Organization failed the public-support test and was classified as a private foundation

Plain-English summary

An organization remained exempt under Section 501(c)(3), but the IRS made a final adverse determination that it did not qualify as a public charity under Section 509(a)(2). The organization had not shown that it met the required public-support test, so the IRS classified it as a private foundation. It must file Form 990-PF and may be subject to Chapter 42 excise taxes, unrelated business income tax, and employment taxes depending on its activities. The organization agreed to waive its right to contest the classification under Section 7428. The public release also includes an earlier procedural letter proposing revocation, but does not include the referenced examination report or facts supporting that separate proposal.

Ruling snapshot

• Question: Did the organization satisfy the public-support test for public-charity status under IRC § 509(a)(2)?
• Outcome: denied, resulting in private-foundation classification
• Key authorities: IRC §§ 501(c)(3), 509(a), 509(a)(2), 4947(a)(1), 7428

Full text (IRS public release)

Department of the Treasury
Internal Revenue Service                                      Date: FEB 21 2024

IRS Independent Office of Appeals Person to contact:

Name:
Employee ID Number:
Phone:

Release Number: 202420030 Fax:

. ; Hours:
Release Date: 5/17/2024 . Employer ID number:

Uniform issue list (UIL)
0501.03-30

Certified Mail
Dear [redacted]:

This is a final adverse determination regarding your private foundation classification under Internal Revenue
Code (the "Code") Section 509(a). Although you are exempt under Section 501(c)(3) of the Code, you do not
qualify as a public charity described under IRC Section 509(a)(2) but, rather, as a private foundation described
under Section 509(a) of the Code effective [redacted].

We made the adverse determination for the following reasons:

Organization has not shown that it meets the public support test to qualify under Section 509(a)(2) of the Code.
You're required to file Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as

Private Foundation. Mail your form to the appropriate Internal Revenue Service Center per the form's
instructions.

You're subject to Chapter 42 excise taxes, unrelated business income taxes, and employment taxes (where
applicable) based on your activities. Please see Publication 557, Tax-Exempt Status for Your Organization, for
more details.

You can get any forms or publications mentioned in this letter by visiting our website at www.irs.gov/forms

or by calling 800-TAX-FORM (800-829-3676).

You've agreed to waive your right to contest this determination under the declaratory judgment provisions of
Section 7428 of the Code.

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

Sincerely,

Valeria B Farr
Appeals Team Manager

Enclosures:
IRS Appeals Survey

cc.

Letter 1372-A (Rev. 10-2021)
Catalog Number 62981S

Department of the Treasury                         Date: November 16, 2022

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:
Avenue

Manager's contact information:
Name:
ID number:

Telephone:
Response due date:

December 16, 2022
CERTIFIED MAIL — Return Receipt Requested
Dear [redacted]:

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 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,
for

Lynn A. Brinkley
Acting Director, Exempt Organizations
Examinations

Enclosures:
Form 886-A
Form 6018

3 Letter 3618 (Rev. 8-2019)

Catalog Number 34809F