department of the treasury internal_revenue_service washington d c contact person identification_number contact number employer_identification_number form required to be filed tax years tax_exempt_and_government_entities_division number release date date date uil dear this is our final_determination that you do not qualify for exemption from federal_income_tax as an organization described in sec_501 c recently we sent you a letter in response to your application that proposed an adverse determination the letter explained the facts law and rationale and gave you days to file a protest since we did not receive a protest within the requisite days the proposed adverse determination is now final you must file federal_income_tax returns on the form and for the years listed above within days of this letter unless you request an extension of time to file file the returns in accordance with their instructions and do not send them to this office failure_to_file the returns timely may result in a penalty we will make this letter and our proposed adverse determination_letter available for public inspection under code sec_6110 after deleting certain identifying information please read the enclosed notice notice of intention to disclose and review the two attached letters that show our proposed deletions if you disagree with our proposed deletions follow the instructions in notice if you agree with our deletions you do not need to take any further action if you have any questions about this letter please contact the person whose name and telephone number are shown in the heading of this letter if you have any questions about your federal_income_tax status and responsibilities please contact irs customer service pincite-829-1040 or the irs customer service number for businesses the irs customer service number for people with hearing impairments is sincerely karen schiller acting director eo rulings and agreements enclosure notice redacted proposed adverse determination_letter redacted final adverse determination_letter department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division contact person identification_number contact number fax number employer_identification_number date december legend state date date date program program entity amount amount conference amount dear we have considered your application_for recognition of exemption from federal_income_tax under internal_revenue_code lr c sec_501 based on the information provided we have concluded that you do not qualify for exemption under sec_501 c the basis for our conclusion is set forth below facts the information you submitted indicates that you were organized as a not-for-profit corporation on date under the laws of state you filed a form_1023 on date for determination of exempt status under sec_501 c on date you submitted a form_1024 and requested determination under sec_501 instead of sec_501 c you state that your primary activity is developing open source software and an interactive forum for the advancement of unified communications software your articles of incorporation state that you are not organized for profit and that no part of your net_earnings shall inure to the benefit of any private individual within the meaning of sec_501 c your articles state that your principal activities shall include serving the mutual benefit of developers distributors and customers of open source software creating and distributing software under open-source licensing soliciting contributions of software and securing - intellectual_property the articles also state you may make distributions to non profits entitled to exemption under sec_501 c or c and that your assets shall be distributed to one or more nonprofits entitled to exemption under sec_501 c or c upon dissolution your bylaws state your purposes are to i create and distribute software under open source licenses ii to solicit the contribution of software for modification and incorporation into your software and iii to secure patents copyrights trademarks service marks and certification marks to distinguish your software and services from those of other organizations you provide open-source software free of charge and a website for users and contributors to interact and contribute code your largest current project is development and distribution of program developed through open source collaboration program is unified open source communications software that integrates communications into one application it provides voice video unified messaging conferencing instant messaging group chat and screen sharing features end users and system managers have the ability to set up configure and administer the system and its features remotely it appears that unrelated third parties make contributions to your software that you own your website jointly hold title to the contributed code and review and budget for these activities and you're the amounts paid to entity and that all of your other operations are performed by entity your website states that program is the open source edition of program provided to the community by entity a for-profit corporation your website references the various editions program the program editions described on your website are licensed for use for a fee payable to entity entity provides the commercial support for the program editions program serves the communications needs for mid to large size enterprises you also organize an annual three-day conference for program and program users and third party commercial ecosystem components conference is open to the public and costs approximately amount for attendance from the information your submitted it appears the content and purpose of the conference appears to be convening users of and contributors to program and program with vendors of components applications or support services for program and program for information exchange and education related to program and program you state you are organized to benefit the industry or line_of_business of higher education institutions your membership is limited to higher education institutions you work with your member educational institutions to tailor and integrate program with other programs specific to educational institutions the educational institutions pay an initial membership fee ranging from amount and an annual membership fee ranging from amount depending on the student size of the educational_institution the members receive i program otherwise available for free to the public ii commercial support and guidance otherwise available to paying users of program iii free admission to conference user conference and iv a position on your steering committee to have a voice in the direction of development of your software the commercial support is provided by entity you state that your programs are intended to assist higher education it administrators with mobile learning systems as well as the communication needs of the students and faculty nonmembers which may include any member of the public may use program free of charge and receive free support provided by the open-source community through your website - nonmembers may also receive commercial support and guidance provided by entity for a fee and may attend conference for a fee you have not indicated whether membership on your steering committee is open to nonmembers the general_public contributes all code to you voluntarily for no compensation to the contributor line 14d of part viii of your application states that the contributors must execute a contributor agreement that allow you to use the contributions without restriction you submitted your sample contribution agreement which states that the contributor must grant you and entity joint_ownership in all worldwide common_law and statutory rights associate with copyrights and copyright applications you and entity share have the irrevocable transferable sub-licensable worldwide royalty free perpetual right to make and distribute copies and to create and distribute collective and derivative works of the contribution the contributor agreement states that entity will review all code and determine whether it should be admitted to the code base you state you have no employees you state that you contract out many of the services you provide the contractor for consulting support services and administrative services is entity in your consulting services agreement you agreed to pay of the annual membership and renewal fees received by you to entity in the support services agreement you agree to pay of the annual and renewal membership fees received by you to entity in the administrative services agreement you agree to pay of the annual and renewal membership fees received by you to entity entity was created by your founders to provide support services for program and that it is focused on commercial support for mid-size to large organizations entity was organized in the first year you had any substantial profits three of your five directors are employees of entity two of those directors are also directors and chief officers at entity you state that none of those persons bill you for their time spent on your contracts as employees of entity you state that those services which must be outsourced are bid out and that those directors recuse themselves from the vote on vendor selection your minutes indicate that all three interested directors voted on the rate structure and other substantive provisions of the agreement with entity for consulting services support services and administrative services your financial statements show loans to entity it appears that most of your activities are outsourced to entity and that the operations performed directly by you are limited to holding title jointly with entity to the software maintaining your website and budgeting for outsourced activities such as conference administrative services support services and consulting services your bylaws state that no more than of your directors shall be interested persons you define an interested person as any persons directly compensated by you for services rendered within the prior twelve months as employee or as independent_contractor and family members of those persons your bylaws state that an annual report must be prepared showing all transactions in which an interested person had a direct or indirect financial interest and that involve more then dollar_figure for purposes of that provision an interested person includes any director officer employee of you your parent or subsidiary or any holder of more than of the voting power your organization your parent or subsidiary mere common directorship shall not be considered such an interest it states that if the transaction was with a partnership with which the interested person is a partner only the interest of the partnership need be described in such report law -4 sec_501 c provides for the exemption from federal_income_tax of business_leagues chambers_of_commerce real_estate boards boards_of_trade and professional_football_leagues not organized for profit and no part of the net_earnings of which inure to the benefit of private shareholders or individuals sec_1_501_a_-1 provides p rivate shareholder or individual s refers to persons having a personal and private interest in the activities of the organization sec_1_501_c_6_-1 provides that a business league is an association of persons having some common business_interest the purpose of which is to promote such common interest and not to engage in a regular business of a kind ordinarily carried on for profit it is an organization of the same general class as a chamber of commerce or board_of trade the activities of such organization should be directed to the improvement of business conditions of one or more lines of business as distinguished from the performance of particular services for individual persons an organization whose purpose is to engage in a regular business of a kind ordinarily carried on for a profit even though the business is conducted on a cooperative basis or produces only sufficient income to be self-sustaining is not a business league revrul_56_65 1956_1_cb_199 holds that a local organization whose principal activity consists of furnishing particular information and specialized individual services to its individual members engaged in a particular industry through publications and other means to effect economies in the operation of their individual businesses is performing particular services for individual persons such organization is not entitled to exemption under sec_501 c even though it performs functions that are of benefit to the particular industry and the public generally revrul_58_294 1958_1_cb_244 describes an organization formed to promote the business interests of those involved in the manufacture and sale of a particular patented product membership in the organization is limited to those engaged in the manufacture and sale of the product the organization owns the controlling interests in the corporation that holds the basic patents in the product the revenue_ruling holds that such organization does not qualify for exemption as a business league under sec_501 c since it is engaged in furthering the business interests of the dealers of a particular product as distinguished from improving business conditions generally revrul_66_338 1966_2_cb_226 holds that an organization formed to promote the interest of a particular retail trade which advised its members in the operation of their individual businesses and sells supplies and equipment to them is not exempt under sec_501 c the revenue_ruling states that by providing its members with an economy and convenience in the conduct in their individual businesses the organization is performing particular services for individual persons as distinguished from activities aimed at the improvement of business conditions in their trade_or_business revrul_68_264 1968_1_cb_264 defines a particular service for the purposes of sec_501 c as including an activity that serves as a convenience or economy to members of the organization in the operation of their own businesses - rev_rul 1973_2_cb_180 in discussion the exempt status of a shopping center merchants' association under sec_501 c describes in detail the history of sec_501 c and the types of organizations described therein in the case of a chamber commerce or similar organization the common business_interest required by sec_1 c -1 is usually the general economic welfare of a community and it has been accepted that an organization seeking sec_501 c as a chamber of commerce must be one whose efforts are directed at promoting the common economic interests of all the commercial enterprises in a given trade community trade associations or business_leagues under sec_501 c are similar to chambers_of_commerce except that they serve only the common business interests of the members of a single line_of_business or the members of closely related lines of business within a single industry the revenue_ruling also stresses that membership in a sec_501 co organization is voluntary and open generally to all businesses and professional persons in the community revrul_83_164 1983_2_cb_95 describes an organization whose purpose is to conduct conferences for the dissemination of information concerning computers manufactured by one specific company m although membership is comprised of various businesses that own rent or lease computers made by m membership is open to businesses that use other brands of computers at the conferences presentations are given primarily by representatives of m as well as by other experts in the computer field problems related to members' use of m's computers are also discussed and current information concerning m's products is also provided the revenue_ruling holds that by directing its activities to businesses that use computers made by one manufacturer the organization is improving business conditions in a segment of a line_of_business rather than in an industry as a whole and is not exempt under sec_501 c the revenue_ruling concludes that by providing a focus on the products of one particular manufacturer the organization is providing m with a competitive advantage at the expense of manufacturers of other computer brands in 440_us_472 the supreme court held that an organization whose membership consisted of the franchisees of one brand of muffler did not constitute a line_of_business within the meaning of sec_501 c because a single brand represented only a segment of an industry in 765_f2d_1387 9th cir aff'g 48_tcm_471 the tax_court found it unnecessary to consider the reasonableness of payments made by the applicant to a business owned by its officers the 9th circuit_court of appeals in affirming the tax court's decision stated the critical inquiry is not whether particular contractual payments to a related for profit organization are reasonable or excessive but instead whether the entire enterprise is carried on in such a manner that the for-profit organization benefits substantially from the operation of the church in 948_f2d_360 7th cir the court concluded that an association of computer users did not qualify for exemption under sec_501 c because it benefited essentially users of ibm equipment in 611_f3d_617 9th cir the ninth circuit_court of appeals held that an association that owned and marketed a wireless networking protocol and trademark was not exempt under sec_501 c because it engaged in a business ordinarily - conducted for profit it did not improve the conditions of one or more lines of business and it provided particular services for members the court cited the district court's discussion of the differences between bluetooth and 267_fsupp_830 w o wash finding that t he product in american plywood was something the members were already selling to begin with the product here is something the members banded together to create thus the collective enterprise of the association derives from the fact that it has created a thing of value which its members can then use to enhance the value of the products they sell in 667_fsupp_250 d c md the court held that an organization which served the needs of users of a specific brand of computers promoted only a segment of a line_of_business and was not exempt under sec_501 c in 71_tc_1067 the petitioner conducted training seminars and lectures under licensing arrangements with various for-profit corporations conditioned on the petitioner maintaining tax exempt status the petitioner argued that it had no commercial purpose of its own and that its payments to the for-profits were just ordinary and necessary business_expenses the court did not agree the question for the court was whether the for-profit benefited substantially from the operation of the applicant in 80_tc_438 rev'd on other grounds 734_f2d_71 1st cir the tax_court ruled that exchanging insurance underwriting information among an organization's members with virtually all insurers in the nation as members was not a regular business of a kind ordinarily conducted for profit and therefore did not preclude exemption of organization as a business league under sec_501 c in making this determination the case law has generally focused on the existence of competing profit-oriented businesses factors indicating the existence of competing profit-oriented businesses include whether there was reasonably foreseeable competition whether a for-profit business would or could perform a similar function if the organization ceased operations and the existence of actual competition rationale based on the information provided your primary activity is the development and promotion of particular software which is in competition with other software the collaborative development of your products and free distribution of your product without technological support does not distinguish your activity from commercial activity you do not improve one or more lines of business but rather perform particular services for members your paying members receive a commercial level technological support for your product further it appears that your membership fees inure to the benefit of private persons because you contract with an entity related to your directors to receive of your membership fees and joint_ownership of intellectual_property rights to your software code therefore you do not qualify for recognition under sec_501 c sec_501 c authorizes federal_income_tax exemption for business_leagues defined in sec_1 c -1 an organization must satisfy the following factors to be recognized as exempt - it must be an association of persons having some common business_interest and its purpose must be to promote this common business_interest it must not be organized for profit it must be a membership_organization and have a meaningful extent of membership support no part of its net_earnings may inure to the benefit of any private_shareholder_or_individual its purpose must not be to engage in a regular business of a kind ordinarily carried on for profit even if the business is operated on a cooperative basis or produces only sufficient income to be self-sustaining its activities must be directed at the improvement of business conditions of one or more lines of business as distinguished from the performance of particular services for individual persons sec_1_501_c_6_-1 see 611_f3d_617 9th cir according to the activities of your member organizations the common interest of your member organizations is higher education thus your main activities should consist of improving the business of the higher education industry to be qualified as a sec_501 c organization in 80_tc_438 the court noted that a business league must not only improve the conditions of a line_of_business but must do so in a way different from simply supplying products or services to its members to determine whether an organization is exempt under sec_501 c the court stated the ultimate inquiry is whether the association's activities advance the members' interests generally by virtue of their membership in the industry or whether they assist members in the pursuit of their individual businesses 734_f2d_71 the court cited education programs lobbying and institutional_advertising as the type of activities that clearly met this test since your activities are not directed at promoting the common economic interests of all the commercial enterprises in a given trade community your right to exemption under sec_501 c if any rests on your characterization as a business league or trade_association an organization under sec_501 c is a membership_organization characteristically supported by dues the information that you have submitted indicates that your membership in general supports you through initial and annual membership fees however your members have a very limited involvement in your activities in fact your activities do not involve your members except on a limited basis your day to day operations are overseen by entity membership support both in the form of dues and involvement in the organizations must be at a meaningful level see revrul_73_411 supra it does not appear that your activities promote higher education in general other than provision customization and support of unified communications software in fact the same benefits available to the dues-paying members of the industry you promote are available to any other persons for a fee in effect the common economic_interest of your organization is your software rather than higher education institutions you engage in a regular business of the kind ordinarily carried on for profit because your purpose is to develop and promote specific software sec_1 c -1 an organization whose purpose is to engage in regular business of a kind ordinarily carried on for - profit even though the business is conducted on a cooperative basis or produces only sufficient income to be self-sustaining is not a business league kl the business' nature determines whether it is ordinarily carried on for profit revrul_81_174 the inquiry focuses on the existence of competing profit-oriented businesses 80_tc_438 rev'd on other grounds 734_f2d_71 1st cir factors indicating the existence of competing profit-oriented businesses include whether there is reasonably foreseeable competition whether a for-profit business would or could perform a similar function if the organization ceased operations and the existence of actual competition kl pincite activities engaged in by regular businesses of the kind ordinarily carried on for profit include promoting uniform practices in connection with a certain product or patented technology directly or indirectly owning the relevant trademarks or patents to that product or technology granting licenses under the trademarks or patents to use the product or technology and selling the equipment and materials necessary to manufacture the product see bluetooth sig f 3d pincite revrul_58_294 supra furthermore a group of individuals banding together to produce a particular product indicates that the members intend to create a thing of value which the business league's members can then use to enhance the value of the products they sell bluetooth sig f 3d pincite your activities are indistinguishable from the activities performed by the organizations in revrul_58_294 and 611_f3d_617 first you develop and promote particular software own the relevant trademarks and patents and grant licenses to members and non members to use your trademark additionally your members and users of your software created the software and which they can then use for any purpose the fact that you distribute the community edition of your software to the public for free does not change this conclusion in bluetooth sig the court recognized that licensing intellectual_property for a low-price is a business tactic to prevent competitors from forming rival technology standards as the district_court recognized the bluetooth trademark is a valuable commodity which is for sale under different circumstances ericsson or the original promoters might have licensed its intellectual_property for a low price companies license their intellectual_property rights all the time and here-where competitors could just as easily come up with a different standard-the owner will likely license its intellectual_property at a low enough cost to prevent the formation of rival standards if ericsson had decided to license the bluetooth brand and technology it would be engaging in business activity of the sort ordinarily engaged in for profit a low selling_price and a manufacturer-agnostic rights holder do not change the fundamental commercial nature of the transaction f 3d pincite you collaborate with members and nonmembers to develop technology and you market own and promote the technology you don't charge for use of the basic version of - your product which is a common commercial marketing tactic therefore you engage in a business ordinarily conducted for profit in 440_us_472 the supreme court held that an organization whose membership consisted of the franchisees of one brand of muffler did not constitute a line_of_business within the meaning of sec_501 c because a single brand represented only a segment of an industry similarly the court in bluetooth sig determined that bluetooth-enabled products was not an industry f 3d pincite your activities do not improve the business conditions of one or more lines of business because organizations that use your software are not an industry therefore you do not benefit a line_of_business additionally your primary activity is developing distributing and licensing software although you distribute the software royalty free your software competes with software produced by other entities the fact such software may not perform the exact same function or as well as yours is irrelevant you promote a single brand or product organizations that promote a single brand or product within a line_of_business do not improve an industry or line_of_business and do not qualify for exemption under sec_501 c national muffler dealers ass'n u s pincite revrul_68_182 1968_1_cb_263 revrul_83_164 1983_2_cb_95 by developing and promoting your software you are performing particular services for members revrul_68_264 defines particular services as including an activity that serves as a convenience or economy to the members of the organization in the operation of their own businesses see mib inc v commissioner 734_f2d_171 1st cir your membership includes members of the industry of higher educational institutions and any other users or contributors of your software your members pay a membership fee and receive in return access to program and technical assistance which is otherwise available for purchase by entity your members are essentially paying for a product and a service related to the product which effect their economic operation and which are otherwise available by purchase from entity or other competing companies your members also may participate in the direction of further development of your software such participation allows the members to maximize the economy of your software to their individual business revrul_68_264 supra you are similar to the organization described in revrul_56_65 supra which furnished particular information and specialized individual services to individual members to effect economies in the operation of their individual businesses such an organization is not an exempt business league or board_of trade within the meaning of sec_501 c sec_501 c provides that no part of the net_earnings of an exempt business league may inure to the benefit of private shareholders or individuals sec_1 a -1 c of the income_tax regulations provides the terms private shareholders or individuals refer to persons having a personal and private interest in the activities of the organization if a related for-profit corporation benefited substantially from the operation of an applicant organization it does not qualify for exemption see 765_f2d_1387 9th cir 71_tc_1067 you have three contracts with entity that stipulate a total of of your membership income shall be paid to entity three of your five directors are officers and or employees of entity your board meeting minutes evidence that three of your five directors a voting majority of your board voted on all of the contracts with entity although you state your directors do not bill you for their time as employees of entity - you have not provided any evidence that your directors do not benefit otherwise from the payment of all of your membership income to entity your bylaws and articles allow interested persons to vote on transactions from which they may benefit indirectly your bylaws only require interested persons who benefit from transactions to report such transactions annually but not before voting on preparing or closing such transactions your minutes indicate that the interested directors participated in such votes and initiated and seconded the votes on the rate structure and other substantive provisions of the agreements with entity for consulting services support services and administrative services your minutes do not indicate any discussion of any other contractor to provide administrative consulting or support services or whether the amounts paid to entity were reasonable necessary and ordinary there is no upper limit on the compensation to be paid to entity there is no evidence that the compensation is linked to the value of services performed your financial statements also indicate you have entered into loan transactions with entity but you have not provided any information that these transactions were reasonable arms-length transactions you also state that you are the protectorate of your software but your contribution agreements require contributors to assign joint copyright ownership to you and to entity further entity controls the decisions with respect to contributions to the software code you have not provided any evidence that these transactions are ordinary and necessary business_expenses negotiated at arms length in your best interest you distribute most of your revenue to entity and have apparently distributed a portion of your assets to entity the timing of your founders organizing entity also indicates intent to divert your assets from advancing an exempt_purpose conclusion for the reasons described above we conclude that you do not qualify for recognition of exemption from federal_income_tax under sec_501 c you have the right to file a protest if you believe this determination is incorrect to protest you must submit a statement of your views and fully explain your reasoning you must submit the statement signed by one of your officers within days from the date of this letter we will consider your statement and decide if the information affects our determination you have the right to file a protest if you believe this determination is incorrect to protest you must submit a statement of your views and fully explain your reasoning you must submit the statement signed by one of your officers within days from the date of this letter we will consider your statement and decide if the information affects our determination your protest statement should be accompanied by the following declaration under penalties ofperjury i declare that i have examined this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all the relevant facts and such facts are true correct and complete you also have a right to request a conference to discuss your protest this request should be made when you file your protest statement an attorney certified_public_accountant or an individual enrolled to practice before the internal_revenue_service may represent you if you - want representation during the conference procedures you must file a proper power_of_attorney form_2848 power ofattorney and declaration of representative if you have not already done so for more information about representation see publication practice_before_the_irs and power_of_attorney all forms and publications mentioned in this letter can be found at www forms and publications if you do not intend to protest this determination you do not need to take any further action if we do not hear from you within days we will issue a final adverse determination_letter that letter will provide information about filing tax returns and other matters please send your protest statement form_2848 and any supporting documents to this address you may also fax your statement using the fax number shown in the heading of this letter if you fax your statement please call the person identified in the heading of this letter to confirm that he or she received your fax if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely karen schiller acting director exempt_organizations rulings and agreements


department of the treasury internal_revenue_service te_ge eo examinations commerce street mc 4920dal dallas tx tax_exempt_and_government_entities_division date number release date uil taxpayer_identification_number person to contact identification_number contact telephone number certified mail dear this is a final adverse determination regarding your exempt status under sec_501 of the internal_revenue_code the code our favorable determination_letter to you dated december 19xx is hereby revoked and you are no longer exempt under sec_501 of the code effective january 20xx organizations described in sec_501 of the internal_revenue_code and exempt from tax under sec_501 must be both organized and operated exclusively for exempt purposes you have failed to produce documents or otherwise establish that you are operated exclusively for exempt purposes and that no part of your net_earnings inure to the benefit of private shareholders or individuals you failed to respond to repeated reasonable requests to allow the internal_revenue_service to examine your records regarding your receipts expenditures or activities as required by sec_6001 sec_6033 sec_1_6033-2 and revrul_59_95 1959_1_cb_627 moreover you failed the organizational_test for exemption because your corporate status has been dissolved therefore you are not a corporation community chest fund or foundation as required by r c sec_501 contributions to your organization are no longer deductible under sec_170 you are required to file income_tax returns on form_1120 these returns should be filed with the appropriate service_center for the tax_year ending december 20xx and for all tax years thereafter in accordance with the instructions of the return processing of income_tax returns and assessments of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the internal_revenue_code if you decide to contest this determination under the declaratory_judgment provisions of sec_7428 of the code a petition to the united_states tax_court the united_states claims_court or the district_court of the united_states for the district of columbia must be filed before the ' day after the date this determination was mailed to you please contact the clerk of the appropriate court for rules regarding filing petitions for declaratory judgments by referring to the enclosed publication you may write to these courts at the following addresses united_states tax_court second street nw washington d c united_states court of federal claims madison place nw washington d c united_states district_court for the district of columbia constitution avenue nw washington d c 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 if you qualify for tas assistance which is always your problem with the irs free tas will do everything possible to help you visit taxpayeradvocate irs gov or call if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely mary epps acting director eo examinations enclosure publication internal_revenue_service tax_exempt_and_government_entities_division department of the treasury date date taxpayer_identification_number form tax_year s ended person to contact id number contact numbers manager’s name id number manager’s contact number response due_date certified mail - return receipt requested dear why you are receiving this letter we propose to revoke your status as an organization described in sec_501 of the internal_revenue_code code enclosed is our report of examination explaining the proposed action what you need to do if you agree if you agree with our proposal please sign the enclosed form_6018 consent to proposed action - sec_7428 and return it to the contact person at the address listed above unless you have already provided us a signed form we'll issue a final revocation letter determining that you aren't an organization described in sec_501 after we issue the final revocation letter we’ll announce that your organization is no longer eligible for contributions deductible under sec_170 of the code if we don't hear from you if you don’t respond to this proposal within calendar days from the date of this letter we'll issue a final revocation letter failing to respond to this proposal will adversely impact your legal standing to seek a declaratory_judgment because you failed to exhaust your administrative remedies letter rev catalog number 34809f effect of revocation status if you receive a final revocation letter you'll be required to file federal_income_tax returns for the tax_year shown above as well as for subsequent tax years what you need to do if you disagree with the proposed revocation if you disagree with our proposed revocation you may request a meeting or telephone conference with the supervisor of the irs contact identified in the heading of this letter you also may file a protest with the irs appeals_office by submitting a written request to the contact person at the address listed above within calendar days from the date of this letter the appeals_office is independent of the exempt_organizations division and resolves most disputes informally for your protest to be valid it must contain certain specific information including a statement of the facts the applicable law and arguments in support of your position for specific information needed for a valid protest please refer to page one of the enclosed publication how to appeal an irs decision on tax-exempt status and page six of the enclosed publication the examination process publication also includes information on your rights as a taxpayer and the irs collection process please note that fast track mediation referred to in publication generally doesn’t apply after we issue this letter you also may request that we refer this matter for technical_advice as explained in publication please contact the individual identified on the first page of this letter if you are considering requesting technical_advice if we issue a determination_letter to you based on a technical_advice_memorandum issued by the exempt_organizations rulings and agreements office no further irs administrative appeal will be available to you contacting the taxpayer_advocate office is a taxpayer right you have the right to contact the office_of_the_taxpayer_advocate their assistance isn't a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate can't reverse a legally correct_tax determination or extend the time you have fixed by law to file a petition in a united_states court they can however see that a tax matter that hasn't been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at internal_revenue_service office_of_the_taxpayer_advocate taxpayer_advocate_service for additional information if you have any questions please call the contact person at the telephone number shown in the heading of this letter if you write please provide a telephone number and the most convenient time to call if we need to contact you letter rev catalog number 34809f thank you for your cooperation enclosures report of examination form_6018 determinations package publication publication sincerely margaret von lienen director eo examinations letter rev catalog number 34809f schedule number or exhibit form 886-a rev date explanations of items name of taxpayer tax identification_number year period ended december 20xx whether the continues to qualify for exemption under sec_501 of the internal_revenue_code issue facts the organization was granted tax-exempt status on december 19xx under internal_revenue_code sec_501 as an organization described in sec_501 according to its articles of incorporation dated may 19xx the purposes of the eo are solely those exempt purposes as defined in sec_501 of the internal_revenue_code of and specifically do not include any pecuniary profit gain or private advantage for the incorporators directors or officers of the corporation and it is organized solely for charitable and educational_purposes the exempt_purpose of the organization as stated in the original application_for exemption form is to the organization filed form 990-n for the year ended december 20xx and as such no financial information was available from the review of the filed return to enable the secretary to make a determination of whether the organization's activities were charitable in nature additionally no evidence was available to determine whether the organization was conducting activities in accordance with its stated purpose we began an examination on july 20xx we left voicemails for the president at various phone numbers found in the case file and through a review of accurint records did not respond to the various voice mail messages left in attempt to reach him we issued a request for information information_document_request or idr on september 20xx along with an initial contact letter the request was for financial and organizational information for the year under examination and set the examination for october 2xx at the principal address listed for the organization the organization failed to respond to the request for documentation as it did not respond to the request by october 20xx on december 20xx we prepared a subsequent letter along with a copy of the original information_document_request and mailed the documents certified see exhibit a to the taxpayer's address of record we set the subsequent examination date for january 20xx at the address of record for the organization additionally we completed a postal tracer request see exhibit b on december 20xx to verify the address of the taxpayer form 886-a catalog number 20810w page _1 publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items name of taxpayer tax identification_number year period ended december 20xx we received verification of receipt of the certified mailing see exhibit c for the second l3611 we also received verification of the address of record from the postal tracer signed by see exhibit d we drove to the address of record on january 20xx to meet with the taxpayer and conduct the field_examination however the taxpayer did not answer the door of the residence and did not appear to be present at the premises to date we have not received financials organizational information meeting minutes board_of director lists and other documents requested on idr exhibit e provides copies of the internal_revenue_service correspondence sent to the taxpayer attempting to schedule the examination and to obtain the required_documentation to verify the activities of the organization the exempt_organization failed to respond to the internal_revenue_service correspondence for the tax period ending december 20xx law sec_501 of the internal_revenue_code provides an exemption from federal_income_tax for corporations and any community chest fund or foundation organized and operated exclusively for religious charitable scientific testing for public safety literary or educational_purposes or for the prevention of cruelty to children or animals the exemption is available where 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 and which does not participate in or intervene in any political campaign on behalf of any candidate for public_office sec_6001 of the internal_revenue_code provides that every person liable for any_tax imposed by the irc or for the collection thereof shall keep adequate_records as the secretary_of_the_treasury or_his_delegate may from time to time prescribe sec_6033 of the internal_revenue_code provides that except as provided in sec_6033 every organization exempt from tax under sec_501 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 the secretary may also prescribe by forms or regulations the requirement of every organization to 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 sec_1_6001-1 states that every organization exempt from tax under sec_501 shall keep such permanent books of account or records including inventories as are sufficient to show specifically the items of gross_income receipts and disbursements such organizations shall also keep such books_and_records as are required to substantiate the information required by sec_6033 form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items name of taxpayer tax identification_number sec_1_6001-1 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 year period ended december 20xx in accordance with the above cited provisions of the code and regulations under sec_6001 and sec_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 revrul_59_95 1959_1_cb_627 concerns an exempt_organization asked to produce 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 internal_revenue_service held that the failure or inability to file the required information_return or otherwise to comply with the provisions of sec_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 government's position failure to meet the operational_test the eo has failed to show us that they meet the operational_test for a sec_501 organization for the year under examination in order 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 sec_501 we will not regard an organization as having met this test if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose as evidence of their failure to operate for exempt purposes we reviewed the form 990-n filings and found little or no support for exempt operations the form 990-n filed for the year ended december 20xx does not state the exempt_purpose or describe the activities of the organization it does not show that they incurred expenses on their exempt_function program services the subsequent years returns form 990-n also do not show any exempt_purpose activities the organization has failed to show that they have been performing exempt_purpose activities since january 20xx which is required for a sec_501 organization to keep their tax- exempt status accordingly we are proposing revocation because they do not operate for exempt purposes failure to provide records the eo has failed to provide records as is required in code sec_6033 and regulation sec_1_6033-1 they failed to provide any organizational or financial information that we form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items name of taxpayer tax identification_number requested during the examination we attempted to obtain these records numerous times by mail and phone without the eo’s records we cannot verify that they are operating according to their exempt_purpose our position is that the organization then is not operating for exempt purposes they have provided nothing to the contrary year period ended december 20xx in accordance with the above cited provisions of the code and regulations under sec_6001 and sec_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 the organization has failed repeatedly to respond to the service’s request for information in contrast to sec_1_6033-1 of the regulations which require an organization to provide such information as requested to allow the service to make a determination of that organization's exempt status it is the service's position that the organization failed to meet the reporting requirements under sec_6001 and sec_6033 to be recognized as exempt from federal_income_tax under sec_501 accordingly we propose that the organization's exempt status be revoked effective january 20xx the taxpayer's position is unknown at this time taxpayer's position conclusion by not complying with the code and regulations the organization has jeopardized its exempt status the forms 990-n that the organization has filed fail to show that they are operating for exempt purposes they have also failed to provide required_documentation thereby failing to be complaint with the code and failing to show any evidence of their exempt_activities we have no reason to believe that the eo is operating for exempt purposes as a result of the examination we have determined that the eo is not operating for exempt purposes as a sec_501 organization they have not provided any information to the contrary accordingly since the organization failed to operate primarily for exempt purposes we are proposing revocation of their tax-exempt status effective january 20xx form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items name of taxpayer tax identification_number since the organization will no longer have tax-exempt status beginning january 20xx they are liable for filing form_1120 u s_corporation income_tax return as of that date year period ended december 20xx it is the services position that the organization does not qualify for exemption from federal_income_tax under sec_501 the proposed date of the revocation is january 20xx form 886-a department of the treasury-internal revenue service catalog number 20810w publish no irs gov page


significant index number department of the treasury internal_revenue_service washington o c tax_exempt_and_government_entities_division apr tier la’ ar re taxpayer dear this letter constitutes notice that approval has been granted for your request for a 5-year automatic_extension for amortizing the unfunded liabilities as of september for the above-named plan which are described in sec_431 b2 b and b of the internal_revenue_code code and sec_304 b b and b of the employee_retirement_income_security_act_of_1974 erisa this extension is effective with the plan_year beginning september bases established as of september this extension applies to the eligible amortization charge the extension of the amortization periods of the unfunded liabilities of the plan was granted in accordance with sec_431 of the code sec_431 of the code requires the secretary to extend the period of time required to amortize any unfunded_liability of a plan for a period of time not in excess of years if the plan submits an application meeting the criteria stated in sec_431b the plan has submitted the required information to meet the criteria in sec_431 including a certification from the plan's actuary that i absent the extension under subparagraph a the plan would have an accumulated_funding_deficiency in the current plan_year or any of the succeeding plan years ii the plan_sponsor has adopted a plan to improve the plan's funding status iii the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended and iv the notice required under paragraph a has been provided we have sent a copy of this letter to the and to the this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited by others as precedent if you require further assistance in this matter please contact sincerely yours ts david m ziegler manager ep actuarial group


department of the treasury internal_revenue_service washington d c t a x e x e m p t a n d g o v e r n m e n t e n t i t i e s d i v i s i o n release number release date date date uil control number contact person identification_number telephone number employer_identification_number this is in reference to your ruling_request concerning the proposed reorganization legend t v w x y dear reorganization as described below facts a private_foundation as described in sec_509 t operates a variety of programs including the operation of a group home for dependent and neglected children who are in need of group care t provides services to unwed mothers foster home care for other dependent and neglected children adoptive placement for children and everything else necessary or desirable in connection with the care and or placement of any such children and the promotion of the welfare of children private_foundations because they are described in sec_509 under the reorganization v will become the parent holding_company of t w x and y t’s bylaws have been amended to make v its sole member and v will become the sole member of w x and y v will appoint the board_of directors of t w x and y and approve certain extraordinary corporate transactions such as mergers dissolution and liquidation v w x and y are organizations described in sec_501 of the code and are not t is an organization described in sec_501 of the internal_revenue_code and is not the reorganization will provide flexibility to cope with the increasingly competitive pursuant to the reorganization v will coordinate the efforts of the autonomous providers environment to deliver services and allocate resources and plan effectively for the future by pulling together new and existing affiliates into a planned and coordinated system v will now have a system-wide perspective that will enable it to study and respond to the community’s needs in a more effective manner than could be achieved by any of its affiliates acting alone other goals will be to promote better use of specialized services and expertise by avoiding unnecessary duplication and realizing economies of scale through the sharing of assets services and or personnel among the affiliates and other operating entities which are or will become part of the reorganized corporate structure v will be responsible for developing a long-range strategic plan for the overall system focusing on broader system-wide issues to reduce functional overlap and maximize the utilization of available_resources v will monitor each affiliate’s actual and proposed programs to help assure that services are being or will be delivered efficiently v will focus on whether new organizations should be created or acquired to assume certain functions currently performed by existing affiliates or to add new services to the overall system care center t currently operates and other similar programs in the future x will hold all real_property and y will operate endowments currently that were held by t pursuant to the reorganization t will transfer assets to v w x and y w will operate the you are requesting the following rulings the reorganization and resulting corporate structure will not adversely affect the continued tax-exempt status of t v w x and y under sec_501 of the code the reorganization and resulting corporate structure will not adversely affect the continued public charity status of t v w x and y under sec_509 of the code any transfer of funds assets services and or personnel in connection with the reorganization and any subsequent sharing of funds assets services and or personnel by and amongst t v w x and y that are related to the reorganization will not jeopardize the continued sec_501 exempt status of the organization providing such funds assets services and or personnel any payments for transfers of funds assets services and or personnel in connection with the reorganization and any payments in connection with the subsequent sharing of funds assets services and or personnel by and among t v w x and y that are related to the reorganization will not generate unrelated_business_taxable_income under sec_511 through of the code law sec_501 of the code provides in part for the exemption from federal income revrul_69_545 1969_2_cb_117 sets forth standards under which a nonprofit_hospital tax of organizations that are organized and operated exclusively for religious charitable scientific or educational_purposes provided no part of their net_earnings inures to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 of the income_tax regulations provides that the term charitable is used in code sec_501 in its generally accepted legal sense the promotion of health has long been recognized as a charitable purpose see restatement second of trusts sec_368 sec_372 iv scott on trusts sec_368 sec_372 3rd ed and revrul_69_545 1969_2_cb_117 may qualify for recognition of exemption under sec_501 of the code this revenue_ruling gave consideration to two separate hospitals only one of which was determined to qualify for exempt status under sec_501 by weighing all the relevant facts and circumstances the revenue_ruling analyzed whether both the control and use of the hospitals were for the benefit of the public or for the benefit of private interests the hospital that qualified for exemption was found to be organized and operated to further the charitable purpose of promoting health by satisfying a community benefit standard that included among other factors a board_of directors that broadly represented the interests of the community the hospital that did not qualify for recognition of exemption was found to be operating for the private benefit of those who controlled it rather than for the benefit of the public revrul_67_149 1967_1_cb_131 holds that an organization providing only financial assistance to organizations exempt under sec_501 of the code may qualify for exemption under sec_501 revrul_78_41 1978_1_cb_148 concludes that a_trust created by a hospital to revrul_69_463 1969_2_cb_131 holds that the leasing of its adjacent office building and the furnishing of certain office services by an exempt hospital to a hospital based medical group is not unrelated_trade_or_business under sec_513 of the code where the medical group performs important health services for the hospital accumulate and hold funds to pay malpractice claims against the hospital qualified for exemption under sec_501 of the code as an integral part of the hospital the hospital provided the funds for the trust and the banker-trustee was required to make payments to claimants at the direction of the hospital the organization conducted an activity that the hospital could perform itself sec_509 of the code provides that the term private_foundation means a domestic or foreign organization described in sec_501 other than an organization described in sec_170 other than in clauses vii and viii organizations exempt from federal_income_tax under sec_501 sec_511 of the code imposes a tax on the unrelated_business_taxable_income of sec_512 of the code defines the term unrelated_business_taxable_income as gross_income derived by an organization from any unrelated_trade_or_business regularly carried on by it less the deductions directly attributable to such business activity sec_513 of the code defines the term unrelated_trade_or_business as any trade sec_1_513-1 of the regulations defines unrelated_business_taxable_income to sec_1_513-1 of the regulations provides that a trade_or_business is related to or business the conduct of which is not substantially related aside from the need of the organization for income or funds or the use it makes of the profits derived to the exercise or performance by an organization of the purpose or function constituting the basis for its exemption mean gross_income from any unrelated_trade_or_business regularly carried on sec_1 b states that the phrase trade_or_business includes activities carried on for the production_of_income and which possess the characteristics of a trade_or_business within the meaning of sec_162 of the code finally sec_1_513-1 of the regulations explains that regularly carried on has reference to the frequency and continuity of the conduct of an activity and the manner in which the activity is pursued exempt purposes only where the conduct of the business activity has a causal relationship to the achievement of any exempt_purpose and is substantially related for purposes of sec_513 of the code only if the causal relationship is a substantial one thus for the conduct_of_a_trade_or_business from which a particular amount of gross_income is derived to be substantially related to purposes for which exemption is granted the production or distribution of the goods or the performance of the services from which the gross_income is derived must contribute importantly to the accomplishment of those purposes rationale risk abused neglected and abandoned children its current tax-exempt status under sec_501 of the code and classification as an organization described in sec_509 will not be adversely affected by the reorganization the restructuring of t and the transfer of assets to v w x and y pursuant to the reorganization will not adversely affect their exempt status as organizations described in sec_501 of the code v w x and y will perform the same functions that t formerly performed or could have performed in furtherance of its exempt purposes which are charitable as described in sec_1_501_c_3_-1 of the regulations and the promotion of health as described in revrul_69_545 see also revrul_78_41 and revrul_67_149 the activities performed by v w x and y support t’s exempt purposes and would not jeopardize their statuses as supporting organizations under sec_509 the transfer of assets and or funds pursuant to the reorganization will be one-time transfers and therefore will not possess the characteristics of a trade_or_business regularly carried on within the meaning of sec_1_513-1 and sec_1_513-1 of the regulations following the reorganization the sharing of services and facilities whether or not a fee is since after the reorganization t will continue to provide and arrange for services for at- charged and transfers of cash and assets among the exempt_organizations will be substantially related to the exercise or performance of their exempt purposes and will therefore not constitute unrelated_trade_or_business activities within the meaning of sec_513 of the code and sec_1_513-1 and sec_1_513-1 of the regulations each organization will be merely supplying a related charitable_organization with a service or facility necessary for and in furtherance of the performance of its own exempt functions under sec_501 see revrul_69_463 based on all the facts and circumstances described above we rule as follows the reorganization and resulting corporate structure will not adversely affect the continued tax-exempt status of t v w x and y under sec_501 of the code the reorganization and resulting corporate structure will not adversely affect the continued public charity status of t v w x and y under sec_509 of the code any transfer of funds assets services and or personnel in connection with the reorganization and any subsequent sharing of funds assets services and or personnel by and among t v w x and y that are related to the reorganization will not jeopardize the continued sec_501 exempt status of the organization providing such funds assets services and or personnel any payments for transfer of funds assets services and or personnel in connection with the reorganization and any payments in connection with the subsequent sharing of funds assets services and or personnel by and among t v w x or y that are related to the reorganization will not generate unrelated_business_taxable_income under sec_511 through of the code this ruling will be made available for public inspection under sec_6110 of the code after certain deletions of identifying information are made for details see enclosed notice notice of intention to disclose a copy of this ruling with deletions that we intend to make available for public inspection is attached to notice if you disagree with our proposed deletions you should follow the instructions in notice this ruling is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter enclosure notice steven b grodnitzky manager exempt_organizations technical group sincerely


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division number release date date date contact person identification_number contact number employer_identification_number form required to be filed tax years uil dear this is our final_determination that you do not qualify for exemption from federal_income_tax as an organization described in sec_501 c recently we sent you a letter in response to your application that proposed an adverse determination the letter explained the facts law and rationale and gave you days to file a protest since we did not receive a protest within the requisite days the proposed adverse determination is now final you must file federal_income_tax returns on the form and for the years listed above within days of this letter unless you request an extension of time to file file the returns in accordance with their instructions and do not send them to this office failure_to_file the returns timely may result in a penalty we will make this letter and our proposed adverse determination_letter available for public inspection under code sec_6110 after deleting certain identifying information please read the enclosed notice notice of intention to disclose and review the two attached letters that show our proposed deletions if you disagree with our proposed deletions follow the instructions in notice if you agree with our deletions you do not need to take any further action if you have any questions about this letter please contact the person whose name and telephone number are shown in the heading of this letter if you have any questions about your federal_income_tax status and responsibilities please contact irs customer service pincite-829-1040 or the irs customer service number for businesses the irs customer service number for people with hearing impairments is sincerely michael seta manager exempt_organizations technical enclosure notice redacted proposed adverse determination_letter redacted final adverse determination_letter fit irs department of the treasury internal_revenue_service constitution ave nw washington dc date date employer id number contact person id number contact telephone number contact fax number legend company dear we considered your application_for recognition of exemption from federal_income_tax under sec_50l a of the internal_revenue_code the code based on the information provided we determined that you don't qualify for exemption under sec_501 of the code this letter explains the basis for our conclusion please keep it for your records issue whether you qualify for exemption as an organization described in sec_501 c facts your narrative response states that you will operate a website that will act as a social network connecting individuals to non-profit organizations your narrative response provides that your website is designed to facilitate donations from individuals to charitable organizations churches and other individuals the website will allow anyone seeking to receive donations to create a profile page similar to those found on facebook so that individuals can read about and donate to those entities you will further facilitate the donations ensuring that they get to the intended recipient the website will not only provide a destination where organizations can raise funds but it will also provide a location where organizations can keep its donors up to date letter4036 rev catalog number 47630w with recent pictures and comments about its current activities you will seek to integrate your website into other social networking sites in order to utilize the power of viral marketing helping organizations spread their message you state that you will charge a transaction fee on donations given to organizations using your website the terms of service for the website indicate that you will receive a percent fee plus sixty cents per credit card transaction while you will receive a percent fee plus sixty cents per check transaction you indicate that you expect dollar_figure to dollar_figure in fees in each ofthe first two years you also indicate that you expect that these fees will simply cover the costs of operation with no additional revenue you have clarified that while a website containing the above activities will be operated by company on a for-profit basis you will only conduct activities associated with the website in regards to unclaimed profiles as part of the website you will create unclaimed pages from the irs pub individuals visiting the website can donate to these organizations through you despite such organization not having claimed the profile as part of these services you will verify that the organization continues to be an organization exempt from taxes under sec_501 and that they are listed as a public charity the terms of service for the website stipulates that if the designated organization does not meet taxpayer's criteria then you will provide the funds to an organization of your choosing that is both described in sec_501 and as a public charity you will not provide money to any organization or individual that is not a sec_501 c public charity in order to create and maintain this website you have contracted with the for-profit company company to perform such services company is controlled entirely by your three directors company will maintain all rights to the web technology used for your website company will operate and maintain the website performing all the transactions with individuals or organizations that have created or claimed a profile on which individuals will donate to the organizations you will not conduct any transactions with these entities and will not pay company for any service company will collect a percent fee plus sixty cents on each donation made to a profile that has been cr ated or claimed by an outside entity your board_of directors contains three directors all of the directors are related through the ownership of company and two of those three are married to each other you will pay these individuals market compensation in their roles as employees in the future law sec_501 provides that organizations may be exempted from tax if they are organized and operated exclusively for religious charitable scientific testing for public safety literary or educational_purposes and no part of the net_earnings ofwhich inures to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 provides that in order to be exempt under section letter rev catalog number 4763cnv c of the code an organization must be both organized and operated exclusively for one or more of the exempt purposes specified in that section sec_1_501_c_3_-1 defines charitable as it is used in its generally accepted legal sense the term includes the relief of the poor and distressed advancement of religion lessening the burdens of government and the promotion of social welfare by eliminating prejudice and discrimination or by defending human and civil rights secured_by law sec_1 c -1 e states that an organization may meet the requirements of sec_501 c although it operates a trade_or_business as a substantial part of its activities if the operation of such trade_or_business is in furtherance of the organization's exempt_purpose or purposes and if the organization is not organized or operated for the primary purpose of carrying on an unrelated_trade_or_business as defined in sec_513 an organization operated primarily for an unrelated_trade_or_business is not exempt under c revrul_67_149 1967_1_cb_133 holds that an organization formed for the purpose of providing financial assistance to several different types of organizations which are exempt under sec_501 c of the code is itself exempt under that section it carries on no operations other than to receive contributions and incidental investment_income and to make distributions of income to such exempt_organizations at periodic intervals the organization does not accumulate its investment_income revrul_69_528 1969_2_cb_127 found that an organization regularly carrying on an investment service business that would be unrelated_trade_or_business if carried on by any of the exempt_organizations on whose behalf it operates is not exempt under sec_501 this organization was free from the control ofthe participants and had the absolute and uncontrolled discretion in investment of the property sale of investments and reinvestment of the proceeds payment of taxes and liens distributions of income and principal or the addition of accumulated income to principal and dealing with the property and managing the funds as if it were absolute owner thereof revrul_71_529 1971_2_cb_234 states that a nonprofit organization that provides assistance in the management of participating colleges' and universities' endowment or investment funds for a charge substantially below cost qualifies for exemption under sec_501 the organization was found to only provide services to those organizations that were controlling it and the services provided were found to be essential functions of the colleges and universities revrul_72_369 1972_2_cb_245 provides that an organization organized to provide managerial and consulting services to organizations exempt under c on a cost_basis is not itself an exempt_organization as there is no recognized charitable purpose in 326_us_279 letter rev catalog number 4763cjn the court determines that the presence of a single non-exempt purpose if substantial in nature will destroy the exemption regardless of the number or importance of truly exempt purposes in 71_tc_102 the court denied exemption to an organization for failure to develop criteria for disbursements of grants or to keep adequate_records of each recipient such failures were determined to potentially lead to abuse thus representing a non-exempt purpose 71_tc_1067 the tax_court held that compensation need not be unreasonable or exceed fair_market_value to be private benefit stating n or can we agree with petitioner that the critical inquiry is whether the payments made to international were reasonable or excessive regardless of whether the payments made by petitioner to international were excessive international and est inc benefited substantially from the operation of petitioner in bubbling well church ofuniversal love v commissioner t c big_number aff' d f 2d 9th cir the tax_court explained that an organization that is closely-controlled by related individuals must clearly demonstrate that private interests will not be served and that net_earnings will not inure to the benefit of insiders given the control_over the petitioner organization by related individuals the court could not conclude from the information in the administrative record that part of the net_earnings did not inure to the benefit of the controlling family or stated another way that petitioner was not operated for the family's private benefit p l l scholarshi82_tc_196 the tax_court found that an organization that operated charitable bingo on the premises of a bar allowed the bar to increase its sales of food and drinks by its operations in the bar thereby benefiting the bar in more than an insubstantial way the organization and bar were controlled by some of the same persons the court held that the operations of the organization and bar were so interrelated as to be functionally inseparable the effect of which was that any economic benefit the bar received was not incidental in 92_tc_1053 the court determined that an organization providing training for individuals specifically to work on republican campaigns was providing prohibited private benefit in making this determination the court stated that the presence of earnings inuring to the benefit of a private shareholder were not necessary prohibited private benefit can be gained by an unrelated third party that a determination of private benefit must examine the charitable nature of the class and that size alone will not convert an uncharitable class into a charitable one international postgraduate medical foundation v commissioner 56_tcm_1140 an organization whose activity was to conduct continuing medical education tours abroad exclusively used one for-profit travel agency to arrange its travel tours the same individuals controlled both the organization and the for-profit travel agency and the letter4036 rev catalog number 47630w organization did not solicit bids from any other travel agency furthermore both entities shared the same office as both entities were interrelated the court held that the organization was operated for the benefit of the for-profit travel agency application of law you must be operated for an exempt_purpose sec_1_501_c_3_-1 your activities consist of running certain pages on a website consisting of the unclaimed pages belonging to exempt_organizations these pages if claimed will allow an organization to inform the public about their activities as well as provide a means for such organizations to receive donations through company for providing the platform on which these profiles exist and for transferring the money in a safe manner to the receivers on your website you take percent plus forty cents for every donation your terms of service specify that your activities are a service to these organizations for which those using it must abide by the provided terms you are providing a service to these organizations as well as providing advertising for company by indicating to exempt_organizations with unclaimed pages their ability to use company more fully providing commercial type services exclusively to exempt_organizations is not an exempt_purpose revrul_72_369 supra provides that an organization providing managerial_services to exempt_organizations on a cost_basis is not an exempt_purpose under sec_501 c additionally revrul_69_528 supra provides that an organization formed to provide investment services exclusively for exempt_organizations is not operated for an exempt_purpose in both of these rulings the taxpayer was not controlled by an organization that is otherwise exempt and did not charge a rate substantially below cost cf revrul_71_529 supra exempting an organization that was entirely controlled by exempt universities and provided investment services exclusively to those organizations for a price substantially below cost here you are not controlled by any exempt_organization and you provide services for a fee to any exempt_organization your fee is not substantially below your costs as you anticipate your service fee to be your primary source of revenue therefore you are not operated for an exempt_purpose your activities consist entirely of providing fundraising and public relations services to organizations unlike the organization in revrul_67_149 supra you do not retain complete control_over your funds when determining to whom those funds will be contributed your setup provides for funds to go to organizations of a donors choosing through you for which you will take a percent cut additionally you do not consider these funds to be your funds you have no charitable purpose outside of the possible provision of grants to exempt_organizations however you clarified that you do not provide grants to organizations but that the donations are made directly to the other organizations in order to be exempt you must also be operated for public rather than private benefit sec_1_501_c_3_-1 the court in 326_us_279 states that the presence of private benefit if substantial in nature will destroy an organization's tax-exempt status regardless of the organization's other charitable purposes or activities private benefit is defined in american campaign academy t c pincite as letter4036 rev catalog number 47630w nonincidental benefits conferred on disinterested persons that serve private interests several cases go further discussing what constitutes a non-incidental benefit in p l l scholarshi82_tc_196 the court determined that an organization that primarily operated bingo in a bar which was owned by related parties of the organization provided a non incidental benefit to the bar by bringing in clientele and otherwise promoting the bar the organization in 765_f2d_1387 was found to provide a non-incidental private benefit to a for profit owned by the founders of the church since that church made up the entire market of the for profit organization it was determined in this case that the critical inquiry is not whether particular contractual payments to a related for-profit organization are reasonable or excessive but instead whether the entire enterprise is carried on in such a manner that the for-profit organization benefits substantially from the operation of the church id pincite finally in postgraduate medical foundation 56_tcm_1140 an organization was denied exemption because its program exclusively used a for profit travel agency owned by the founders of the organization without soliciting bids from other organizations the travel agency and the petitioner also shared office space the court determined that the organization was operated for the private benefit of the travel agency here you receive and distribute funds to exempt_organization who have yet to claim a page on company's website similar to the organization in p l l scholarshi82_tc_196 that solely operated bingo in a restaurant owned by related parties your activities while consisting of distributing funds to exempt_organizations have a substantial purpose of driving business to company's website the critical inquiry not being the amount of any contractual payments but whether the entire enterprise is carried on in a manner that the for profit benefits substantially from your operations you are operated primarily as a conduit for the related for profit this is particularly concerning when the board is a small_group of entirely related individuals bubbling well church t c pincite your activities act as little more than an advertising and business development branch of company your operations not only do not further an exempt_purpose but they are also for a substantial private benefit conclusion you are not operated exclusively for an exempt_purpose you provide a service for a fee and the fact that these services may be provided directly to tax exempt entities does not make such activity charitable you also provide a substantial private benefit you are not exempt under sec_501 if you don't agree you have a right to file a protest if you don't agree with our proposed adverse determination to do so you must send us a statement within days of the date of this letter the statement must include your name address employer_identification_number ein and a daytime phone number letter rev catalog number 47630w a copy of this letter highlighting the findings you disagree with an explanation of why you disagree including any supporting documents the law or authority if any you are relying on the signature of an officer director trustee or other official who is authorized to sign for the organization or your authorized representative one of the following declarations for an officer director trustee or other official who is authorized to sign for the organization under penalties of perjury i declare that i examined this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete for an authorized representative under penalties of perjury i declare that i prepared this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete your representative attorney certified_public_accountant or other individual enrolled to practice_before_the_irs must file a form_2848 power_of_attorney and declaration of representative with us if he or she hasn't already done so you can find more information about representation in publication practice_before_the_irs and power_of_attorney we'll review your protest statement and decide if you provided a basis for us to reconsider our determination you also have a right to a conference after you submit your statement if you want a conference you must request it when you file your protest statement you can also ask the office of appeals to review your application_for tax-exempt status your right to request appeals review is in addition to your right to a conference as outlined in revenue_procedure rev_proc and revproc_2014_9 you must notify us in writing if you want us to forward your case to the appeals_office you can find more information about the process and the role ofthe appeals_office in section of revproc_2014_9 and publication overview of the appeals process if the person representing you in this process is not an officer director trustee or other official who is authorized to sign for the organization he or she must file form_2848 as explained above and otherwise meet the requirements in publication conference and practice requirements letter rev catalog number 47630w if you don't file a protest within days you can't seek a declaratory_judgment in court at a later date because the law requires that you use the irs administrative process first sec_7428 ofthe code where to send your protest please send your protest statement any request for consideration by the office of appeals form_2848 if needed and any supporting documents to the applicable address u s mail street address for delivery service internal_revenue_service te_ge se t eo ra t nca- constitution ave n w washington dc internal_revenue_service te_ge se t eo ra t nca- constitution ave n w washington dc you can also fax your statement and supporting documents to the fax number listed at the top of this letter if you fax your statement please contact the person listed at the top of this letter to confirm that he or she received it ifyou agree if you agree with our proposed adverse determination you don't need to do anything if we don't hear from you within days we'll issue a final adverse determination_letter that letter will provide information on your income_tax filing_requirements you can find all forms and publications mentioned in this letter on our website at www irs gov formspubs if you have questions you can contact the person listed at the top of this letter enclosure publication sincerely michael seto manager exempt_organizations technical letter rev catalog number n


internal_revenue_service uil number info release date date the honorable u s house of representatives washington d c attention dear this letter is in response to your date inquiry to floyd williams national director for legislative affairs on behalf of your constituent mr mr recently purchased land that he rents to farmers he wants to know why he cannot deduct the cost of acquiring the land even though he pays taxes on the rental income from the land he notes that he could deduct the cost of farm machinery a taxpayer can deduct the cost of farm machinery under the depreciation provisions of sec_167 and sec_168 of the internal_revenue_code depreciation is an annual reasonable allowance for the exhaustion wear_and_tear and obsolescence of certain types of property used in a trade_or_business or held_for_the_production_of_income depreciation is an accounting concept that treats a designated part of the cost of certain limited-life assets as an expense return_of_capital in determining taxable_income generally this expense is deducted over a specified recovery_period the depreciation allowance applies only to that part of the property that is subject_to wear_and_tear decay or decline from natural causes exhaustion and obsolescence sec_1_167_a_-2 of the income_tax regulations these factors that provide the basis for the depreciation allowance are not present for land land has an unlimited useful_life sec_1_167_a_-2 specifically provides that the depreciation allowance does not apply to land while farm machinery is an example of a limited-life asset for which the depreciation allowance is available land is not a limited-life asset i hope our letter has been responsive to your inquiry if we can be of further assistance in this matter please call at sincerely passthroughs and special industries paul f kugler assistant chief_counsel


t c memo united_states tax_court geordan c and samantha s mcquiston petitioners v commissioner of internal revenue respondent docket no filed date larry d harvey for petitioners randall l preheim for respondent memorandum opinion vasquez judge this case is before the court on respondent’s motion for summary_judgment pursuant to rule unless otherwise indicated all rule references are to the tax_court rules_of_practice and procedure and all section references are to the internal_revenue_code in effect for the year in issue after a concession the sole issue for decision is whether petitioners can exclude from income wages earned during from working in antarctica background at the time they filed the petition petitioners resided in medford oregon during petitioners performed services at mcmurdo station in ross island antarctica on their federal_income_tax return petitioners excluded wage income earned and received during for services performed in antarctica i summary_judgment discussion rule a provides that either party may move for summary_judgment upon all or any part of the legal issues in controversy full or partial summary_judgment may be granted only if it is demonstrated that no genuine issue exists as to any material fact and that the legal issues presented by the motion may be decided as a matter of law see rule b 98_tc_518 affd 17_f3d_965 7th cir we conclude that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law respondent concedes that no penalty pursuant to sec_6662 is due from petitioners for ii in general sec_61 provides that gross_income means all income from whatever source derived accordingly citizens of the united_states generally are taxed on income earned outside the geographical boundaries of the united_states unless the income is specifically excluded from gross_income 117_tc_95 affd sub nom 68_fedappx_44 9th cir affd sub nom 357_f3d_1108 10th cir exclusions from income are construed narrowly and taxpayers must bring themselves within the clear scope of the exclusion id iii sec_911 in 126_tc_89 473_f3d_790 7th cir arnett ii we addressed the arguments made by the parties herein regarding sec_911 the u s court_of_appeals for the seventh circuit agreed with our analysis of sec_911 and affirmed our conclusion that antarctica is not a foreign_country pursuant to sec_911 and the regulations thereunder arnett v commissioner f 3d pincite we shall not repeat our analysis from arnett i herein we follow our analysis and holding in arnett i and the analysis and holding of the court_of_appeals in arnett ii in 126_tc_89 affd 473_f3d_790 7th cir we concluded our opinion with a continued iv conclusion accordingly for the reasons stated in arnett i arnett ii and herein we conclude that petitioners cannot exclude from gross_income wages earned during from working in antarctica to reflect the foregoing an appropriate order and decision will be entered continued citation of sec_863 suggesting that sec_863 provided an additional reason to rule against the taxpayer id pincite see also sec_863 providing that income earned in antarctica by a u_s_person is sourced in the united_states in arnett v commissioner f 3d pincite the u s court_of_appeals for the seventh circuit addressed sec_863 in greater detail stating at the outset we think that it is important to note that considering antarctica not to be a foreign_country is compatible with the general statutory scheme notably sec_911 is found under subtitle a chapter subchapter_n of the irc which is designated tax based on income from sources within or without the united_states part i of this subchapter entitled source_rules and other general rules relating to foreign_income deems any activity in antarctica to be space_or_ocean_activity in turn the united_states is designated the source country of income from such activity when earned by a citizen_of_the_united_states sec_863 although this provision does not provide a definitive answer as to whether antarctica is a foreign_country it supports the conclusion that sec_911 is not intended to apply to income earned for services provided in antarctica we take this opportunity to state our agreement with the court of appeals’ conclusion set forth above see also 450_us_1


id office uilc cca_2011110209575947 -------------- number release date from ---------------------- sent wednesday november am to ----------------- cc subject fw levy question for assignment --------- we don't actually need consent from the taxpayer to return the funds per se if you look at the regs under d we say that for illegal levies it is deemed to be in the taxpayer us best interest to return funds and we will return funds no discretion however under d the taxpayer can give us written permission to keep the money applied to a tax_liability so the onus is on the taxpayer to ask us to keep it otherwise we return it i don't think there is any set process for contacting the taxpayer it makes sense to send a letter explaining the situation advising them we plan to return the proceeds unless they ask us in writing to keep it there is some stuff in the irm on the procedures see irm and did you see the e-mail i sent you on friday i think that addressed your questions about the month period and the only wiggle room there really is with the month period under d is the date the determination was made to return the property which would be the same date of discovery of the illegal levies let me know if you didn't get my friday email for some reason or you still had questions i agree with what you say about that below feel free to contact me if other questions come up