Supporting organization revoked for lacking required ties and distributions

View official IRS release (PDF)

Plain-English summary

An organization claimed exemption as a Type III non-functionally integrated supporting organization under IRC §§ 501(c)(3) and 509(a)(3). The examination found no qualifying distributions to or for its supported organization, no shared officers or directors, and no evidence that the supported organization had a significant voice in its operations. The IRS also found that the organization did not satisfy the annual notification, responsiveness, distribution, or attentiveness requirements for that classification. As an alternative to revocation, the IRS offered to reclassify it as a publicly supported organization under IRC § 509(a)(2) if it changed its activities to primarily charitable or educational work. The organization instead signed Form 6018 selecting revocation, so the IRS revoked its exemption and stated that contributions were no longer deductible under IRC § 170.

Ruling snapshot

• Question: Did the organization qualify as a Type III non-functionally integrated supporting organization under IRC § 509(a)(3)?
• Outcome: Revoked because it lacked the required relationship with its supported organization and made no qualifying distributions
• Key authorities: IRC §§ 170, 501(c)(3), 509(a)(2), 509(a)(3), 7428; Treas. Reg. §§ 1.501(c)(3)-1, 1.509(a)-4

Full text (IRS public release)

Department of the Treasury
Internal Revenue Service
IRS Tax Exempt and Government Entities

Date: 02/15/2024
Taxpayer ID number (last 4 digits):
Form:

Tax periods ended:

Release Number: 202419024
Release Date: 5/10/2024 Person to contact:
UIL Code: 501.03-00 Name:
ID number:
Telephone:
Fax:

Last day to file petition with United States
Tax Court

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: Organization fails to
demonstrate that operates, supervised, or controlled by or in connection with its supported organization per
section 1.509(a)-4(d)(2) of the regulations. Organization does not operates as a 509(a)(3) Type III non-
functionally integrated supporting organization. As an alternative position, the government gave the
organization the opportunity to modify their current activities and primarily engage in activities that are
charitable and/or educational as described in Internal Revenue Code 501(c)(3). Organization signed Form 6018
on selecting their exempt to be revoked.

Organizations that are not exempt under IRC Section 501 generally are required to file federal income tax returns
and pay tax, where applicable. For further instructions, forms and information please visit IRS.gov.
Contributions to your organization are no longer deductible under IRC Section 170.
What you must do if you disagree with this determination
If you want to contest our final determination, you have 90 days from the date this determination letter was
mailed to you to file a petition or complaint in one of the three federal courts listed below.
How to file your action for declaratory judgment
If you decide to contest this determination, you can file an action for declaratory judgment under the provisions
of Section 7428 of the Code in either:

• The United States Tax Court,

• The United States Court of Federal Claims, or

• The United States District Court for the District of Columbia

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

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

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

United States Tax Court
400 Second Street, NW
Washington, DC 20217
ustaxcourt.gov

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

US Court of Federal Claims

717 Madison Place, NW

Washington, DC 20439

uscfc.uscourts.gov

US District Court for the District of Columbia
333 Constitution Avenue, NW

Washington, DC 20001

dced.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

Telephone:
Fax:

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.

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

Find tax forms or publications by visiting IRS.gov/forms or calling 800-TAX-FORM (800-829-3676). If you
have questions, you can call the person shown at the top of this letter.

If you prefer to write, use the address shown at the top of this letter. Include your telephone number, the best
time to call, and a copy of this letter.

You may fax your documents to the fax number shown above, using either a fax machine or online fax service.
Protect yourself when sending digital data by understanding the fax service's privacy and security policies.

Keep the original letter for your records.

Sincerely,

Lynn A. Brinkley
Director, Exempt Organizations Examinations

Enclosures:

Publication 1
Publication 594
Publication 892

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

Department of the Treasury Date: November 28, 2023
Internal Revenue Service Taxpayer ID number:
IRS Tax Exempt and Government Entities

Form:
Tax periods ended:

Person to contact:
Name:
ID number:

Telephone:
Fax:
Address:

Manager’s contact information:
Name:

Telephone:
Response due date:

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 509(a)(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 509(a)(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 3618 (Rev. 8-2019)
Catalog Number 34809F

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.

Sincerely,

Lynn A. Brinkley
Director, Exempt Organizations
Examinations

Enclosures:
Form 886-A
Form(s) 6018

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

Form 886-A Department of the Treasury - Internal Revenue Service Schedule number or exhibit
(May 2017) Explanation of Items
Name of taxpayer Tax Identification Number (last 4 Year/Period ended
digits)
ISSUE(S):
Whether the qualify for exemption from federal
income tax under section 501(c)(3) of the Internal Revenue Code (Code) as a Type III non-
functionally integrated described in section 509(a)(3).
FACTS:
was incorporated in the State of April

19
Per the articles the purpose of this organization is to:

uphold and promote the welfare of , ,

(hereinafter called the " "), as an , especially in

the portion of the State of commonly known as the

(hereinafter called the " "):
By providing a medium through which
and of the may contribute to the welfare of the ;

By facilitating, initiating, and participating in programs and projects aimed at
developing and maintaining mutual understanding between _ its
, and of the ;

In applied for tax exempt status from the
Internal Revenue Service and was granted exemption via letter 947 October

October was contacted by the Internal
Revenue Service regarding an examination of their Form return.

During the initial interview
President and Director confirmed this organization was a regional organization which
collects to support its various activities and programs. The activities
included funding program in addition to planning and hosting aimed at

engagement.

does not make any distributions to its

. In the examination year of
also did not make any distributions on behalf of its

Page 1 of 13

Form 886-A Department of the Treasury - Internal Revenue Service Schedule number or exhibit
(May 2017) Explanation of Items
Name of taxpayer Tax Identification Number (last 4 Year/Period ended
digits)
During the initial interview it was also stated did
not issue any correspondence or receive any from its other than

contact lists.

Per the 20 Form Schedule Section. All Type III Supporting Organizations,
stated no to each of the following:

1) Did the organization provide to each of its , by the last day
of the fifth month of the organization's tax year, (i) a written notice describing the
type and amount of support provided during the prior tax year, (ii) a copy of the
Form 990 that was most recently filed as of the date of notification, and (iii) copies
of the organization's governing documents in effect on the date of notification, to
the extent not previously provided?

2) Were any of the organization's officers, directors, or trustees either (i) appointed or
elected by the supported organization(s) or (ii) serving on the governing body of a
supported organization? If “No,” explain in Part VI how the organization maintained
a close and continuous working relationship with the supported organization(s).

3) By reason of the relationship described in line 2 above, did the organization's
supported organizations have a significant voice in the organization's investment
policies and in directing the use of the organization's income or assets at all times
during the tax year? If "Yes," describe in Part VI the role the organization's
supported organizations played in this regard.

In did not hold any events due to
and . This was documented in the board’s meeting minutes

dated The meeting Minutes dated were the only

minutes provided by the organization for examination.

Per the Initial Document Request issued meeting minutes were

requested for all meetings held by a _for the year

ending December 31, . In addition to copies of all communications issued to and/or

received from their supported organization. Along with explanations and documentation to
support all benefits paid to or for .

During a call with ’s Director on
; stated this organization conducts on behalf of its
. Per the website,
allows prospective /first year to be from local
under the ( ) along with current seniors.
To volunteer individuals must join the in order to access the . The

Page 2 of 13

Form 886-A Department of the Treasury - Internal Revenue Service Schedule number or exhibit
(May 2017) Explanation of Items
Name of taxpayer Tax Identification Number (last 4 Year/Period ended
digits)
is used to streamline the . This is used to see assigned

in the area, submit reports and review guidelines.
is not solicited or contacted by its supported organization to conduct

. The are conducted on an basis.
On Director emailed a series of documents to support the relationship
between and its supported organization. The
documentation included emails between a Director of
as well as a Director on
( ), which is under the ( ). is not
an employee or Director of the supported organization. The emails were sent to and
addressed directly and contained information about his duties as an
, as it relates to the . The series of emails do not

support or document any communication between
and its supported organization.

Additional documentation provided included letters issued by to
/ . The is an actual presented to
. The recipients of the are selected by their
/ . The book is organized and controlled by the
local/regional
Also stated during the call with
Director was that the was operated in connection with the
supported organization to provide to current
However, in the emailed documents submitted it is evident the
( ) to which was referring is supported by
in various locations throughout the . The selects
local employers to be a part of this program in addition to, funding
to work with the nonprofits for a period of weeks. According to the ;
provides a where (for profit and non-
profit), and can post for . These and
are at the discretion of regional/local and all other

employers who pays to post .
does not work with its supported organization to provide the

( )

Considering all the information and documentation reviewed during this examination,
has not provided any substantiation to support that it is

operated, supervised or controlled by or in connection with its

Page 3 of 13

Form 886-A Department of the Treasury - Internal Revenue Service Schedule number or exhibit
(May 2017) Explanation of Items

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

No documentation has been provided to support any communication between

and its that demonstrate their activities
are operated exclusively for the benefit of, to perform the functions of, or to carry out the
purposes of its .

and its does not have any
common Officers or Directors.

does not meet the distribution or attentiveness

requirements to be recognized as a Type III non-functionally integrated Supporting
Organization described in section 509(a)(3).

APPLICABLE LAW:

Internal Revenue Code 509(a)(3) describes an organization which-

(A) is organized, and at all times thereafter is operated, exclusively for the benefit of, to
perform the functions of, or to carry out the purposes of one or more specified
organizations described in paragraph (1) or (2),

(B) is--
(i) operated, Supervised, or controlled by one or more organizations described
in paragraph (1) or (2),
(ii) supervised or controlled in connection with one or more such organizations,
or
(iii) operated in connection with one or more such organizations, and
(C) is not controlled directly or indirectly by one or more disqualified persons (as
defined in section 4946) other than foundation managers and other than one or
more organizations described in paragraph (1) or (2); ,

Treasury Regulation 1.509(a)-4(b) Organizational and operational tests. (1) Under
subparagraph (A) of section 509(a)(3), in order to qualify as a supporting organization, an
organization must be both organized and operated exclusively for the benefit of, to perform
the functions of, or to carry out the purposes of (hereinafter referred to in this section as being
organized and operated to support or benefit) one or more specified publicly supported
organizations. If an organization fails to meet either the organizational or the operational test,
it cannot qualify as a supporting organization.

Treasury Regulation 1.509(a)-4(g) Meaning of operated, supervised, or controlled

by. (1)(i) Each of the items operated by, supervised by, and controlled by, as used

in section 509(a)(3)(B), presupposes a substantial degree of direction over the policies,

programs, and activities of a supporting organization by one or more publicly supported
Page 4 of 13

Form 886-A Department of the Treasury - Internal Revenue Service Schedule number or exhibit
(May 2017) Explanation of Items

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

organizations. The relationship required under any one of these terms is comparable to that
of a parent and subsidiary, where the subsidiary is under the direction of, and accountable or
responsible to, the parent organization. This relationship is established by the fact that a
majority of the officers, directors, or trustees of the supporting organization are appointed or
elected by the governing body, members of the governing body, officers acting in their official
capacity, or the membership of one or more publicly supported organizations.

Treasury Regulation 1.509(a)-4(i)(2) Notification requirement—(i) Annual notification. For
each taxable year, a Type III supporting organization must provide the following documents
to each of its supported organizations:

(A) A written notice addressed to a principal officer of the supported organization
describing the type and amount of all of the support the supporting organization
provided to the supported organization during the supporting organization's taxable
year immediately preceding the taxable year in which the written notice is provided
(and during any other taxable year of the supporting organization ending after
December 28, 2012, for which such support information has not previously been
provided);

(B) A copy of the supporting organization's Form 990, “Return of Organization Exempt
from Income Tax,” or other annual information return required to be filed under section
6033 (although the supporting organization may redact from the return the name and
address of any contributor to the organization) that was most recently filed as of the
date the notification is provided (and any such return for any other taxable year of the
supporting organization ending after December 28, 2012, that has not previously been
provided to the supported organization); and

(C) A copy of the supporting organization's governing documents as in effect on the
date the notification is provided, including its articles of organization and bylaws (if
any) and any amendments to such documents, unless such documents have been
previously provided and not subsequently amended.

Treasury Regulation 1.509(a)-4(i)(3) Responsiveness test—(i) General rule. A supporting
organization meets the responsiveness test if it is responsive to the needs or demands of a
supported organization. Except as provided in paragraph (i)(3)(v) of this section, in order to
meet this test, a supporting organization must satisfy the requirements of paragraphs (i)(3)(ii)
and (i)(3)(iii) of this section.

(ii) Relationship of officers, directors, or trustees. A supporting organization satisfies the
requirements of this paragraph (i)(3)(ii) with respect to a supported organization only if-

Page 5 of 13

Form 886-A Department of the Treasury - Internal Revenue Service Schedule number or exhibit
(May 2017) Explanation of Items

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

(A) One or more officers, directors, or trustees of the supporting organization are
elected or appointed by the officers, directors, trustees, or membership of the
supported organization;

(B) One or more members of the governing body of the supported organization are
also officers, directors, or trustees of, or hold other important offices in, the supporting
organization; or

(C) The officers, directors, or trustees of the supporting organization maintain a close
and continuous working relationship with the officers, directors, or trustees of the
supported organization.

(iii) Significant voice. A supporting organization satisfies the requirements of this
paragraph (i)(3)(iii) only if, by reason of paragraphs (i)(3)(ii)(A), (i)(3)(ii)(B), or
(i)(3)(ii)(C) of this section, the officers, directors, or trustees of the supported
organization have a significant voice in the investment policies of the supporting
organization, the timing of grants, the manner of making grants, and the selection of
grant recipients by such supporting organization, and in otherwise directing the use of
the income or assets of the supporting organization.

Treasury Regulation 1.509(a)-4(i)(5) Integral part test—non-functionally integrated Type III
supporting organization—(i) General rule. A supporting organization meets the integral part
test and will be considered non-functionally integrated if it satisfies either—

(A) The distribution requirement of paragraph (i)(5)(ii) of this section and the
attentiveness requirement of paragraph (i)(5)(iii) of this section; or

(B) The pre-November 20, 1970 trust requirements of paragraph (i)(9) of this section.

Treasury Regulation 1.509(a)-4(i)(5)(ii) Distribution requirement—(A) Annual distribution.
With respect to each taxable year, a supporting organization must distribute to or for the use
of one or more supported organizations an amount equaling or exceeding the supporting
organization's distributable amount for the taxable year, as defined in paragraph (i)(5)(ii)(B) of
this section, on or before the last day of the taxable year.

(B) Distributable amount. Except as provided in paragraphs (i)(5)(ii)(D) and (E) of this
section, the distributable amount for a taxable year is an amount equal to the greater
of 85 percent of the supporting organization's adjusted net income (as determined by
applying the principles of section 4942(f) and § 53.4942(a)-2(d) of this chapter) for the
taxable year immediately preceding the taxable year of the required distribution
(immediately preceding taxable year) or its minimum asset amount (as defined in
paragraph (i)(5)(ii)(C) of this section) for the immediately preceding taxable year,

Page 6 of 13

Form 886-A Department of the Treasury - Internal Revenue Service Schedule number or exhibit
(May 2017) Explanation of Items

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

reduced by the amount of taxes imposed on the supporting organization under subtitle
A of the Internal Revenue Code during the immediately preceding taxable year.

(C) Minimum asset amount. For purposes of this paragraph (i)(5), a supporting
organization's minimum asset amount for the immediately preceding taxable year is
3.5 percent of the excess of the aggregate fair market value of all of the supporting
organization's non-exempt-use assets (determined under paragraph (i)(8) of this
section) in that immediately preceding taxable year over the acquisition indebtedness
with respect to such non-exempt-use assets (determined under section

514(c)(1) without regard to the taxable year in which the indebtedness was incurred),
increased by—

(1) Amounts received or accrued during the immediately preceding taxable year
as repayments of amounts which were taken into account by the organization to
meet the distribution requirement imposed in this paragraph (i)(5)(ii) for any
taxable year;

(2) Amounts received or accrued during the immediately preceding taxable year
from the sale or other disposition of property to the extent that the acquisition of
such property was taken into account by the organization to meet the
distribution requirement imposed in this paragraph (i)(5)(ii) for any taxable year;
and

(3) Any amount set aside under paragraph (i)(6)(v) of this section to the extent it
is determined during the immediately preceding taxable year that such amount
is not necessary for the purposes for which it was set aside and such amount
was taken into account by the organization to meet the distribution requirement
imposed in this paragraph (i)(5)(ii) for any taxable year.

Treasury Regulation 1.509(a)-4(i)(5)(iii) Attentiveness requirement—(A) General rule. With
respect to each taxable year, a non-functionally integrated Type III supporting organization
must distribute one-third or more of its distributable amount to one or more supported
organizations that are attentive to the operations of the supporting organization (within the
meaning of paragraph (i)(5)(iii)(B) of this section) and to which the supporting organization is
responsive (within the meaning of paragraph (i)(3) of this section).

(B) Attentiveness. A supported organization is attentive to the operations of the
supporting organization during a taxable year if, in the taxable year, at least one of the
following requirements is satisfied:

(1) The supporting organization distributes to the supported organization
amounts equaling or exceeding 10 percent of the supported organization's total
support (or, in the case of a particular department or school of a university,
hospital, or church, the total support of the department or school) received

Page 7 of 13

Form 886-A

(May 2017)

Department of the Treasury - Internal Revenue Service Schedule number or exhibit
Explanation of Items

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

during the supported organization's last taxable year ending before the
beginning of the supporting organization's taxable year.

(2) The amount of support received from the supporting organization is
necessary to avoid the interruption of the carrying on of a particular function or
activity of the supported organization. The support is necessary if the
supporting organization or the supported organization earmarks the support for
a particular program or activity of the supported organization, even if such
program or activity is not the supported organization's primary program or
activity, as long as such program or activity is a substantial one.

(3) Based on the consideration of all pertinent factors, including the number of
supported organizations, the length and nature of the relationship between the
supported organization and supporting organization, and the purpose to which
the funds are put, the amount of support received from the supporting
organization is a sufficient part of a supported organization's total support (or, in
the case of a particular department or school of a university, hospital, or church,
the total support of the department or school) to ensure attentiveness. Normally
the attentiveness of a supported organization is influenced by the amounts
received from the supporting organization. Thus, the more substantial the
amount involved in terms of a percentage of the supported organization's total
support, the greater the likelihood that the required degree of attentiveness will
be present. However, in determining whether the amount received from the
supporting organization is sufficient to ensure the attentiveness of the
supported organization to the operations of the supporting organization
(including attentiveness to the nature and yield of the supporting organization's
investments), evidence of actual attentiveness by the supported organization is
of almost equal importance. A supported organization is not considered to be
attentive solely because it has enforceable rights against the supporting
organization under state law.

Treasury Regulation 1.509(a)-4(i)(4)(ii)(D) Payments to individual beneficiaries. The making
or awarding of grants, scholarships, or other payments to individual beneficiaries who are
members of the charitable class benefited by a supported organization will be treated as an
activity that directly furthers the exempt purposes of that supported organization for purposes
of this paragraph (i)(4) only if—
(1) The individual beneficiaries are selected on an objective and nondiscriminatory
basis (as described in § 53.4945-4(b));

(2) The officers, directors, or trustees of the supported organization have a significant
voice in the timing of the payments, the manner of making them, and the selection of

recipients; and

Page 8 of 13

Form 886-A Department of the Treasury - Internal Revenue Service Schedule number or exhibit
(May 2017) Explanation of Items

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

(3) The making or awarding of such payments is part of an active program of the
supporting organization that directly furthers the exempt purposes of the supported
organization and in which the supporting organization maintains significant
involvement, as defined in § 53.4942(b)-1(b)(2)(ii) (except that “supporting
organization” shall be substituted for “foundation”).

GOVERNMENT’S POSITION:

. must satisfy not only an operational test, but
also an organizational test. It must be organized in a manner which demonstrates that it is
operated, supervised, or controlled by or in connection with its per
section 1.509(a)-4(d)(2) of the regulations.

During the examination of Form
return no support was provided to substantiate that the has a
significant voice in any operations. The examination also revealed

does not share common officers or directors with its

TAXPAYER’S POSITION:

This organization does not agree with the proposed revocation.

During a conference call with the organization Director ;
stated the organization does meet the requirements to be recognized as a
organization because:

1)This organization gives out a . The is an sent to
. The recipient(s) of this are by their respective
. The is selected by the and is sent to by

this organization on behalf of

2)This organization funds (s). The is offered to
3)This organization utilizes its on a volunteer basis to perform

. The provides the names of in the region
to assist with . This organization utilizes a managed by its

to transmit information.

CONCLUSION:

Considering all the facts and circumstances we have determined
has none of the features required of an organization which is operated,
supervised, or controlled by or in connection with . Accordingly,
Page 9 of 13

Form 886-A Department of the Treasury - Internal Revenue Service Schedule number or exhibit
(May 2017) Explanation of Items

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

your organization cannot be classified as an organization described in section 509(a)(3) of
the Code.

The IRS proposes to revoke tax-exempt status
under IRC section 501(c)(3) for the year ending December 31, , effective January 1,
Should this position be upheld, Form(s) , , should be filed
for tax period ending December 31, forward.

Please refer to the attached 30-day letter and IRS publications for the options available to the
organization including appeal rights.

You have the right to file a protest if you disagree with this determination. To protest, you
must submit a statement of your position and fully explain your reasoning within 30 days from

the date of this letter. Details of filing a protest can be found in the enclosed publications.

If you agree with this conclusion, please sign and return the enclosed Form

Alternative Position

Issue:

Whether . qualifies for exemption as a 501(c)(3)
under Internal Revenue Code § 509(a)(2).

Facts

During the examination of return

the service determined the organization did not meet the requirement to be classified as a
Type III non-functionally integrated Supporting Organization described in section 509(a)(3).

was incorporated in Its Certificate of

Incorporation provides that its purposes “shall be exclusively charitable and educational
within the meaning of Section 501(c)(3) of the Internal Revenue Code of 1954. Per the

Articles the purpose goes on to mention upholding and promoting

and ( ).
is a regional which collects
to support its various activities and programs. The activities include
in addition to planning and aimed at

Page 10 of 13

Form 886-A Department of the Treasury - Internal Revenue Service Schedule number or exhibit
(May 2017) Explanation of Items

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

receives more than one-third of its support from
, and gross receipts from to the extent these activities are
not an unrelated trade or business. Also, does
not receive more than one-third of its support from gross investment.

Per the dissolution clause in the Articles of Incorporation Filed upon dissolution
all assets shall be paid over to to be used for exclusively charitable or
purposes. Therefore, upon dissolution
net assets will be distributed for exempt purposes within the meaning of IRC 501(c)(3).

Law

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

Treasury Regulation §1.501 (c)(3)-1 (c)(1) states in part that an organization will be regarded
as “operated exclusively” for one or more exempt purposes only if it engages primarily in
activities which accomplish one or more of such exempt purposes specified in section
501(c)(3). An organization will not be so regarded if more than an insubstantial part of its
activities is not in furtherance of an exempt purpose.

Treasury Regulation §1.501 (c)(3)-1 (c)(2) states in part that an organization is not operated
exclusively for one or more exempt purposes if its net earnings inure in whole or in part to the
benefit of private shareholders or individuals.

Treasury Regulation §1.501 (c)(3)-1 (d)(2)-The term charitable is used in section 501(c)(3) in
its generally accepted legal sense and is, therefore, not to be construed as limited by the
separate enumeration in section 501(c)(3) of other tax-exempt purposes which may fall within
the broad outlines of charity as developed by judicial decisions. Such term includes: Relief of
the poor and distressed or of the underprivileged; advancement of religion; advancement of
education or science; erection or maintenance of public buildings, monuments, or works;
lessening of the burdens of Government; and promotion of social welfare by organizations
designed to accomplish any of the above purposes, or (i) to lessen neighborhood tensions;

Page 11 of 13

Form 886-A Department of the Treasury - Internal Revenue Service Schedule number or exhibit
(May 2017) Explanation of Items

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

(ii) to eliminate prejudice and discrimination; (iii) to defend human and civil rights secured by
law; or (iv) to combat community deterioration and juvenile delinquency.

Treasury Regulation §1.501 (c)(3)-1 (d)(3) Educational defined—(i) In general. The term
educational, as used in section 501(c)(3), relates to:

(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.

Internal Revenue Code 509(a)(2) an organization which--

(A) normally receives more than one-third of its support in each taxable year from any
combination of--

(i) gifts, grants, contributions, or membership fees, and

(ii) gross receipts from admissions, sales of merchandise, performance of
services, or furnishing of facilities, in an activity which is not an unrelated trade
or business (within the meaning of section 513), not including such receipts
from any person, or from any bureau or similar agency of a governmental unit
(as described in section 170(c)(1)), in any taxable year to the extent such
receipts exceed the greater of $5,000 or 1 percent of the organization's support
in such taxable year, from persons other than disqualified persons (as defined
in section 4946) with respect to the organization, from governmental units
described in section 170(c)(1), or from organizations described in section
170(b)(1)(A) (other than in clauses (vii) and (viii)), and

(B) normally receives not more than one-third of its support in each taxable year from
the sum of--
(i) gross investment income (as defined in subsection (e)) and

(ii) the excess (if any) of the amount of the unrelated business taxable income
(as defined in section 512) over the amount of the tax imposed by section 511;

Governments Position

was granted exempt status as a
in . However, per the Service’s examination
does not qualify as a described in section 509(a)(3).

Page 12 of 13

Form 886-A Department of the Treasury - Internal Revenue Service Schedule number or exhibit
(May 2017) Explanation of Items

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

As an alternative to revocation of the organizations exempt status the service is proposing an
alternative position.

Whereas financial support is aligned with the
parameters listed in Internal Revenue Code 509(a)(2) and the current organizing documents
of meets the organizational requirements of a

publicly supported organization within the meaning of Internal Revenue Code 509(a)(2).

would need to modify their current activities and
primarily engage in activities that are charitable and/or educational as described in Internal
Revenue Code 501(c)(3) which would then qualify the organization for exemption.

Taxpayers Position

The is in the process of the
organization.

Conclusion

Position 1: to the revocation with the
effective date

If agrees with this conclusion please sign and
return the enclosed Form indicating, Revocation of ruling or determination letter
granting tax-exempt status as an organization described in section 501(c)(3).

Position 2: As an alternative to the revocation of
tax exempt status the Service is proposing to reclassify the organization as a
within the meaning of Internal Revenue Code 509(a)(2).

If agrees to be primarily engaged in activities
described as charitable and/or educational as described in Internal Revenue Code 501(c)(3)
and provide a written description of those activities, the organization may agree to be
reclassified as a publicly supported organization within the meaning of Internal Revenue
Code 509(a)(2) and retain their exemption status by signing the alternate Form 60,
indicating classification as an organization described in section 509(a)(2), effective

Page 13 of 13