Exemption revoked after organization ignored examination requests

Plain-English summary

A section 501(c)(3) organization did not respond to repeated IRS requests for records during an examination. The IRS sent certified and ordinary mail, checked the address with the Postal Service, called the organization's listed contact, and left follow-up messages. It received no records or other response that would allow it to verify the organization's receipts, expenses, activities, or continued exempt operation. The organization also appeared inactive in its state of incorporation. Under sections 6001 and 6033 and Revenue Ruling 59-95, the IRS concluded that the organization had not established continued compliance with the exemption requirements and revoked its status.

Ruling snapshot

• Question: Could the organization retain section 501(c)(3) status after failing to provide records or respond to repeated examination requests?
• Outcome: revocation
• Key authorities: IRC §§ 501(c)(3), 6001, 6033; Treas. Reg. §§ 1.6001-1, 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
IRS Tax Exempt and Government Entities Taxpayer ID number (last 4 digits):

Form:

Release Number: 202404008
Release Date: 1/26/2024
UIL Code: 501.03-18 Person to contact:
Name:
ID number:
Telephone:
Fax:
Last day to file petition with United States
Tax Court:
1/16/2024

Tax periods ended:

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 must be
both organized and operated exclusively for charitable, educational, or other exempt purposes within the
meaning of section 501(c)(3). You have not demonstrated that you are operated exclusively for charitable,
educational, or other exempt purposes within the meaning of IRC Section 501(c)(3) and that no part of your net
earnings inure to the benefit of private shareholders or individuals. You failed to respond to repeated reasonable
requests to allow the Internal Revenue Service to examine your records regarding your receipts, expenditures,
or activities as required by I.R.C. §§ 6001, 6033(a)(1) and 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.

What you must do if you disagree with this determination
If you want to contest our final determination, you have 90 days from the date this determination letter was

mailed to you to file a petition or complaint in one of the three federal courts listed below.

How to file your action for declaratory judgment .
If you decide to contest this determination, you can file an action for declaratory judgment under the provisions

of Section 7428 of the Code in either:
• The United States Tax Court,
• The United States Court of Federal Claims, or
• The United States District Court for the District of Columbia

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

with the petition or complaint.

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

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

United States Tax Court

400 Second Street, NW

Washington, DC 20217

ustaxcourt.gov

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

US Court of Federal Claims

717 Madison Place, NW

Washington, DC 20439

uscfc.uscourts.gov

US District Court for the District of Columbia

333 Constitution Avenue, NW
Washington, DC 20001

dcd.uscourts.gov

Processing of income tax returns and assessments of any taxes due will not be delayed if you file a petition for
declaratory judgment under IRC Section 7428.

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.

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.

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

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

. Date:
Department of the Treasury 11/14/2022
Internal Revenue Service Taxpayer ID number:
IRS Tax Exempt and Government Entities
Exempt Organizations Examinations Form:
Tax periods ended:

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

Manager's contact information:
Name:
ID number:

Telephone:
Response due date:

December 5, 2022
CERTIFIED MAIL - Return Receipt Requested
Dear

Why you’re receiving this letter
We enclosed a copy of our audit report, Form 886-A, Explanation of Items, explaining that we

propose to revoke your tax-exempt status as an organization described in Internal Revenue Code
(IRC) Section 501(c)(3).

If you agree

If you haven’t already, please sign the enclosed Form 6018, Consent to Proposed Action, and
return it to the contact person shown at the top of this letter. We'll issue a final adverse letter
determining that you aren't an organization described in IRC Section 501(c)(3) for the periods

above.

After we issue the final adverse determination letter, we’ll announce that your organization is no
longer eligible to receive tax deductible contributions under IRC Section 170.

If you disagree

1. Request a meeting or telephone conference with the manager shown at the top of this

letter.

2. Send any information you want us to consider.
3. File a protest with the IRS Appeals Office. If you request a meeting with the manager or

send additional information as stated in 1 and 2, above, you'll still be able to file a protest
with IRS Appeals Office after the meeting or after we consider the information.

Letter 4102 (Rev. 8-2017)
Catalog Number 48373U

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.

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).

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

If you have questions, you can contact the person shown at the top of this letter.

Enclosures:
Form 886-A
Form 6018
Form 4621-A
Publication 892
Publication 3498

Sincerely,

Michelle Henson signing for
Lynn A. Brinkley

Director, Exempt Organizations
Examinations

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 Exhibit A
Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended
ISSUES:
1) Whether qualifies for exemption under Section 501(c)(3) of the
Internal Revenue Code?
FACTS:
was founded and incorporated in the State of on ;
. Per the determinations letter dated ; , the organization was recognized as

exempt under Internal Revenue Code Section 501(c)(3) as a public charity. The organization’s
current address is ' a, ,

On , , the examiner conducted a taxable entity search for

on the website. Under the section “Right to
Transact Business in .” it stated, “ INVOLUNTARY ENDED.” Please see
exhibit A.
On ; , the examiner mailed Letter 6031 (initial examination appointment letter),
Form ), Publication 1 (Rights as a Taxpayer), Publication
5295 (Taxpayer Digital Communication) and Notice 609 (Privacy Act). The documents were
mailed certified. On , , the documents were tracked on the USPS website and

the status stated that it was out for delivery.

By has made no contact in response to the
initial examination appointment letter. The package was tracked, and the USPS website stated
that there was not an authorized recipient available and that a notice was left. A contact number

was found on Form for , which states that is the person to contact if more
information is needed. The Form also stated that was the President of the
organization. :
The number on the Form was called and the Service was able to confirm that it was

. It was asked if received the documents that were mailed on
Stated that did not receive the documents. stated that if the documents were certified

then the USPS delivery could not get a signature because there was a gate at the front of the house
with a lock.

It was asked if there was another address or a fax number that the documents could be sent to.
replied stating that there was not another address or fax number. It was discussed that

would go to USPS to get the mail and a call would be made to the next week to
follow-up. On ; , the package was tracked again, and it appeared that it was
still at USPS. A call was made to ‘ however, the call was forwarded. A voicemail with the

examiners name and phone number was left.

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

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

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

On ; , the dates on Letter 6031 and Form were updated and were re-
mailed uncertified to the same address — , , . An “Address
Information Request Postal Tracer” for the ’s address was also
conducted. The postal tracer was certified and mailed to : ; — the
closest USPS to the organization’s location.

On , , the examiner received a response to the postal tracer from USPS. The
response stated that mail is still being delivered to the address. Examiner called , but there
was no answer, and a voicemail was left. The voicemail stated that the documents were re-mailed
to the address without being certified and should have been delivered already. Examiner's number
was also left in the voicemail.

The Service has not received any correspondence or phone call from
or :

LAW:

Internal Revenue Code (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 as the Secretary may by forms or regulations
prescribe, and 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 Regulation (Treas. Reg.) Section 1.6001-1(a) in conjunction with Treas. Reg.

Section 1.6001-1(c) provides that every organization exempt from tax under IRC Section 501(a)
and subject to the tax imposed by IRC Section 511 on its unrelated business income must keep
such permanent books or accounts or records, including inventories, as are sufficient to establish
the amount of gross income, deduction, credits, or other matters required to be shown by such
person in any return of such tax. Such organization shall also keep such books and records as are
required to substantiate the information required by IRC Section 6033.

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 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 which has established its right
to exemption from tax, whether or not it is required to file an annual return of information, shall

Catalog Number 20810W Page 2 www. irs.gov Form 886-A (Rev. 5-2017)

Schedule number

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

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 (Rev. Rul.) 59-95, 1959-1 C.B. 627, concerns an exempt organization that was
requested to produce a financial statement and statement of its operations for a certain year.
However, its records were so incomplete that the organization was unable to furnish such
statements. The Service held that the failure or inability to file the required information return or
otherwise to comply with the provisions of 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:

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 completed 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.

has failed to respond to the Service’s request for information in
disregard 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 also appears that the organization is not active in the state of
, which it was incorporated in.

It is the Service's position that the failed to meet the reporting
requirements under IRC Sections 6001 and 6033 to be recognized as exempt from federal

income tax under IRC Section 501(c)(3). Accordingly, it is proposed that the organization's
exempt status be revoked effective ;

TAXPAYER’S POSITION:

Taxpayer's position is not known at this time.

CONCLUSION:

failed to respond to the Service's initial examination appointment letter
and request for information to verify that they are operating according to their exempt purpose. It is

Catalog Number 20810W Page 3 www.irs.gov Form 886-A (Rev. 5-2017)

Schedule number

Form 8 86- A Department of the Treasury - Internal Revenue Service or exhibit
(May 2017) Explanations of Items Exhibit A
Name of taxpayer Tax Identification Number (last 4 digits) | Year/Period ended

the Service’s position that does not qualify for exemption from federal income tax
under IRC Section 501(c)(3). The proposed date of revocation is ' ;
The organization will be liable for filing Form ; , for tax
periods ending ; and later.
Catalog Number 20810W Page 4 www.irs.gov Form 886-A (Rev. 5-2017)