The IRS moves to revoke a charity's 501(c)(3) exemption after its officers refused the examination and it failed to keep or produce required records

Plain-English summary

A tax-exempt charity has to keep adequate books and records and file complete,
accurate annual returns (Forms 990), and it must cooperate with an IRS examination so
the IRS can confirm it still deserves its exemption. Here, the IRS tried repeatedly to
examine an organization: it sent appointment letters, information requests, and four
certified-mail delinquency notices to the officers, most of which were refused ("stop
sending," "refused, do not send again"), phone calls went unanswered, and emails to
the finance manager got no response. Because the organization would not cooperate and
did not establish that it kept the required records or that it was operated exclusively
for exempt purposes, the IRS took the position that its 501(c)(3) status should be
revoked. The letter relies on the recordkeeping and reporting rules (Sections 6001 and
6033) and on Revenue Ruling 59-95, which holds that failing to comply with those
rules can terminate a previously recognized exemption because the organization has not
shown it is meeting the conditions for staying exempt. This release contains the
determination-letter package (including Letter 6337 with declaratory-judgment rights
under Section 7428) and the Form 886-A explanation of items. (The IRS's text layer
extracted here is partial and page-reordered; the full letter is in the linked PDF.)

Ruling snapshot

• Question: Should a charity's 501(c)(3) exemption be revoked when it refuses to cooperate with an examination and does not keep or produce the required records?
• Outcome: Revocation (proposed adverse determination; exemption revoked for failure to establish continued qualification)
• Key authorities: IRC § 501(c)(3); § 6001; § 6033; § 170(b)(1)(A)(vi); Treas. Reg. § 1.6001-1, § 1.6033-1(h)(2); Rev. Rul. 59-95; Shapiro v. Commissioner, 40 T.C. 34 (1963)

Full text (IRS public release)

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
                                          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
      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,



                                                          Group Manager
Enclosures:
Pub 1, Pub892, Pub 3498
Form 886-A, Form 6018, Form 4621-A




                                                                                           Letter 3618 (Rev. 3-2024)
                                                                                           Catalog Number 34809F
                                    Department of the Treasury – Internal Revenue Service                Schedule number
      Form 886-A                                                                                         or exhibit
       (May 2017)                       Explanations of Items                                            Form 990
  Name of taxpayer                                           Tax Identification Number (last 4 digits)




                      Revenue agent sent 4 separate delinquency Notices (letter 5077-B) to the officers of
record. Two officers were sent delinquency notice to (OPC) physical addresses. Two Officers were sent letters
to their personal addresses. All via certified mail.

1) Certified mail “envelope” sent on                    , to            (Officer on tax return) was returned
   to sender with a note “refused, stop sending” on
2) Certified mail sent on                   , to                   (officer on tax return) has been return to
   sender-notes: refused.
3) Certified mail sent on                    , to           (Officer on tax return) was returned, unopened
   to sender, with the note: Refused Do not send again!
4) Certified mail sent on                      , to                   (Officer on tax return) was confirmed
   delivered on                     .

                         :

On the Job Instructor,              , called (     ) listed Officer-                  , officer on the tax return
under examination. Previous steps taken to contact the organization were explained, this included initial
examination date and appointment letters and the delinquency notices and calling the current Executive
Director, .             , Officer stated       is not a current officer but will reach out to another officer to
assist with this.

Call Made to            (officer on the tax return) cell number.    did not answer. Agent left                      contact
number and requested a call back.     did not call back or respond.

                     :

Revenue Agent resent copies of the Appointment Letter 6031, IDR-1 F4564, Publication 1 and Notice 609
and publication 5295 to the organization address of record. The certified mail package was received by the
organization and signed                    .

                     :

Revenue Agent emailed the organization’s Finance Manager                                to request the current officer’s
contact information. No response was received.

Revenue agent mailed out an address postal tracer to the Memphis postmaster. The request was received
by the         USPS postmaster on                     .




Catalog Number 20810W                      Page    2                 www.irs.gov                     Form 886-A (Rev. 5-2017)
                                    Department of the Treasury – Internal Revenue Service                Schedule number
     Form 886-A                                                                                          or exhibit
      (May 2017)                        Explanations of Items                                            Form 990
 Name of taxpayer                                            Tax Identification Number (last 4 digits)




Per              Secretary of State website, the organization status is active with a renewal date of
 / /        The address listed on the State website is                                                     and
the contact person listed is           . The initial examination Letter and IDR were also sent to this address.
The Executive Director was contacted, but did not cooperate.

                                                         Law:

Internal Revenue Code (IRC) § 501(c)(3) of the Code provides that an organization organized and
operated exclusively for charitable or educational purposes is exempt from Federal income tax, provided
no part of its net earnings inures to the benefit of any private shareholder or individual.

IRC § 170(b)(1)(A)(vi) to qualify as a publicly supported organization require that one-third or more of an
organization’s total support is normally from governmental units, direct or indirect contributions from the
public or a combination of these sources.

IRC § 6001 of the Code provides that every person liable for any tax imposed by this title, or for the
collection thereof, shall keep such records, render such statements, make such returns, and comply with
such rules and regulations as the Secretary of the treasury may from time to time prescribe.

IRC § 511 of the Internal Revenue Code imposes a tax at corporate rates under section 11 on the
unrelated business taxable income of certain tax-exempt organizations.

IRC § 6033(a)(1) of the Code provides, except as provided in 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.

Treas. Reg. § 1.6001-1(a) in conjunction with Treas. Reg. § 1.6001-1(c) provides that every organization
exempt from tax under IRC § 501(a) and subject to the tax imposed by IRC § 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 § 6033.

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 officers or employees and shall be retained as long
as the contents thereof may be material in the administration of any internal revenue law.




Catalog Number 20810W                      Page    3                 www.irs.gov                     Form 886-A (Rev. 5-2017)
                                    Department of the Treasury – Internal Revenue Service                Schedule number
     Form 886-A                                                                                          or exhibit
      (May 2017)                        Explanations of Items                                            Form 990
 Name of taxpayer                                            Tax Identification Number (last 4 digits)




Treas. Reg § 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 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 § 6033.

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 § 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.

In accordance with the above cited provisions of the Code and regulations under IRC §§ 6001 and 6033,
organizations recognized as exempt from federal income tax must meet certain 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 and to determine its liability for
any unrelated business income tax.

In Shapiro v. Commissioner, 40 T.C. 34 (1963) the tax court stated: “The burden of proof is of course,
upon the petitioner, and if there should be a gap in the record, it may not be presumed that any missing
facts are favorable to him.” Indeed, it has even been stated that a “well-founded doubt is fatal to the
claim.” Estate of Bowers v. Commissioner, 94 T.C. 582 (1990); Butka v. Commissioner, 91 T.C. 110 (1998)
aff’d without published opinion 886 F.2d 442 (D.C. Cir. 1989).

                                               Taxpayer Position:

Unknown at this time.
                                             Government Position:
In accordance with the above-cited provisions of the Code, 501(c)(3) organization recognized as exempt
from federal income tax must be both organized and operated exclusively for one or more of the purposes
specified in such section, and will not be regarded as "operated exclusively" for one or more exempt
purposes described in section 501(c)(3) of the Code if more than an insubstantial part of its activities is not
in furtherance of a 501(c)(3) purpose.

The organization has taken the position that they are organized and operated exclusively for one or more
of the purposes specified in sections 501(c)(3) and 170(b)(1)(A)(vi). However, the organization has failed




Catalog Number 20810W                      Page    4                 www.irs.gov                     Form 886-A (Rev. 5-2017)
                        Department of the Treasury – Internal Revenue Service                Schedule number
     Form 886-A                                                                              or exhibit
      (May 2017)            Explanations of Items                                            Form 990
 Name of taxpayer                                Tax Identification Number (last 4 digits)




Catalog Number 20810W          Page    6                 www.irs.gov                     Form 886-A (Rev. 5-2017)