02/XX

05/02/XX

05/02/XX

05/05/XX

05/05/XX

05/06/XX

05/06/XX

05/06/XX

Report issued on August 12, 20XX

Form 886-A (1-1994)

Catalog Number 20810W

Page 28 publish.no.irs.gov

Department of the Treasury-Internal Revenue Service


Form 886-A
(Rev. January 1994)

EXPLANATIONS OF ITEMS

Form number or exhibit

990

Name of taxpayer

Tax Identification Number

Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

05/06/XX

19

05/06/XX

05/07/XX

05/07/XX

05/08/XX

05/08/XX

20

05/08/XX

05/09/XX

05/09/XX

05/09/XX

05/10/XX

05/12/XX

21

05/13/XX

05/14/XX

05/15/XX

05/15/XX

05/15/XX

05/16/XX

05/16/XX

23

05/16/XX

05/20/XX

05/20/XX

05/20/XX

05/21/XX

05/22/XX

05/24/XX

05/27/XX

05/27/XX

05/28/XX

05/29/XX

05/30/XX

05/30/XX

06/03/XX

06/06/XX

06/07/XX

06/09/XX

06/09/XX

06/13/XX

06/16/XX

06/17/XX

06/18/XX

06/18/XX

06/19/XX

06/20/XX

06/20/XX

Report issued on August 12, 20XX

Form 886-A (1-1994)

Catalog Number 20810W

Page 29 publish.no.irs.gov

Department of the Treasury-Internal Revenue Service


Form 886-A
(Rev. January 1994)

EXPLANATIONS OF ITEMS

Form number or exhibit

990

Name of taxpayer

Tax Identification Number

Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

06/20/XX

06/23/XX

06/24/XX

06/25/XX

06/26/XX

06/27/XX

06/30/XX

06/30/XX

24

06/30/XX

07/01/XX

07/03/XX

07/07/XX

07/07/XX

08/07/XX

09/08/XX

10/09/XX

11/07/XX

11/25/XX

12/05/XX

12/08/XX

12/31/XX

Trans.
Date

Transaction Description of Saving Account

Deposits

Funds
transferred
to
__ or paid for

Products

Transfer to
Personal
Credit Card
Account

Cash
Withdrawal

Meals
Entertain.

Office and Misc.
Expense Expenses

02/28/XX

02/28/XX

06/30/XX

08/05/XX

08/13/XX

08/21/XX

08/22/XX

08/25/XX

08/27/XX

09/03/XX

09/15/XX

11/10/XX

12/04/XX

Total

Percentage

Fund from President

Note

All financial charges due to withdrawal overdrawn were not included in the table above.

1

A full-service salon and spa serving

2

online

3

Restaurant

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 30

publish.no.irs.gov

Department of the Treasury-Internal Revenue Service


Form number or exhibit
Form 886-A
(Rev. January 1994) EXPLANATIONS OF ITEMS 990
Name of taxpayer Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

4 Women's clothing

5 Cruise trip

6 This shop affiliated with a ministry features a selection of spiritual books, gospel CDs & more.

7 is the fast, simple and secure way to pay online without using a credit card at more than 1000 stores.

8 Closeout chain selling a range of products, such as housewares, grocery items, furniture & apparel.

9 Upscale deli making pastries, salads, sandwiches & more for dining in or takeout

10 in _& Streaming online

11 Car Wash

12 Professional services

13 Licensed clinical social worker, is a professional who provides counseling and psychosocial services to clients in clinical settings

14 24 hour emergency outside service

15 Cruise planning

16 Bars near Concert Hall

17 LLC

18 Vehicle payment

19 Full Services Salon

20 Discount office supplies

21 of Beauty

22 yacht club offering full service yacht club amenities

23 Medical Marijuana Dispensary in

24 Medical marijuana in quality medication and excellent service

A Deposit from President's personal checks

B Checks written from individuals other than President

C Records not available to show the source of deposits

D Check was pay to the order of

Summary of 20XX bank records

The gross receipts of in 20XX were $ . The total amount of checks written
by or checks paid to the order of her name was $ , which accounted for
% of 's gross receipts. had the following expenses:

e $ transferred to 's account

e $ transferred to 's personal credit cards

e $ cash withdrawn by

e $ office expenses

e $ meals, grocery, gas, medical, entertainment, and miscellaneous expenses

On May 22, 20XX, we sent IDR4 with copies of the determination application
filed with IRS in 20XX and asked whether any changes in methods of operation from
what was described in the application.

On June 4, 20XX, we received s comment in response to IDR4: “No changes in
methods of operation.”

Report issued on August 12, 20XX
Form 886-A (1-1994) Catalog Number 20810W Page_31 _publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A 990
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer , Tax Identification Number Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX

On July 29, 20XX, we sent the summonsed records to and asked whether any errors

appear on the bank records provided by

On August 4, 20XX, commented that no errors appear on the bank records.
Additionally, she informed us of Ms. Wilks’ status as representative is no longer effective.

; , and Representative did not provide any other records to
demonstrate or substantiate 's exempt activities.

LAW

IRC section 501(c)(3) provides, in part, for the exemption from federal income tax of
corporations organized and operated exclusively for charitable, scientific, or educational
purposes, provided no part of the organization's net earnings inures to the benefit of any private
shareholder or individual.

IRC section 502(a) provides that an organization operated for the primary purpose of carrying
on a trade or business for profit shall not be exempt from taxation under section 501 on the
ground that all of its profits are payable to one or more organizations exempt from taxation
under section 501.

Treasury Regulations (Treas. Reg.) section 1.501(c)(3) -1(c)(2) states that an organization is
not operated exclusively for charitable purposes if its net earnings inure in whole or in part to
the benefit of private shareholders or individuals.

Treas. Reg. section 1.501(a)-1(c) defines “private shareholder or individual” as referring to
persons having a personal and private interest in the activities of the organization.

Treas. Reg. section 1.501(c)(3) -1(d)(1)(ii) states that an organization is not organized
exclusively for any of the purposes specified in IRC section501(c)(3) unless it serves public,
rather than private interests. Thus, an organization applying for tax exemption under IRC
section501(c)(3) must establish that it is not organized or operated for the benefit of private
interests.

Treas. Reg. section1.501(c)(3)-1(d)(3)(i) defines “educational” as “ In general... (a) The
instruction or training of the individual for the purpose of improving or developing his
capabilities; or (b) The instruction of the public on subjects useful to the individual and beneficial
to the community.

In Better Business Bureau of Washington, D.C. v. U.S., 326 U.S. 279, 283 (1945), the Supreme
Court held that the “presence of a single . . . [nonexempt] purpose, if substantial in nature, will
destroy the exemption regardless of the number or importance of truly ... [exempt] purposes.”

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 32 _publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A 990
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

In Airlie Foundation, Inc. v. U.S., 826 F. Supp. 537 (D. D.C. 1993), aff.d 55 F.3d 684 (D.C. Cir.
1995) the court acknowledged that Airlie's activities have some noncommercial characteristics,
but found these outweighed by other factors such as the nature of Airlie's clients and
competition, its advertising expenditures, and substantial revenues derived from weddings and
special events. In the court's view, these factors support an adverse conclusion. Finally, citing
a distinctive commercial hue to the way it carries out its business, the court concluded that Airlie
does not qualify under IRC 501(c)(3) because it operates its conference center in a manner
consistent with that of a commercial business.

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

IRC section 6033(a)(1) provides, except as provided in IRC section 6033(a)(2), every
organization exempt from tax under section 501(a) shall file an annual return, stating
specifically the items of gross income, receipts and disbursements, and such other information
for the purposes of carrying out the internal revenue laws. The Secretary may also prescribe by
forms or regulations the requirement of every organization to 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.

Treas. Reg. section 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 sections 1.6033-1
through -3.

Treas. Reg. section 1.6001-1(e) states that the books or records required by this section shall
be kept at all times available for inspection by authorized Internal Revenue 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.

Treas. Reg. section 1.6033-1(h)(2) provides that every organization that 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.

In accordance with the above cited provisions of the Code and Regulations under IRC sections
6001 and 6033, organizations recognized as exempt from federal income tax must meet certain

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page_33 __publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A 990
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

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.

IRC Section 6033(a)(1) provides, except as provided in IRC Section 6033(a)(2), every
organization exempt from tax under Section 501(a) shall file an annual return, stating
specifically the items of gross income, receipts and disbursements, and such other information
for the purposes of carrying out the internal revenue laws. The Secretary may also prescribe by
forms or regulations the requirement of every organization to 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.

Treas. Reg. Section 1.6033-1(h)(2) provides that every organization that 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.

Revenue Ruling 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 are so incomplete that the organization was unable to furnish such statements. The
ruling held that the failure or inability to file the required information return or otherwise to
comply with the provisions of IRC Section 6033 and the regulations which implement it, may
result in the termination of the exempt status of an organization previously held exempt, on the
grounds that the organization has not established that it is observing the conditions required for
the continuation of exempt status.

GOVERNMENT'S POSITION

We are proposing revocation based on ’s failure to operate exclusively for charitable
purposes, failure to provide operational information requested, and a part of its net earnings inures
to the benefit of individual prohibited by law, as discussed below.

Issue 1

received recognition of its exempt status because it commits to help victims of
child sexual abuse, and to educate the American public about the perils of child sexual abuse
on all aspects. However, there is no indication that conducts activities to fulfill its
exempt purpose.

provided two pages of handouts and claimed that they are given to Ss
clients during workshops. However, no records illustrate when the workshops take place, how

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 34  publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A 990
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

these handouts are used, and how they are related to ’s educational and charitable
purposes. Flyers show that hosted several fundraising events. However, no
publications were created and presented to ’s donors about ’$ progress
of its programs or recent accomplishments.

Bank statements reveal that does not have expenses that normally occur for
educational activities, such as fees for rental spaces of seminars, costs of class curriculum,
charges by instructors or professionals’ counseling for 's clients. Instead, we observe
a long list of meals, grocery, medical, gas, entertainment, and miscellaneous expenses. In
addition to these unsubstantiated expenses, 's funds paid for cosmetic products,

's credit card bills, and 's Schedule C activities. also
withdrew cash from s account at her discretion.

Treas. Reg. section 1.501(c)(3)-1(d)(1)(ii) provides that an organization is not organized or
operated for exempt purposes unless it serves a public rather than a private interest. The term
“educational” is used in IRC section 501(c)(3) in its general legal sense in the law of charities
and does not have a separate and distinct meaning from the term “charitable.” In construing
the meaning of the phrase “exclusively for educational purposes” in Better Business Bureau v.
United States, 326 U.S. 279 (1945), the Supreme Court of the United States said, “This plainly
means that the presence of a single noneducational purpose, if substantial in nature, will
destroy the exemption regardless of the number or importance of truly educational purposes.”

's exempt status should be revoked because it is not organized and operated
exclusively for exempt purposes within the meaning of IRC section 501(c)(3) and the
Regulations.

Issue 2

has failed to provide records as required in Code Section 6033(a)(1) and
Regulation Section 1.6033-1(h)(2). failed to provide operational information that
was requested during the audit. We made many attempts to obtain records via correspondence
and telephone contacts. Without ’s records to substantiate its expenses, we cannot
verify that is operating according to its exempt purpose.

This situation is similar to the case in Revenue Ruling 59-95. In that case, tax-exempt status is
revoked for failure to establish that it is observing the required conditions for exempt status,
namely, providing financial statements. has also failed to provide actual receipts
or equivalent records of its spending shown on bank statements to substantiate its exempt
purpose. should likewise have its exempt status revoked.

Issue 3
Another primary focus is the question of whether any of 's net earnings inured to the
benefit of private individuals. The term ‘net earnings’ as used in IRC section 501(c)(3) includes

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 35 _publish.no.irs.gov Department of the Treasury-Internal Revenue Service


Form number or exhibit

Form 886-A 990
(Rev. January 1994) EXPLANATIONS OF ITEMS

Name of taxpayer Tax Identification Number Years/Periods ended

12/31/20XX
12/31/20XX
12/31/20XX

more than the net profits as reflected on the organization's books. Net earnings may inure to the
benefit of an individual in a variety of ways, and not merely through the distribution of dividends.

does not correctly book its revenue and expenses on its general ledger.

provides that the figures recorded the 20XX ledger ($ income and $
expenses) is a reflection of circumstances at that time. does not rely on records for
bookkeeping purposes. does not have a system or procedure to keep its cash
receipts and disbursements accountable. , President of , is the only
individual who has the access to 's bank account, signs checks, purchases using

's debit card, and makes deposits or withdrawals. No Board is functioning to oversee

's financial activities or review bank statements.

Bank records clearly show that substantial funds of are transferred to Ss

Schedule C activities and personal credit card accounts. Moreover, significant amounts of
expenses for meals, gas, grocery, medical, entertainment, and unsubstantiated withdrawals, are
not distinguishable whether they were for operations or "s personal use.
Without reliable records, we cannot verify that these expenditures are exclusively for

s exempt purpose. Our position is that a portion of 's net earnings inure
to the benefit of and has thereby violated the requirements for tax
exemption under IRC section 501(c)(3).

TAXPAYER'S POSITION

The taxpayer's position is unknown at this time.

CONCLUSION
As a result of the audit, we have determined that is not operating for exempt
purposes as a IRC section 501(c)(3) organization. fails the operational test
prescribed in Treas. Reg. 1.501(c)(3)-1. Because is not organized and operated
exclusively for one or more exempt purposes under IRC section 501(c)(3), its Federal tax exempt
status under such section is revoked effective January 1, 20XX. is required to file

Form 1120, U.S. Corporation Income Tax Return, for the tax year ended December 31, 20XX and
all years there after.

Report issued on August 12, 20XX

Form 886-A (1-1994) Catalog Number 20810W Page 36 _publish.no.irs.gov Department of the Treasury-Internal Revenue Service