Charity lost exemption after failing to document any exempt activity

Plain-English summary

A charitable and scientific organization did not respond to repeated IRS requests for records during an examination. The IRS tried the organization and its officers at several addresses, and certified mail eventually reached one address. The organization still did not provide the organizational and financial information needed to show that it conducted activities furthering an exempt purpose. The IRS concluded that it failed the operational test under IRC § 501(c)(3) and the recordkeeping requirement in Treas. Reg. § 1.6001-1(e). The IRS therefore revoked its exemption effective on a redacted date, and contributions to it were no longer deductible under IRC § 170.

Ruling snapshot

• Question: Did the organization remain exempt under IRC § 501(c)(3) when it failed to document its activities or provide records requested during an examination?
• Outcome: Revocation
• Key authorities: IRC §§ 170, 501(a), 501(c)(3), 6001; Treas. Reg. §§ 1.501(c)(3)-1(a), (c), (d), 1.6001-1(e); Rev. Rul. 58-617

Full text (IRS public release)

Department of the Treasury
Internal Revenue Service

[redacted]

[redacted]

Date:
[redacted]

Taxpayer ID number (last 4 digits):
[redacted]

Form:
[redacted]

Tax periods ended:
[redacted]

Person to contact:
Name: [redacted]
ID number: [redacted]
Telephone: [redacted]
Fax: [redacted]

Release Number: 202540026
Release Date: 10/3/2025
UIL Code: 501.03-00

Last day to file petition with United States
Tax Court:
[redacted]

CERTIFIED MAIL - Return Receipt Requested

Dear [redacted]:

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
[redacted]. Your determination letter dated [redacted], is revoked.

Our adverse determination as to your exempt status was made for the following reasons: Organizations
described in Section 501(c)(3) of the Internal Revenue Code and exempt under Section 501(a) must be both
organized and operated exclusively for exempt purposes. You have failed to produce documents to establish
that you have engaged in any activity to accomplish an exempt purpose, so you have failed to establish that you
operate exclusively for exempt purposes. Thus, you did not meet exemption requirements under IRC Sec. 501
(c)(3).

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

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

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

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

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

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

US Court of Federal Claims
717 Madison Place, NW
Washington, DC 20439
uscfc.uscourts.gov

US District Court for the District of Columbia
333 Constitution Avenue, NW
Washington, DC 20001
dcd.uscourts.gov

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

The IRS office whose phone number appears at the top of the notice can best address and access your tax
information and help get you answers. However, you may be eligible for free help from the Taxpayer Advocate
Service (TAS) if you can’t resolve your tax problem with the IRS or if you believe an IRS procedure just isn't
working as it should. TAS is an independent organization within the IRS that helps taxpayers and protects
taxpayer rights. Visit TaxpayerAdvocate.IRS.gov/contact-us or call 877-777-4778 (TTY/TDD 800-829-4059)
to find the location and phone number of your local advocate. Learn more about TAS and your rights under the
Taxpayer Bill of Rights at TaxpayerAdvocate.IRS.gov. Do not send your Tax Court petition to TAS. Use the
Tax Court address provided earlier in the letter. Contacting TAS does not extend the time to file a petition.

Where you can find more information

Enclosed are Publication 1, Your Rights as a Taxpayer, and Publication 594, The IRS Collection Process, for
more comprehensive information.

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

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

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

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

Keep the original letter for your records.

Sincerely,

[redacted]

Director, Exempt Organizations Examinations

Enclosures:
Publication 1
Publication 594
Publication 892

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

Department of the Treasury
Internal Revenue Service

[redacted]

[redacted]

Date:
[redacted]

Taxpayer ID number:
[redacted]

Form:
[redacted]

Tax periods ended:
[redacted]

Person to contact:
Name: [redacted]
ID number: [redacted]
Telephone: [redacted]
Fax: [redacted]

Manager's contact information:
Name: [redacted]
ID number: [redacted]
Telephone: [redacted]

Response due date:
[redacted]

CERTIFIED MAIL – Return Receipt Requested

Dear [redacted]:

Why you’re receiving this letter

If you agree

If you haven’t already, please sign the enclosed [redacted] 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.

If you disagree

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

2. Send any information you want us to consider.

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

The IRS Appeals Office is independent of the Exempt Organizations division and resolves most disputes
informally. If you file a protest, the auditing agent may ask you to sign a consent to extend the period of
limitations for assessing tax. This is to allow the IRS Appeals Office enough time to consider your case.
For your protest to be valid, it 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.

Letter 3618 (Rev. 3-2024)
Catalog Number 34809F

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.

Additional information

You can get any of the forms and publications mentioned in this letter by visiting our website at
www.irs.gov/forms-pubs or by calling 800-TAX-FORM (800-829-3676).

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

Sincerely,

[redacted]

Director, Exempt Organizations Examinations

Enclosures:
Form 886-A
Form 6018

Letter 3618 (Rev. 3-2024)
Catalog Number 34809F

Form 886-A
(May 2017)

Department of the Treasury – Internal Revenue Service

Explanations of Items

Name of taxpayer: [redacted]
Tax Identification Number (last 4 digits): [redacted]
Year/Period ended: [redacted]

ISSUE:

Whether [redacted] continues to qualify for exemption as an organization
described in the Internal Revenue Code (IRC) Section 501(c)(3) because of your failure to meet
the Operational Test?

FACTS:

[redacted] was incorporated under the laws of the State of [redacted] as a non-profit
corporation in [redacted], for the following purposes:

[redacted] was organized and operated exclusively to further Charitable and Scientific
purposes under IRC, Section 501(c)(3).

In [redacted] was recognized to be exempt from Federal income tax as an
organization described in IRC Section 501(c)(3).

[redacted] is related to another exempt organization that was involved in
fraudulent activities. The activities of the other exempt organization were deemed to be consistent
with the activities of [redacted].

On [redacted], Internal Revenue Service sent [redacted] Letter 6031 and
enclosed Form 4564, Information Document Request (IDR) listing items needed to conduct the
examination with Publication 1 and Notice 609, [redacted] did not provide response to
the IDR.

Revenue Agent (RA) alerted the Group Manager that [redacted] has not responded to
the initial Letter 6031 and Information Document Request, Form 4564 issued to [redacted].

On [redacted], the RA researched the Organization and found an article in the news
relating to the Organization and in that Article, it named the officers of the Organization. The
officers related to the Organization were:

1. [redacted]
2. [redacted]
3. [redacted]

On [redacted], the RA researched Accurint and located the addresses of all three (3)
Officers. The RA mailed the Letter 6031 and Form 4564, Information Document Request (IDR)
listing items needed to conduct an examination to include Publication 1 and Notice 609 to all 3
Officers.

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

Form 886-A
(May 2017)

Department of the Treasury – Internal Revenue Service

Explanations of Items

Name of taxpayer: [redacted]
Tax Identification Number (last 4 digits): [redacted]
Year/Period ended: [redacted]

On [redacted], RA received return mail back from following individuals:

1. [redacted]
2. [redacted]

On [redacted], RA researched the IRS website for the Exempt Organizations and found an
additional address for the Organization. The address displayed on the IRS website is [redacted]. The RA also found an additional address for Officer [redacted].

On [redacted], RA forward initial Letter 6031 along with IDR, Publication1 and Notice 609 to
the additional addresses of the Organization and Officer [redacted].

On [redacted], RA received returned mail from the Post Office and the Organization at
address [redacted].

On [redacted], RA received return Certified mail from the following:

1. [redacted]
2. [redacted]
3. [redacted]

The RA continued to do research on locating an Officer/Officers of the Organization. On [redacted], the RA found an additional addresses for [redacted] located at [redacted] and [redacted].

The RA also found an additional address for [redacted] located at [redacted].

On [redacted], RA checked the Certified Mail Service and the mail to [redacted] was
delivered. It was left with someone at that address and signed.

LAW:

IRC § 501 (c)(3) exempts from federal income tax organizations which are 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.

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

Form 886-A
(May 2017)

Department of the Treasury – Internal Revenue Service

Explanations of Items

Name of taxpayer: [redacted]
Tax Identification Number (last 4 digits): [redacted]
Year/Period ended: [redacted]

IRC § 501(c)(3) requires an organization to be both "organized" and "operated" exclusively for one
or more IRC § 501(c)(3) purposes. If the organization fails either the organizational test or the
operational test, it isn't exempt. The operational test applies to the organization's activities and
how it furthers exempt purposes.

Tax Reg. § 1. 501(c)(3)-1(d)(1) states that an organization may be exempt as an organization
described in Section 501(c)(3) if it is organized and operated exclusively for one or more of the
following purposes: religious, charitable, scientific, testing for public safety, literary, educational, or
prevention of cruelty to children or animals.

Tax Reg. § 1.501(c)(3)-1(a)(1) of the regulations provides that in order to be exempt as an
organization described in Section 501(c)(3) of the Code, the organization must be one that is both
organized and operated exclusively for one or more of the purposes specified in that section.

Tax Reg. § 1.501(c)(3)-1(c)(1) of the regulations provides 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).

Treas. Reg. § 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.

IRS, Private Letter Ruling, Section 501 - Exemption from Tax on Corporations, Certain Trusts,
etc., [redacted]

Revenue Ruling 58-617, 1958-2 CB 260, ([redacted]) Rulings and determinations letters
granting exemption from federal income tax to an organization described in Section 501(a) of the
Internal Revenue Code of 1954, to which contributions are deductible by donors in computing their
taxable income in the manner and to the extent provided by section 170 of the Code, are effective
only so long as there are no material changes in the character of the organization, the purposes
for which it was organized, or its methods of operation. Failure to comply with this requirement
may result in serious consequences to the organization for the reason that the ruling or
determination letter holding the organization exempt may be revoked retroactively to the date of
the changes affecting its exempt status, depending upon the circumstances involved, and subject
to the limitations on retroactivity of revocation found in Section 503 of the Code.

TAXPAYER'S POSITION:

No response from Organization and Officers.

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

Form 886-A
(May 2017)

Department of the Treasury – Internal Revenue Service

Explanations of Items

Name of taxpayer: [redacted]
Tax Identification Number (last 4 digits): [redacted]
Year/Period ended: [redacted]

GOVERNMENT'S POSITION:

Internal Revenue Service, Private Letter Ruling, Section 501 - Exemption from Tax on
Corporations, Certain Trusts, etc., [redacted]

Failure to Meet the Operational Test: [redacted] has failed to show us that they meet the
operational test for a § 501(c)(3) organization for the year under examination. To meet the
operational test, they must show that they engage primarily in activities which accomplish one or
more of such exempt purposes specified in section § 501(c)(3). An organization won't meet the
operational test if more than an insubstantial part of its activities isn't in furtherance of an exempt
purpose.

Failure to Provide Records: [redacted] failed to provide records as is required in Treas.
Reg. §1.6001-1(e). They failed to provide most or any organizational or financial information that
we requested for the examination. They were only able to provide bank statements.

Without the Exempt Organization records, we cannot verify that they are operating according to
their exempt purpose. [redacted] has not responded to any of our correspondence,
therefore, because of no response, we can deem that they are not operating exclusively for
exempt purposes.

Our position is that [redacted] will be revoked for failing the operational test, it is not
operating for exempt purpose.

CONCLUSION:

As demonstrated in Rev. Rul. 58-617, an organization's exempt status will remain in effect only so
long as there are no material changes in the character of the organization, the purposes for which
it was organized, or its methods of operation. In the case of [redacted], the Organization
has not responded to any correspondence. [redacted] did not provide any of the
requested items in the Information Document Request (IDR) for the examination. As such, [redacted]
fails to meet the operational requirements to continue its exemption status under
IRC §501(c)(3). Therefore, the effective revocation date will be [redacted].

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