Private Letter Ruling
Number: 202233017
Internal Revenue Service
May 10, 2021
   
   
   
Department of the Treasury
Internal Revenue Service
Tax Exempt and Government Entities
   
Release Number: 202233017
Release Date: 8/19/2022
UIL Code: 501.04-00
   
Date: May 10, 2021
Taxpayer ID number:
Form:
Tax periods ended:
Person to contact:
Name:
ID number:
Telephone:
Fax:
   
CERTIFIED MAIL - RETURN RECEIPT REQUESTED:
   
Dear *******:
   
Why we are sending you this letter   
This is a final determination explaining why your organization doesn't qualify as an organization described in Internal Revenue Code (IRC) Section 501(c)(4) for the tax periods above.
   
In the future, if you believe your organization qualifies for tax-exempt status and would like a determination letter from the Internal Revenue Service, you can request a determination by filing Form 1024, Application for Recognition of Exemption Under Section 501(a), or Form 1024-A, Application for Recognition of Exemption Under Section 501(c)(4) of the Internal Revenue Code, (as applicable) and paying the required user fee.
   
Our adverse determination as to your exempt status was made for the following reasons: During our examination of the return indicated above, we determined that your organization was not described in IRC Section 501(c)(4) for the tax period and therefore, it does not qualify for exemption from federal income tax. This letter is not a determination of your exempt status under IRC Section 501 for any period other than the tax period listed above.
   
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 www.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 may file an action for declaratory judgment under the provisions of IRC Section 7428 in one of the following three venues: 1) United States Tax Court, 2) the United States Court of Federal Claims or 3) the United States District Court for the District of Columbia.
   
Please contact the clerk of the appropriate court for rules and the appropriate forms for filing an action for declaratory judgment by referring to the enclosed Publication 892, How to Appeal an IRS Determination on Tax-Exempt Status. You may write to the courts at the following addresses:
   
United States Tax Court
400 Second Street, NW
Washington, DC 20217
   
U.S. Court of Federal Claims
717 Madison Place, NW
Washington, DC 20439
   
U.S. District Court for the District of Columbia
333 Constitution Ave., N.W.
Washington, DC 20001
   
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 www.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.
   
Keep the original letter for your records.
   
Sincerely,
   
Sean E. O'Reilly
Director, Exempt Organizations Examinations
   
Enclosures:
Publication 1
Publication 594
Publication 892
   
   
   
Department of the Treasury
Internal Revenue Service
Tax Exempt and Government Entities
   
Date:
06/15/2020
Taxpayer ID number:
Form:
Tax periods ended:
Person to contact:
Employee ID:
Telephone:
Fax:
Manager's contact information:
Employee ID:
Response due date:
07/10/2020
   
CERTIFIED MAIL -- Return Receipt Requested
   
Dear *******:
   
Why you're receiving this letter   
   
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)(4) 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.
   
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,
   
Sean E. O'Rilley
   
Director, Exempt Organizations Examinations
   
Enclosures:
Form 886-A
Form 6018
   
   
   
                          
   
 ISSUE    
   
Should ****** (******) remain classified as a public charity described in section 501(c)(4) of the Internal Revenue Code.
   
 FACTS  
   
****** was incorporated in the State of ****** in ******. It submitted an application to the ****** to be classified as a tax-exempt entity, which was approved by the State of ******. ****** then began sending Form ****** annually to the IRS. Upon receipt of said form, the IRS performed due diligence and realized that no determination had ever been issued regarding the tax-exempt status of the organization. In other words, ****** never filed an application (e.g., Form 1023) to be granted exemption [e.g., 501(c)(3)] formally. The IRS then adjudicated ****** with Section 501(c)(4), since an application is not required for this tax-exempt status.
   
****** provides educational resources. A review of its website shows that ****** states it is a tax-exempt organization under Section 501(c)(3). During the initial interview, Revenue Agent discussed with the President the discrepancy between its stated tax-exempt status [i.e., 501(c)(3)] and its classification with the IRS [i.e., 501(c)(4)].
   
 LAW  
   
Section 501(c)(3) of the Internal Revenue Code described an organization as being tax-exempt if it is organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes.
   
Section 501(c)(4)(A) of the Internal Revenue Code describes as being tax-exempt those civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare or local associations of employees..., and the net earnings of which are devoted exclusively to charitable, educational or recreational purposes.
   
 GOVERNMENT'S POSITION  
   
****** self-declared as a tax-exempt organization when it began to file Form ****** soon after its incorporation; however, it never submitted an application for a determination to be made regarding its status. Without an application for determination on file, the IRS branded ****** as tax exempt under Section 501(c)(4), since it does not require an application for this status.
   
Upon due diligence by the Revenue Agent and after initial interview, it is determined that ****** does not qualify for tax exemption under Section 501(c)(4). The entity will be disqualified.
   
 TAXPAYER'S POSITION    
   
****** agrees with disqualification of its tax-exempt status.
   
 CONCLUSION  
   
After initial interview and due diligence, Revenue Agent spoke with President and stated that would be disqualifying ****** as a tax-exempt organization under Section 501(c)(4).
   
The effective date of this disqualification is ******.