T.C. M em o . 2 0 1 8 -4 1

UNITED STATES TAX COURT
ASSOCIATION FOR HONEST ATTORNEYS, Pet i t io n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 1 4 5 62 -1 5 X. Fi l edAp ri l 3 , 2 0 1 8
. J o an Farr (an o ffi cer), fo r p et i t i o n er. Pat ri ckA. Green leaf, fo r res p o n d en t
.

M EM ORANDUM OPINION CHIECHI, J ud g e: Res p o n d en td et erm in edth at , effect i v e as o f J an u ary 1 , 2 0 1 0 , p et i t i o n er n o l o n g er o p erat edi n acco rd an ce wi th s ect i on 5 0 1 (c)(3 ). 1 Co n s equ en tl y , res p o n d en t fu rt her d et erm i n edt o rev o ke, effect iv e as o f J an u ary 1 , 2 0 1 0 ,

1 Al l s ect i o n referen ces are t o th e In tern al Rev en u e Co d e i n effect atal l rel ev an t t i m es . Al l Ru l e referen ces are t o th e Tax Co u rtRu l es o f Pract i ce an d Pro cedure.-2
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[* 2 ] p et i t i o n er’ s s t atu s as an o rg an i zat io n ex em p t fro m Fed eral i n co m e t ax (t ax )
u n d er s ect i o n 5 0 1 (a). Aft er h av i n g ex h au s t edi t s ad m i n is trat i v e rem ed i es , p et i

t i on er ch al l en g ed th o s e d et erm i n at i on s b y t i m el y s eek in g a d ecl arat o ry ju d g m en t p u rs u an t t o s ect io n 7 42 8 (a)(1 ). In acco rd an ce wi th Ru l e 2 1 7 (b ), res p o n d en tfi l ed th e ad m in i s trat i ve reco rdu n d erl y i n g res p o n den t ’ s d et erm i n at i o ns , wh i ch was n o t p ag in at ed , an dan i d en ti cal fi rs tam en d edad m i n is trat i v e reco rdu n d erl y i ng th o s e d et erm i n at i o n s (am en d edad m i n i s trat i v e reco rd ), wh i ch was p ag i n at ed . Th ereaft er, atthe req u es to f p et i t i o n er t o wh i ch res p o nd en t d i dn o to b ject , we co n du ct eda tri al . Fo r p u rp o ses o f th i s p ro ceed i n g , th e fact s an dthe rep res en t at i o n s i n th e ad m i n is trat i v e reco rdan dth e am en d edad m i n i s trat i v e reco rdare accep t ed as tru e,
s ee Ru l e 2 1 7 (b ), an dare i n co rp o rat ed h erei n . 2 W e m u s td eci d e wh et h er t o s u s t ai n res p on d en t ’ s d et erm i nat i o n s t o rev o k e, effect i v e as o f J an u ary 1 , 2 0 1 0 , p et i t i o n er’ s t ax -ex em p ts t atu s u n d er s ect i o n 5 0 1 (a) b ecau s e, effect i v e as o f t h atd at e, i tn o l o ng er o p erat edi n acco rd an ce wi th s ect i o n 5 0 1 (c)(3 ). W e h o l dth atwe wi l l s u s t ai n th o s e d et erm i n at i o n s .

2 J o an Farr f.k .a. J o an Heffi n g t o n (M s. Farr) was th e o n l y wi tn es s atth e t ri al i n thi s cas e. W e fo u ndn o fact s o n th e b as is o f t h e reco rd(i .e., h er t es t i m o ny ) es t ab l i s h edatth e t ri al i n th i s cas e.-3
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[* 3 ] Back g ro u n d Atth e t im e i tfi l edth e p et i t i o n , p et i t i on er’ s p ri n ci pal p l ace o f b u s i n es s was i n Kan s as atth e res i d en ce o f M s . Farr. OnAp ri l 1 8 , 2 0 0 3, M s . Farr h ado rg an i zedp et i t i o n er as a n onp ro fi t co rp orat i on u n d er t h e l aws o f t h e St at e o f Kan s as . Th e p u rp o s es fo r wh i ch p et it i on er was
o rg an i zed , as s etfo rt h i n i t s art i cl es o f i n co rp o rat i o n , were “ d i s co u rag i n g ci v i l l i ti g at i o n , i n creas i n g p ub l ic awaren es s o f t he l eg al s y s t em , an ds eek in g ‘ju st i ce fo r al l ’ ”. Th e b y l aws o f p et i t io n er p ro v i d edth ati twas t o b e m an ag edb y a b o ardo f d i rect o rs (b o ard ) co n s is t i ng o f t h ree m em b ers , o n e o f wh om

was t o s erv e fo r a 1 0 -y ear t erm

s i m u l t an eo u s l y

as b o th i t s ch i ef ex ecu t i v e o ffi cer (CEO) an dth e p res i den to f i t s b o ard(CEO/b oardp res i d en t). M s . Farr s erv edas the i n i t i al CEO/b o ardp res i d en to f p et i t i o n er an d co nt i n u edt o s erv e i n th atro l e atal l rel ev an t t i m es th ereaft er. Th e b y l aws o f p et i t io n er al s o p ro v id edth atth e CEO/bo ardp res i d en twas , as p arto f t he res p o n si b il i t i es o f th atp o s i t i o n , t o “p res en tan an n u al rep o rtt o th e Bo ardo f Di rect o rs fo l l o wi n g th e fi s cal y ear, s i g n al l ch eck s an db e a tru s t ee o f t h e p ro p ert i es o f th e As s oci at i o n . * * * [an d ] s h al l as s u m e an d/ o r ap p o i n t as n eces --4
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[* 4 ] s ary th e s ecret ari al , treas u ry , acco u n t i n g an d o th er du t i es an d/ o r res po n s i b i l i

t i es n eces s ary

t o at t ai n th e g o al s o f t h e As s o ci at i o n .” Th e b y l aws o f p et i t io n er fu rt h er p ro v i d ed : Th e CEO/ Bo ardPres i d en tan d/o r ap p o i n t ed acco u n t an t/ treas u rer s h al l recei v e al l rev en u e o f t h e As s o ci at i o n an ds h al l m ai n t ai n a co m p l et e an daccu rat e acco u n t o f al l fu n d s recei v edan dd i s b urs ed . He/ sh e s h al l d ep o s i tan dd i s bu rs e al l s u ch fu n ds . Th e CEO/ Bo ardPres i

d en t/t reas urer s h al l p res en t an an n u al rep o rtt o th e Bo ardi m m ed i at el y aft er t he cl os e o f t h e fi s cal y ear l i st i ng al l recei p t s an d d i s bu rs em en t s b y b u d g etcat eg o ri es . OnJ u ne 1 2 , 2 00 3 , p et i t i o n er s ub m i t t edt o th e In tern al Rev en u e Serv i ce Fo rm 1 0 2 3 , Ap p l i cat i o n fo r Reco g n i ti o n o f Ex em p ti o n Un d er Sect i o n 5 0 1 (c)(3 ) o f th e In t ern al Rev en u e Co d e (Fo rm 1 0 2 3 o r ap p li cat i o n fo r t ax ex em p t i o n ). In th e ap p li cat io n fo r t ax ex em

p ti on , p et i t io n er rep res en t ed , i n t er al ia, t h ati two u l d
co n du ct fi v e act iv i t i es . Th e fi rs ttwo co n s i s t edo f “ m as s m ai l i n gs o f p os t card s an d b ro ch u res ” o r “ s en d [i n g ] e-m ai l s ” i n o rd er “ to creat e p ub l i c awaren es s / s eekd o n at i on s t o d i s co u rag e l it i gat i o n , i m p ro v e o u r l eg al s y s tem , k eep at t o rn ey s h o n es t , s av e p eo p l e m o n ey , redu ce t h ei r s tres s , an ds eek‘ju s t i ce fo r al l ’ ”. Pet i t i o ner rep res en t edi n i t s ap p l i cat i o n fo r t ax ex em p t i on th ati two u l ds p en di n th e ag g reg at e 5 0 p ercen to f i t s t i m e o n th o s e t wo act i v i ti es . In Fo rm 1 0 23 , p et i t i o n er fu rt h er rep res en t edth at i two u l ds p en d 2 0 p ercen t
o f i t s t i m e i n o rd er t o s el l a “ b o o kcal l edTenSecret s Yo uM u s t Kn o w Befo re-5
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[* 5 ] Hi ri ng a Lawy er t o co n v i nce p eo p le t o wo rko u t th ei r i s s u es i ns t ead o f fi l [i n g ] l aws u i t s / edu cat e p ub l i c.” M s . Farr was th e au th o r o f Ten Secret s Yo uM us tKn o w Befo re Hi ri n g a Lawy er. In i t s ap p l i cat i o n fo r t ax ex em p t i o n , p et i t i on er al so rep res en t ed th ati two u l d
s p en d 2 0 p ercen to f i t s t i m e i n o rd er t o “ m o n it o r A.H.A.! web s i t e t o as s i s t p eo p l e h av in g at t o rn ey d i ffi cu l t i es , s el l b o ok , an s wer qu es t io n s, d is co u rag e l i t i g at i o n , an d acq u ire at ty

m em bers ”. In Fo rm 1 0 23 , p et i t i o n er fu rt h er rep res en t edth at th e fi ft h act i v i ty i n wh i ch i t
wo u l den g ag e wo ul db e t h e “p rep arat io n o f l eg al d o cu m en t s i n an t i ci pat i on o f t ak i n g cu rren t cas e b efo re th e U.S. Sup rem e Co u rtfo r p ub li c awaren es s i n s eek i ng

‘ j u s t i ce fo r al l ’ ” an dth ati t wo u l ds p en d l es s than 1 0 p ercen to f i t s t i m e o n th at act i vi ty . OnNo vem

b er 1 9, 2 0 0 3 , res p o n d en ts en t a l et t er t o p et i ti o n er (No v em b er 1 9 , 2 0 0 3 d et erm i n at i o n l et t er) i n wh i ch res po n d en t m ad e th e fo ll o wi n g d et erm i n at i on s , effect i v e as o f Ap ri l 1 8 , 2 0 0 3 : “ Bas edo n i n fo rm at io n y o us up p l i ed , an d
as s u m in g y o u r o p erat i o n s wi l l b e as s t at ed i n y o ur ap p li cat i o n fo r reco g n i t i o n o f
ex em p t i o n , we h av e d et erm i n edy o uare ex em ptfro m fed eral i nco m e t ax u nd er
s ect i on 5 0 1 (a) o f th e In t ern al Rev en u e Co d e as an o rg an i zat i o n d es cri b edi n-6
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[* 6 ] s ect i o n 5 0 1 (c)(3 ).” Res p o n d en tem p has i zedi n th e No v em

b er 1 9, 2 0 0 3 d et erm i n at i o n l et t er t h atres p o n d en t ’ s d et erm i nat i o n i s b as edo n ev i d en ce t haty o u r fu n d s are d ed i cat ed t o th e p u rp o s es l i s t ed i n s ect i on 5 0 1 (c)(3 ) o f t h e Co d e. To as s u re y o u r co n t in u ed ex em

pt i o n , y o us h o u l dk eep reco rd s t o s ho w th atfu n d s are s p en to n l y

fo r t h o s e p u rp o s es . If y o ud i s tri b ut e fu n d s t o o th er o rg an i

zat i o n s , y o u r reco rd s s h o u l ds h o w wh et h er th ey are ex em ptu n der s ect i o n 5 0 1 (c)(3 ). In cas es wh ere t h e reci p i en to rg an i zat i o n i s n o t ex em p tu nd er s ect i o n 5 0 1 (c)(3 ), y o um u s t h av e ev i d en ce t h atth e fu n d s wi l l rem ai n d ed i cat edt o th e req u iredp u rp o s es an dth atth e reci p i en twi l l u s e th e fu n d s fo r t ho s e p urp o s es . If y o u d i s tri b u t e fu n ds t o i n d i v idu al s , y o u s ho u l dk eep cas e h i s t o ri es s h o wi n g th e reci p i en t s’ n am es , ad dres ses , p u rp o s es o f award s , m an n er o f s el ect i o n , an d rel at i o n s h i p (i f an y ) t o m em b ers , o ffi cers , tru s tees o r d o no rs o f fu n ds t o y o u, s o th aty o ucan s ub st an t i

at e up on req u es tb y

the In t ern al Rev en u e Serv i ce an y an dal l d i s tri b u t i o n s y o u m ad e t o i nd i v i du al s. (Rev enu e Ru l i n g 5 6 -3 0 4, C.B. 1 9 5 6 -2 , p ag e 3 0 6 .) Res p o n d en tal s o i n fo rm edp et i t i on er i n th e No vem b er 1 9 , 2 0 0 3 d et erm i n at i on l et t er, i n t er al i a, t h atp et i t io n er i s “ n o treq u i redt o fi l e Fo rm 9 9 0, Return o f Org an i zat i on Ex em

p tFro m In co m e Tax , i f y o u r [p et i t io n er’ s ] g ro s s recei p t s each y ear are n o rm al ly

$ 2 5,0 0 0 o r l es s .” By l et t er d at ed M arch 1 5 , 2 0 1 3 , an ds en t t o J o an Heffi ng t on (i .e., M s . Farr),
res p o n d en t co nfi rm ed th atres p o n d en th add eci d edt o ex am i n e p et i t i o n er’ s o p erat i on an dact i v i t i es wi th res p ectt o 2 0 1 1 . As a res u l to f res po n d en t’ s ex am i n at i o n fo r t h aty ear, res p on d en t d eci d edt o ex p an dres p o n d en t ’ s ex am i n at i o n o f p et i

--7
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[* 7 ] t i on er’ s o p erat i on an d act i v i t i es t o i n cl u d e 2 0 1 0 an d2 0 1 2 an ds o n o ti fi ed p et i t i o n er i n Fo rm

4 5 6 4 , In fo rm at i o n Do cu m en tReq u es t , d at edM ay 1 , 2 0 13
. Du ri n g 2 0 1 0 , 2 01 1, an d2 0 1 2 , M s . Farr u s edcert ai n o f p et i t i o n er’ s fu n d s wh en s h e en g ag edp ri m ari l y i n th ree act i v i t i es o n b eh al f o f p et i t i o n er an d/ o r o n h er
o wnb eh al f. Sh e (1 ) p ro vi d ed as s i s t an ce t o i n d i v i du al s wi th res p ectt o l eg al
m at t ers , (2 ) p ro du ceda qu art erl y n ews l et t er an d m ai nt ai neda web si t e i n p et i t i o n er’ s n am e, an d(3 ) p ai dcert ai n o f h er p ers o n al ex p en s es , i n cl u di ng p ay i ng ex p en ses fo r t h e ex h u m at i o n an dDNA t es t i ng o f t h e rem ai ns o f J ackFarr, h er fat her. Du ri n g 2 0 1 0 , 2 01 1, an d2 0 1 2 , p et i t i o n er m ai n t ai n eda ch eck i n g acco u n tat Veru s Ban ki n Derb y , Kan s as (p et i t i o n er’ s ch eck i n g acco u n t ). Du ri ng th os e y ears , M s . Farr h adex cl u s i v e s i gn atu re au th o ri ty fo r t hatch eck i n g acco u n t
. Du ri n g 2 0 1 0 , 2 01 1, an d2 0 1 2 , M s . Farr u s edp et i t io n er’ s ch eck i ng acco u n t t o m ak e cert ai n p u rch as es fro m cert ai n thi rdp art i es an d cert ai n cas h wi th drawal s t o t al i n g $ 6 ,9 6 3 .7 6, $ 27 ,3 88 .5 3, an d $ 5 ,3 4 9
. 0 5 , res p ect i v el y (co l l ect i vel y , p ay m en t s an dwi thd rawal s i n ques t i o n ). Sp eci fi cal l y , M s . Farr u sedp et i t i o n er’ s ch eck i n g acco un ti n 2 0 1 0 , 2 0 1 1 , an d2 01 2 t o m ak e cert ai n p u rch as es fro m cert ai n d ep art m en ts t o res an d g ro cerys t o res , s u ch as Di l l ard ’ s , W al m art , Kwi kSh o p , Ko h l ’ s , W al green s , an dDi ll o n s . In ad d i t i o n , M s . Farr u s edp et i t i o n er’ s ch eck i n g
acco u n t in 2 0 1 0 , 2 0 1 1 , an d 2 0 12 t o m ak e au t o m o b i l e-rel at edp u rch as es fro m-8
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[* 8 ] cert ai n v en do rs , s uch as Qu i k Tri p , A&A Au to Sal v ag e, Derb y Qu i ckLub e, K-1 5 Au to Sal v ag e, an dM ei n ek e. M s . Farr al s o u s ed p et i t io n er’ s ch eck i n g
acco u n t in 2 0 1 0 , 2 0 1 1 , an d 2 0 12 t o m ak e cert ai n h om e-rel at edan d real -es t at erel at ed p u rch as es fro m

cert ai n s t o res , s u ch as Sl u m b erl an d , W es t ar En erg y , Lo wes , T&S Tree Serv i ce, Gen e’ s Stu m p Gri nd i ng Serv i ce, Du t ch ’ s , Ech o s t ar Di s h , Al l s t at e, Ro b ert s Ov erd o o rs In c., Lu s co Bri ck & St o n e, M Y Co n s tru ct i o n , an d St ar Lu m

b er & Su p p ly . Inad di t i o n , M s. Farr u s edp et i ti o n er’ s ch eck in g
acco u n t in 2 0 1 0 an d2 01 1 t o m ak e cert ai n p aym en ts wi th res p ect t o a USAA cred i t card . M s . Farr al s o u s edp et i t i on er’ s ch eck i n g acco u n ti n 2 0 11 t o m ak e a $ 1 8 9 .5 0 p aym en t t o an an im al cl i n ic an d a $ 7 ,7 5 0 p aym en t t o St . J o h n ’ s M i li t ary Sch o o l fo r tu i ti o n fo r h er s o n , an d an o th er $ 1 0 0 p aym en tt o th ats ch o o l . Inad d i t i o n , M s . Farr u s edp et i t i o n er’ s ch eck i n g acco u n ti n 2 0 1 1 t o p ay $ 2 , 2 0 0 fo r t h e ex h u m at i o n
an d DNA t es t i n g o f M s . Farr’ s fat h er’ s rem ai n s . Pet i t i o ner d i dn o tp ay Ms . Farr a s al ary du ri ng an y

o f t h e y ears 2 0 1 0 th ro u g h 2 0 1 2 . Inan act i o n t h atth e St at e o f Kan s as co m m en cedi n 2 01 0 ag ai n s t M s . Farr fo r t h e u n lawfu l p ract i ce o f l aw (d i s cu s s edb el o w), M s . Farr cl ai m edth at
s h e was a v o l u n t eer fo r p et i t i o n er. Pet i t i o ner d i dn o ti s s u e t o M s . Farr Fo rm W -2 , W ag e an dTax St at em en t , o r
an y ty p e o f Fo rm

1 09 9 fo r an y

o f t h o s e y ears .-9
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[* 9 ] Du ri n g res p o n den t ’ s ex am i n at i on o f p et i ti o ner’ s o p erat i o n an dact i v i t i es wi th res p ect t o 2 0 1 0 , 2 0 11 , an d2 0 1 2 , res p o n den t ’ s rev en u e ag en tres po n s i b l e fo r th atex am i n at i o n (ag en t ) as k edM s . Farr fo r d o cu m en t at i o n es t ab l i s h i n g th e n ature
an d/o r t h e p u rp o s e o f each o f t h e p aym en t s an d wi th drawal s i n qu es t i o n t h ats h e h ad m ad e du ri n g th o s e y ears wi th fu n d s fro m p et i ti o n er’ s ch eck i n g acco u n tan d th atth e ag en t fo u n dt o b e qu es t i o n ab l e t ran s act i on s fo r p et i t i o ner, an o rg an i zat i o n th atres p o n d en t h add et erm i n edt o b e ex em p tfro m t ax u n d er s ect i o n 5 01 (a) b ecau s e i twas an o rg an i zat i o n d es cri b edi n s ect i o n 5 0 1 (c)(3 ). M s . Farr d i dn o t p ro v id e an y

s u ch d o cu m en t at i o n t o th e ag en t
. In s t ead , M s. Farr i n fo rm edth e ag en tthatth e p aym en t s an dwi th drawal s i n qu es ti o n co n s t itut edrep aym en t s o f o n e o r m o re l o an s t h ats h e h ad m ad e t o p et i

t i on er. Th e ag en t as k edM s . Farr t o p ro v i de h i m wi th d ocu m en t at io n es t ab l i s h i n g th e l o an s thats h e cl ai m eds h e h adm ad e t o p et i t i o ner. M s . Farr d i dn o tg i ve t h e ag en t an y s u ch d o cu m en t at i o n b u t i n s t eadreco n s tru ct ed fo r t h e y ears 2 0 03 th ro u g h 2 0 0 6 (1 ) t h e l o an s t h ats h e cl ai m eds h e h adm ad e t o p et i t i o n er an d(2 ) t h e h o u rs th ats h e cl ai m ed s he h adwo rk edfo r p et i ti o n er. Th ereaft er, M s. Farr g av e th e ag en t a l is t o f t h o se reco n s tru ct edcl ai m edl o an s an d a l i s to f t h o se reco n s tru ct ed cl ai m edh o u rs .-1 0
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[* 1 0 ] Du ri n g th e p eri o d2 0 03 th ro u gh 2 0 1 2, p et i t io n er d i dn o tex ecu t e an y p ro m i s s o ry

n o t es p ay ab l e t o M s . Farr an dd i d n o tm ak e an y p aym en t s o f i nt eres t t o h er. OnDecem

b er 7 , 2 0 09 , th e St at e o f Kan s as co m m en cedan act i o n i n t h e Ei g h teen th J u d i ci al Di s tri ctCo u rt , Sed g wi ck Co u nt y , Kan s as (Sed g w ickCo u n t y d i s tri ctco u rt ), ag ai n s tM s . Farr fo r t h e u n au tho ri zedp ract i ce o f l aw an dfo r
v i o l at i o n s o f t h e Kan sas Co n s u m er Pro t ect i o n Act (Kan s as act i o n ag ai n st M s . Farr). Ata p ro ceed i n g o n Decem b er 6 , 2 0 1 0 , th atthe Sed g w i ckCo u n ty d i s tri ct
co u rth el d , thatco u rti s s u edi t s fi n d i n gs an dru l i n g s wi th res p ectt o th e Kan s as act i on ag ai n s tM s . Farr, i n cl u d i n g i n p ert i n en tp art the fo ll o wi n g :

On e o f t h e i s su es th ath as b een arg ued[i s ] wh o i s th e d efen d an t an dwh en I s ay

“ wh o i s th e d efen d an t” M rs . Heffi n g to n [M s . Farr] v ers us th e As s o ci at io n [p et i ti o n er] . Th e St at e n ev er rai sedth e i s s ue o f al t er eg o i n th i s cas e an dth e As so ci at i o n h as n o tb een n am edas a p art y i n th i s cas e. So , an y

rel i ef t h atI o rd er i s s o l el y ag ai n s t M rs . Heffi n g t o n . M rs . Heffi n g t o n h as rai s edth e d i st i n ct i o n b et ween th e As s o ci at i on d o i ng th e wo rkan d M rs . Heffi n g t o n d o i n g th e wo rk . Sh e’ s t es t i fi edth atan drep eat ed l y at t em p t edt o el i ci tt es t i m o n y

th atAHA was d o i n g th e wo rkan dn o tM rs . Heffi n g t o n . No w, th e o n l y

ev i d en ce i n th atreg ardo r an y o f th e rem ed i es th atI’ m co n s i d eri ng co n cern s M rs . Heffi n gt o n ’ s act i o n s . Th ati s al l th e co urt is g o i n g t o co n s i d er.-1 1
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[* 1 1 ] * * * * * * *

No w, i n thi s cas e I’ v e h eardth e ev id en ce an dI’ v e h eard th e t es t i m o n y o f s ev eral wi tn es s es b o th fo r t h e St at e an dfo r M rs . Heffi n g t o n . I wen tb ackan dI’ v e l oo k edat the [s ic] al l d o cu m en t s th ath av e b een ad m it t edan dju s t l i s t en i n g t o wh at M rs . Heffi n g t o n h as s ai d an d/ or t h e t es ti m o n y th at ’ s co m e t h ro u gh s o m e o f h er wi tn es s es th ere h as b een s ev en ty th o u san dd o l l ars i n co n tri b ut i o n s fo r s erv ices i n as s i s t i n g p eo p l e i n l eg al m at t ers . Th ere h av e b een atl eas t fo u r cl i en t s . Sh e’ s d o d g ed , i n m

y o p i n i o n , a s i g ni fi can t b u l l etb y n o tp ro du ci ng the d ocu m en ts th atwere o rd ered p ro du cedb ecau s e i t ’ s v ery real , v ery co n cei v ab l e t h atth e n u m b er o f cl i en t s o r p eo p l e s h e h as co n s u l ted , wh et h er o r n o tth ey m ad e p aym en t s , co u l d b e h ig h er. M o re t h an o n e p art y

en t eredi n t o the co n ti ng en cy co n tract . I n o t e ev en M rs . Heffi n g t on s l i p p edo n e t im e an d cal ledi t a l eg al ag reem en t . An ds i nce 2 0 0 5 , M rs . Heffi n g t o n h as kn o wn thatth e at t o rn ey g en eral was rev i ewi n g h er act i v i ty . * * * * * * * Sh e co n ced es th ats h e d raft edp lead i n g s an dco u rt p ap ers . Sh e draft edd em an d l et t ers . Sh e n eg o t i at edo n b eh al f o f t he cl ien t s. Sh e m ed i at edan dthe co u rtn o t es i twas t o the d et ri m en tt o M r. Fran k
. Her act i o n s i n th i s co u rt ’ s ex p eri en ce were d et ri m en tal t o M r. Fran k
. Sh e al s o p art i ci p at ed i n p rep ari n g s et tl em en t p ro p o s al s . * * * An d th e co u rtn ot es s h e s t at eds h e g av e p ers o n al o p i n io n b as edup o n res earch thats h e o b t ai n edatth e l aw l i b rary . Un d er an y defi n i t i o n u n d er an y b u rd eno f p ro o f atl aw i t’ s cl ear th atM rs . Heffi n g t o n was p ract i ci n g l aw an dthatth ere’ s b een n o p ro o f t h ats h e h as as [s i c] l i cen s e t o p ract ice l aw u n d er t h e St at e o f Kan s as . M erel y

s ay i n g y o u are n o ta l awy er an d th aty o u d o n o tg iv e-1 2
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l eg al ad vi ce d o es n o t n eg at e g i v in g l eg al ad vi ce i n t h e fas h i o n a l awy er wo u l d
. M erel y s ay in g y ouare n o ta l awy er an dd o n o t g i v e l eg al ad v i ce d o es n ot n eg at e p rep ari ng l eg al p ap ers fo r s o m eo n e as g iv i n g l eg al ad vi ce. So , i n ad d i t i o n , th e co u rtfi n d s fo r p u rp os es o f th i s h eari n g t h at Si g g , Keck , Fran k [ 3 ] an dBru n ch were co n s u m ers th e St at e h as p ro ven were g iv en as s i s t an ce b y

M rs . Heffi n g t o n i ll eg al ly wi th o u ta l i cen s e. Th i s i s n o tfam i ly

an dfri en d s s i tt i ng ro u n d g ri p i n g ab o u t l i ti g at i o n . It ’ s co n cei v ab l e an dI’ m as s u m i n g ev ery b o dy h as h ada fam i l y m em

b er wh o h as b een i nv o l vedi n l i t i g at i o n h as co m pl ai n ed ab o u tth ei r l awy ers o r, y o ukn o w, o ne fam i l y m em ber s ay s y o u real l y o u g h tt o d o th i s o r an o th er fam i l y m em b er s ay s that . Th at ’ s n o twh at we’ re t al k i n g ab o uti n th i s i n st an ce. Arg uab ly th at ’ s p ro hi b it i v e co n du ct . Th at ’ s n o twh atth i s i s . Th es e are t hi rd -p art i es . Th es e were t h i rd -p art i es wh o were b ro u g h ti n t o co n t actwi th M rs . Heffi n g t o n thro u g h s o l ici t at i o n an d o th er s i m il ar co m

m erci al m ean s. OnFeb ru ary 1 0 , 2 0 1 1, the Sed gwi ck Co u n ty d is tri ctco u rten t ereda d efau l t ju d g m en tan dan i n

jun ct i o n ag ai n s t M s . Farr (Feb ru ary 1 0 , 2 0 1 1 i n

jun ct i o n ) fo r t h e
u n au th o ri zed p ract i ce o f l aw an dfo r co m m i t t i n g d ecep t i v e p ract i ces i n v i o l at i o n o f th e Kan s as Co ns u m er Pro t ect i o n Act
. [* 12 ]

3 “ J . Si g g ”, “ M. Si g g”, “ E. Keck ”, an d“ T. Fran k ” were s h o wnas m em b ers o f p et i t i o n er i n a l i s t o f m em b ers du ri n g 2 0 1 1 th at M s . Farr m ai n t ai nedo n b eh al f o f p et i t i o n er.-1 3
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[* 1 3 ] M s . Farr was ev i d en tl y u n d et erred b y

th e Feb ru ary

1 0 , 2 0 1 1 i n

jun ct i o n o f th e Sed g wi ckCo un ty

d i s tri ctco u rtp ro h i b i t in g h er fro m ad v i s i n g o r as s i s t i n g
o th ers i n l eg al m at t ers . InAu g u s t2 0 1 1 J o hn Si gg (M r. Si g g ) en t ered i n t o an ag reem en twi th p et i t io n er t o accep t$ 2 0 ,0 0 0 as a p urp o rt ed d o n at i o n fro m h i m i n
ex ch an g e fo r (1 ) rev i ewi n g th e fi l es o f h i s “ at t o rn ey (s ), p as tan dp res en t , an dt o
as s i s t * * * [h i m

i n ] fi l i n g a ‘ wri to f m an d am us ’ ” wi th t h e Sup rem e Co u rto f t h e Un i ted St at es (Sup rem e Co u rt ) co n cern i n g M r. Si g g’ s d i v o rce an d cert ai n o th er ci v i l m at ters an d(2 ) p rep ari n g “p o s s i b l e co n t actl et t er t o s ue l awy ers / ju d g e/ s t at e
o f KS.” M r. Si g g wi red $ 2 0 , 0 0 0 t o p et i ti o n er’ s ch eck i n g acco u n to n Au g u s t4 , 2 0 1 1 . Pet i t i o n er h ada p ri o r h is t o ry o f accep t in g p u rp o rt edd on at i o n s fro m M r. Si g g an dcert ai n o th er i n d iv i du al s i n ex ch an g e fo r s erv i ces p erfo rm edb y M s . Farr. OnSep t em

b er 9 , 2 01 1 , M r. Si g g fi l ed , p urp o rt ed l y p ro s e, wi th th e Sup rem e Co u rta d o cu m en t t i t l ed“ PETITION FOR EXTRAORDINARY W RIT” (M r. Si g g ’ s p et i t i o n ). Th e qu es t io n p res en t edfo r Sup rem e Co u rt rev i ew, as s etfo rt h i n M r. Si g g ’ s p et i t i o n , was wh et h er M r. Si g g was “ d ep ri v edo f du e p ro ces s o f l aw i n h i s d i v o rce u nd er t h e 5 th Am en d m en t t o th e Un i t edSt at es Co n s t i tu t i o n du e t o h i s at t o rn ey s an dth e co u rten g ag i n g i n ab u s e o f d is cret i o n, frau d o n th e co urtan d
o u trag eo u s g o vern m en tco n du ctfo r o v er 1 0 y ears t o d ep let e h i m an dh i s s o n , M i t ch , o f t h ei r as set s”. M r. Si g g ’ s p et i t i o n al so s t at edi n p ert i n en tp art :-1 4
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[* 1 4 ] M o re fru s trat ed th an ev er, J o h n ag ai n s o u gh t h el p fro m the As s o ci at i o n fo r Ho nes t At t o rn ey s (A.H.A.!) o n Au g u s t4 , 2 01 1 . He t o l d th em th at b ack i n 2 0 0 7 , At t o rn ey s Sev artan dM i l l s h ad p ers uad

edJ o h n an dM i t ch th ey co u l d h an d l e al l o f t h ei r l eg al m at ters up t o th e U.S. Suprem e Co urt fo r $ 1 m i l li o n , th atSev arth adb een p ai d al m o s tal l o f t h i s m o n ey , an dth atan o th er $ 1 m i l l i o n h adb een i l l eg al l y t ak en fro m

th ei r as s et s o n a s up erced eas b o n do n J u l y 1 2 , 2 0 1 1
. He t o l dth e A.H.A.! th atth e Tri al Co urts t at edthatth e $ 7 m i l l i o n ju d g m en tag ai n s tM i tch was n o w up t o $ 9 m i l l i o n b ecau s e “ i n t eres t was b ei n g ad d ed .” On Au g u st2 2 , 2 0 1 1, M i t ch s en ta l et t er i n t en d i ng t o s u e t he l awy ers , co u rtan do th ers i n a fed eral s u i t al l eg i n g th efto f h i s as set s , an dthe A.H.A.! h el p edJ o hn p rep are t h i s p et i t i o n fo r an ex trao rd i n ary

wri t
. M s . Farr co n t i n uedi n 2 0 1 1 t o p ro v i d e i n p et i t io n er’ s n am e u n au th o ri zed l eg al as s i s t an ce t o cert ai n i n d i v i du al s , i n cl u d in g h ers el f wi th res p ectt o, i nt er al i a, h er ch al l en g es t o th e Feb ru ary 1 1 , 2 0 1 1 i n jun ct io n an dthe fi nes i m p o sedb y th e Sed gwi ckCo u n ty

d i s tri ct co urtag ai n s th er fo r p ract i ci ng l aw wi th o u t a l i cen s e, h er arres t fo r h o st i ng an u n d erag e d ri n ki n g p art y , an da l aws u itfi l edag ai n s ta l o cal s ch o o l d i s tri ctreg ard in g h er s o n . Pet i t i o ner ceas eds en d i n g n ews l et t ers v i a m ai l i n J an u ary 2 0 1 1 . Duri n g 2 0 1 0 , 2 0 1 1 , an d 2 0 1 2, p et i t i o n er m ai n t ai n eda web si te atwww.as s o cfo rh o n es t at ty s .co m . In fo rm at i o n l i n k s o n p et i t io n er’ s web s i t e i ncl u d edt o p i cs s u ch as

“ A.H.A.! News Up d at e”, “ Lawy ers t o Av o i d/ Co ns i d er”, “ Ho w t o Fi le a Fed eral Su i t ”, an d“ Bo o kOrd er/ M em b ers hi p ”.-1 5
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[* 1 5 ] Pet i t i o ner’ s “News Up d at e” fo r Oct o ber 2 0 11 i n cl u d ed i n fo rm at i o n t h at p et i t i o n er “ h el p edM r. Si g g fi l e a wri to f m an d am u s wi th th e Un i tedSt at es Sup rem e Co u rt ”, an di n fo rm at i o n reg ard in g th e at t em p t edex h u m at i o n o f t h e
rem ai n s o f J ackFarr an dth e res u l t s o f th atat t em pt edex h u m at i o n. A s u m m ary o f p et i ti o n er’ s b o ardm eet in gs i n 2 0 1 1 (2 0 1 1 b oardm eet i n g
s u m m ary ) i n d i cat edth atatth e b o ardm eet i n g o n Ap ri l 2 8 , 2 0 1 1 , th e b o ard d i s cu s s edp et i t i o n er’ s n ews up d at e fo r Ap ri l 2 0 1 1, wh i ch i n di cat edth atM s . Farr

“ was fal s el y

p u t i n jai l o n 3 / 1 9 / 1 1 fo r ‘ h o s t i n g an u n d erag e d ri nk i n g p arty ’ wh en h er 1 6 -y r o l ds o n h ada p art y

fo r s p ri n g b reak .” Th e 2 0 1 1 b o ardm eet i ng s u m m ary fu rt her i n d i cat edth atatth e b o ardm eet i n g o n J u n e 4 , 2 0 1 1, the b o ardd i s cu s s ed

“ h o w g o v to ffi ci al s co nt i n u e t o try an dthwartth e M ed al o f Ho n o r Awardfo r CEO’ s [M s . Farr’ s] fat h er”. M s . Farr fi l edan ap p eal wi th th e Co u rto f Ap p eal s fo r t h e St at e o f Kan s as (Kan s as co u rto f ap p eal s ) wi th res p ectt o the ru li n g s an dfi n d in g s o f t h e Sed g wi ck Co u n ty d i s tri ctco u rti n th e Kan s as act i o n ag ai ns tM s . Farr fo r t h e u n au tho ri zed p ract i ce o f l aw an d th e v i o l at i o n o f cert ai n Kan sas co n s u m er p ro t ect i o n l aws . Th e Kan sas co u rto f ap peal s i s s u edan o p in i o n o n Feb ru ary 2 4 , 2 0 1 2 , i n wh i ch i t , i n t er al i a, s u s tai n edth e Feb ru ary 1 0 , 2 0 1 1 i n

j u n ct io n. In d o i n g s o , th e Kan s as co u rto f ap p eal s s t at ed , i n ter al i a:-1 6
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[* 1 6 ] Heffi n g t o n ad m i t t edth atAHA h el p edp rep are l et ters an dd o cu m en t s , i n cl u d i n g p et i ti o n s , o n b eh al f o f d o no rs t o the co rp o rat i o n . Heffi n g t o n al so ad m i t t ed th at sh e h adg o n e t o co u rtwi th d o n o rs b u t o n l y t o o ffer p ers on al ad v i ce, g ui d an ce, an d em o t i o n al s up p ort
. * * * * * * * K.S.A. 6 0 -3 60 1 s t at es th at a v o l u n teer fo r a n onp ro fi tco rp o rat i o n m ay

b e i m m u n e fro m l i ab i l i ty u n d er cert ai n ci rcu m s t an ces . Bu ti n o rd er t o b e a v o l un t eer, o n e m us tn ot“ d i rect l y

o r i n d i rect l y ” recei v e co m

p en s at i o n fo r h i s o r h er s erv i ces . Here, t h e [Sed g wi ck Co u nt y ] d i s tri ctco u rtfo u n dth atHeffi n g t o n “ accep t ed p aym en tfro m co n s u m ers i n co n nect i o n wi th l eg al s erv i ces ” an dth at“ [t ] h is p aym en t was m ad e i n th e fo rm

o f a d o nat i o n t o [Heffi n g t o n ’ s] o rg an i zat i o n , ... i n ex ch an g e fo r t h e s erv i ces p ro v i d edt o co n s u m ers .” OnFeb ru ary 3 , 2 0 1 5 , res p o n d en tt i m el y m ai l eda fi nal ad v ers e d et erm i

n at i o n l et t er t o p et i t i on er (ad v ers e d et erm i n at i o n l et t er). In th atl et t er, res p o n d en t
rev o k ed , effect i v e as o f J anu ary 1 , 2 0 1 0 , p et i t i o n er’ s t ax -ex em p ts t atu s u n d er
s ect i on 5 0 1 (a) b ecau s e i t n o l o n g er o p erat edi n acco rd an ce wi th s ect i o n 5 0 1 (c)(3 ). In th e ad v ers e d et erm i n at io n l et t er, res po n d en t ex p l ai n edth e b as i s fo r res p o n d en t’ s rev o cat i o n o f p et i t i o ner’ s t ax -ex em p ts t atu s u n d er s ect i o n 5 0 1(a) i n p ert i

n en t p artas fo ll o ws : Yo u h av e fai l edt o d em o n s trat e t h at y o uare o perat edex cl u s i vel y fo r ex em p tp urp os es , an dth atn o p arto f y o u r n etearn i ng s i n u res t o th e b en efi to f p ri v at e s h areh o l d ers an di n di v idu al s , as req u i redb y s ect i o n 5 0 1 (c)(3 ) o f t h e Co d e. Inad d i t io n , y o u r act iv i t i es m o re t h an i n sub

s t an ti al l y fu rt h er n o n -ex em

p tp u rp os es , an dy o uo p erat e p ri m ari l y fo r th e b en efi to f p ri v at e rat h er t h an p ub l i c i nt eres t s.-1 7
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[* 1 7 ] Du ri n g 2 0 1 0 , 2 01 1, an d2 0 1 2 , p et i t i o n er d i dn ot , th ro u g h M s . Farr o r an y o n e el s e, en g ag e p ri m ari l y i n the act i v i t i es d es cri b edi n i t s art icl es o f i n co rp o rat io n
an d i t s b y l aws . Du ri n g 2 0 1 0 , 2 0 1 1 , an d2 01 2 , th e n et earn i n g s o f p et i t i o ner i n u red t o the b en efi to f M s . Farr, i ts CEO/b o ardp res i d en t; p et it i o n er o p erat edp ri m ari l y fo r t h e b en efi to f p ri v at e rat h er t h an p ub l i c i n teres t s ; an d m ore t han an i n s ub s t an t i al p arto f p et i t i o ner’ s act i v i ti es fu rt h eredn o n ex em p t , p ri v at e p u rp o s es . Di s cu ss i o n Pet i t i o ner h as th e b u rd en o f es t ab l is h i n g thatth e d et erm i n at i o n s i n th e ad v ers e d et erm i n at io n l et t er are erro n eo u s . See Ru l e 1 4 2(a); Part n ers i n Ch ari t y , In c. v . Co m

m is s io n er, 1 4 1 T.C. 1 5 1 , 1 6 2 (2 0 13 ). Befo re ad dres s i n g wh et h er p et i t i o n er h as carri edth atb u rd en , we s h al l s etfo rt h the l eg al p ri n ci p les th at
co n tro l wh et h er t o s u s t ai n res p o n d en t ’ s d et erm i n at i o n s i n th e ad v ers e d et erm i n at i on l et t er. Sect io n 5 0 1 (a) ex em

p t s fro m t ax o rg an i zat io n s d es cri b edi n , i n t er al ia,
s ect i on 5 0 1 (c)(3 ). As p ert i nen th ere, o rg an i zat i o n s d es cri bedi n s ect i o n 5 0 1 (c)(3 ) i n cl u d e Co rp o rat i on s * * * o rg an i zedan do p erat edex cl u si vel y fo r * * * ch ari t ab l e, * * * o r edu cat i o n al p u rp o s es , * * * o r fo r t he p rev en t i o n o f cru el ty t o ch i ld ren * * * n o p arto f t h e n etearn i n g s o f wh i ch i n u res t o th e b en efi to f an y

p ri v at e s h areh o l d er o r i nd i v i du al , n o s ub s t an t i al p arto f th e act i v i t ies o f wh i ch i s carry i n g o n p ro p ag an d a, o r o th erwi s e-1 8
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at t em pt i n g , t o i n fl u en ce l eg is l at i o n (ex cep tas o th erwi s e p ro vi d edi n s ub s ect i o n (h )) * * *
. Ano rg an i zat i o n i s o rg an i zedex cl u s i v el y fo r o ne o r m o re p u rp os es s p eci fi ed i n s ect io n 5 0 1 (c)(3 ) o n l y if i t s art i cl es o f o rg an i zat i o n (art i cl es ) (1 ) l i m i tth e p u rp o s e o f s u ch o rg an i zat i o n t o o n e o r m o re p u rp o s es s p eci fi edi n thats ect i o n an d (2 ) d o n otex p res s l y

em p ower t h e o rg an i zat i o n t o en g ag e, o th erwi s e t h an as an i n s ub s t an t i al p art o f i t s act i vi t i es , i n act i vi t i es th ati n t h em s el v es are n o ti n fu rt heran ce o f o n e o r m o re o f t h os e p u rp o s es . See s ec. 1
. 5 01 (c)(3 )-1 (b )(1 )(i ), In co m e Tax Reg s . Ano rg an i zat i o n wi l l b e t reat edas o p erat edex cl u s i v el y fo r o n e o r m o re p u rp os es s p eci fi edi n s ect i o n 5 0 1 (c)(3 ) o nl y i f i ten g ag es p ri m ari l y

i n act i v i t i es th atacco m

p l i s h o ne o r m ore o f t h o s e p u rp o s es . Ano rg an i zat i on wi l l n o tb e reg ard edas o p erat edex cl u s i v el y fo r o n e o r m o re p u rp o s es s p eci fi edi n s ect i o n 5 0 1 (c)(3 ) i f m o re t h an an i n s ub s t an t ial p arto f i t s act i v i t i es i s n o ti n fu rt h eran ce o f
o n e o r m o re o f t h o s e p urp os es . See s ec. 1 .5 0 1 (c)(3 )-1 (c)(1 ), In co m e Tax Reg s . As p ert i n en th ere, an o rg an i zat i o n g en eral l y m ay b e ex em p tfro m t ax as an
o rg an i zat i o n d es cri b edi n s ect io n 5 0 1 (c)(3 ) i f i ti s o rg an izedan do p erat ed ex cl u s i vel y fo r ch ari t ab l e 4 o r edu cat i o n al p u rp os es . See s ec. 1 .5 0 1 (c)(3 )-(d )(1 )(I), [* 18 ]

4 Th e t erm

“ ch ari t ab l e” i n s ec. 5 0 1(c)(3 ) i s u s edi n i ts g en eral l y accep t ed (co n ti n u ed ...)-1 9
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[* 1 9 ] In co m e Tax Reg s . An o rg an i zat io n i s n oto rg an izedo r o p erat edex cl u s i v el y fo r ch ari tab l e o r edu cat i on al p u rp o s es u n l es s i t s erv es th e p ub l ic rat h er t han a p ri v at e i n t eres t . Ino th er wo rd s , i n o rd er t o b e o rg an i zedan d o p erat edex cl u s i v el y fo r ch ari tab l e o r edu cat i on al p u rp o s es s p eci fi edi n s ect i o n 5 0 1 (c)(3 ), an o rg an i zat i on m u s t es t ab l is h th ati ti s n o to rg an izedo r o p erat edfo r t he b en efi to f p ri v at e i n t eres t s s u ch as d es i g n at edi n di v i du al s, th e creat o r o r t h e creat o r’ s fam i l y , o r p ers o n s co n tro ll ed , d i rect l y o r i n d i rect l y , b y s u ch p ri v at e i n t eres t s . See s ec. 1 .5 01 (c)(3 )-1 (d )(1 )(i i), In co m e Tax Reg s . Th e t erm “ edu cat i o n al ” i n s ect i o n 5 0 1 (c)(3 ) rel at es t o t h e i n s tru ct i o n o r trai n in g o f t h e i n d i v i du al fo r t h e p u rp o s e o f i m p ro v i ng o r d ev el o p i n g th e i n d i v id

u al ’ s cap ab i l i t i es o r the i n st ru ct i o n o f t h e p ub l ic o n s ub ject s u s efu l t o th e i nd i v i d

u al an db en efi ci al t o th e co m m u n i ty . See s ec. 1 .5 0 1(c)(3 )-1 (d )(3 )(i ), In co m e Tax Reg s. Ano rg an i zat i o n m ay b e edu cat i o n al ev en th o ug h i t ad v o cat es a p art i cu l ar p o s i t i on o r v i ewp o i n ts o l o n g as i tp res en t s s u ffi ci en t l y fu l l an dfai r ex po s i t i o n o f th e p ert i n en t fact s as t o p erm i tan i n d i v i du al o r t h e p ub li c t o fo rm an i n d ep en d en t

4 (...co n t in u ed ) l eg al s en s e. Th erefo re, th att erm i s n o tt o b e co ns tru edas l i m i t ed b y th e s ep arat e en u m erat i o n i n th ats ect i o n o f o th er p u rp o s es th atm ay fal l wi th i n th e b ro ad o u t l i nes o f “ ch ari ty ” as d ev el o p edb y ju d i ci al d eci s i o n s . See s ec. 1 .5 0 1 (c)(3 )- 1 (d )(2 ), In co m e Tax Reg s . As p ert i n en t h ere, t h e t erm “ ch ari t ab l e” i n s ec. 5 0 1 (c)(3 ) i n cl u d es th e ad v an cem en to f edu cat i o n .-2 0
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[* 2 0 ] o p i n i o n o r co n cl u s i on . Id . Ho wev er, an o rg an i zat i o n i s n o tedu cat i o n al i f i t s p ri n ci p al fu n ct i o n i s t h e m ere p res en t at i o n o f u n s up p o rt edo p i n i o n . See i d
. Ano rg an i zat i o n m ay

m eet th e req u i rem en t s o f s ect i on 5 0 1 (c)(3 ) o n l y i f i t
s erv es th e p ub l i c rat h er t h ana p ri v at e i n t eres t. See s ec. 1 .5 0 1(c)(3 )-1 (d )(5 )(i ), In co m e Tax Reg s . Th e p res en ce o f a s i n g l e s ub s t an t i al p u rp o s e t h ati s n otd es cri bedi n s ect i o n 5 0 1(c)(3 ) p recl u d es ex em p t i o n fro m t ax u n d er s ect i o n 5 0 1 (a) reg ard l es s o f th e n um

b er o r t h e i m

p o rt an ce o f t h e p u rp o s es th atare p res en tan d th atare d es cri bedi n s ect i o n 5 0 1 (c)(3 ). See Bet t er Bu s . Bu reau v . Un i t edSt at es , 3 2 6 U.S. 2 7 9 , 2 8 3 (1 9 4 5 ); Co p yri g htCl earan ce Ct r., In c. v . Co m m i s s io n er, 7 9 T.C. 7 9 3 , 8 0 4 (1 9 8 2 ). Th e d et erm i n at i o n o f (1 ) an o rg an i zat i o n ’ s p u rp o s es an d(2 ) t h e p u rp o s es th e o rg an i zat i o n ’ s act i v i t i es s up p o rtare q u es t i on s o f fact . See Pu l pi t Res . v . Co m m i s s i o n er, 7 0 T.C. 5 94 (1 9 7 8 ). Inrev i ewi n g th e ad m in i s trat i v e reco rdi n p ro ceed in g s u nd er s ect i o n 7 4 2 8 (a), t h e Co u rtm ay draw fact ual i n feren ces fro m th e en t i re ad m i n i s trat i v e reco rd . See Nat l . As s ’ n o f Am . Ch u rch es v . Co m m i s s i on er, 8 2 T.C. 1 8 , 2 0 (1 9 8 4 ). Ino rd er t o d et erm i n e wh et h er t h e p urp o ses o f an
o rg an i zat i o n are d es cri b edi n s ect i o n 5 0 1 (c)(3 ), i t i s n eces s ary t o ex am in e t h e actu al p u rp o s es th atth e o rg an i zat i o n’ s act i v it i es are i n t en dedt o acco m p l is h , an d
n o to n ly th e n ature o f t h e act i v i t i es o f t h e o rg an i zat io n o r i t s s t at em en to f p u rp o s e.-2 1
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[* 2 1 ] See Li v i ng Fai th , In c. v . Co m m i s s i o n er, 9 5 0 F.2 d3 6 5 , 3 70 (7 th Ci r. 1 9 9 1 ), aff’ g T.C. M em o . 1 9 9 0 -4 8 4 ; Am . Cam p ai g n Acad . v . Co m

m i ss i o ner, 9 2 T.C. 1 0 5 3 , 1 0 6 4 (1 98 9 ). If an o rg an i zat i o n i s en g ag edi n a s in g l e act i v i ty d i rect edat ach i ev i n g
v ari o u s p u rp o s es , s o m e o f wh i ch are d es cri b edi n s ect i o n 5 0 1 (c)(3 ) an ds o m e o f wh i ch are n o td es cri b ed i n th ats ect i o n , th e o rg an i zat i o n wi l l fai l th e o perat i o n al t es twh ere t h e p u rp o s e n o t d es cri b edi n th at s ect i o n i s m ore t han i n s ub s tan t i al . See Red lan d s Su rg i cal Serv s . v . Co m m i s si o n er, 1 1 3 T.C. 4 7 , 7 1 (1 99 9 ), aff’ d , 2 4 2 F.3 d9 0 4 (9 th Ci r. 2 0 0 1). In d et erm in i n g wh et h er an o rg an i zat i on co m pl ies wi th th e o p erat i o n al t es t
o f s ect i o n 5 0 1(c)(3 ), i t i s n eces s ary t o l o o kb ey o ndth e o rg an i zat i o n ’ s art i cl es i n
o rd er t o as cert ai n “ th e act u al o b ject s m ot i v at i n g th e o rg an i zat io n an d t h e s ub s equ en t co n du ct o f t h e o rg an i zat i o n .” See Tax at i o n W i th Rep res en t at i on v . Un i t ed St at es , 5 8 5 F.2 d1 2 1 9 , 1 2 2 2 (4 th Ci r. 1 9 7 8 ) (qu o t i n g Sam u el Fri ed l an dFo u n d . v . Un i ted St at es , 1 4 4 F. Sup p . 7 4 , 8 5 (D.N.J . 1 95 6 )); s ee al s o Ch ri st i anM an n er In tl ., In c. v . Co m

m is s io n er, 7 1 T.C. 6 6 1 , 6 68 (1 9 7 9). W e s h al l n o w co n s id er wh et h er p et it i o n er h as carri edi t s b urd en o f es t ab

l i sh i n g t h atth e d et erm i n at i on s i n th e ad v ers e d et erm in at i o n l et t er are erro neo u s . W e s u m m ari zedi n th e b ack g ro u n d s ect i o n o f t hi s M em oran du m Op i n i on cert ai n-2 2
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[* 2 2 ] s al i en t fact s i n th e reco rdb efo re u s , v i rtu al l y al l o f wh i ch co n s i s t s o f th e ad m i n is trat i v e reco rdan dth e am en d edad m i n i s trat i v e reco rd
. 5 Onth atreco rd , we fo u n d t h atdu ri n g 2 0 1 0 , 2 0 11 , an d2 01 2 p et i t i o n er d idn o t, th ro u g h M s . Farr o r
an y o n e el s e, en g ag e p ri m ari l y i n th e act i v it i es d es cri bedi n i t s art i cl es o f i n co rp o rat i o n an di t s b y l aws . W e al s o fo u n dth at du ri n g 2 0 1 0 , 2 0 11 , an d2 0 1 2 th e n et
earn i n g s o f p et i ti o n er i n uredt o th e b en efi to f M s . Farr, i t s CEO/b o ardp res i d en t ; p et i t i o n er o p erat edp ri m ari ly fo r t h e b en efi to f p ri vat e rat h er th an p ub li c i n t eres t s ;
an d m o re t h anan i n s ub s t an t i al p arto f p et i t i o ner’ s act i v i ti es fu rt h ered n on ex em p t , p ri v at e p u rp o s es . Bas edup on o ur ex am i n at i o n o f t h e en t i re reco rdb efo re u s , we fi n dth at p et i t i o n er h as fai l edt o carryi t s b u rd en o f es t ab l is hi n g erro r i n res p o nd en t ’ s d et erm i n at i o n i n th e ad v ers e d et erm i n at i o n l et t er t h at , effect i v e as o f J an u ary 1 , 2 0 1 0 , p et i t i o n er n o l o n g er o p erat edi n acco rd an ce wi th s ect i on 5 0 1 (c)(3 ). Onth at
reco rd , we fu rt h er fi n dth atp et i t i o n er h as fai ledt o carryi t s b u rd en o f es t ab l i s h i n g th atres p o n d en t erred i n d et erm i n i ng i n th e ad v ers e d et erm i n at i on l et t er t o rev o k e, effect i v e as o f J an u ary 1 , 2 0 1 0 , p et i t i o n er’ s s t atu s as an o rg an i zat i o n ex em p tfro m t ax u n der s ect i o n 5 0 1 (a). On th e reco rdb efo re u s, we s u s t ai n res p o n d en t ’ s d et er5 See s up ra n o t e 2 . Inad di t i o n , as n o t edab o ve, t h e o n l y d i fferen ce b et ween th e ad m in i s trat i ve reco rdan dth e am en d edad m i n i s trat i v e reco rdi s th atth e fo rm er i s n o tp ag i n at ed an dth e l at t er i s p ag i n at ed
.-2 3
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[* 2 3 ] m in at i o n s i n t h e ad v ers e d et erm i n at i o n l et t er t o rev o k e, effect i v e as o f J an u ary 1 , 2 0 1 0 , p et i t i o n er’ s t ax -ex em p t s t atu s u n der s ect i o n 5 0 1 (a) b ecau se, effect i v e as o f t hatd at e, i tn o l o n g er o p erat edi n acco rd an ce wi th s ect i on 5 0 1 (c)(3 ). W e h av e co n s id eredal l o f t h e co n t en ti o n s an darg u m en t s o f p et i t io n er t h at
are n o td i s cu ss edh erei n , an dwe fi n dth em t o b e wi th o u tm eri t, i rrel ev an t , an d/ o r
m o ot
. To refl ectthe fo reg o i n g , Deci s i o n wi ll b e en t eredfo r
res p o nd en t
.