t c memo united_states tax_court richard g and anne c greene petitioners v commissioner of internal revenue respondent docket no filed date frank sommerville for petitioners sheri wilcox for respondent memorandum findings_of_fact and opinion armen special_trial_judge this case was assigned pursuant to the provisions of sec_7443a and rule sec_180 sec_181 and sec_182 unless otherwise indicated all section references are to the internal_revenue_code in effect for the taxable_year in issue and all rule references are to the tax_court rules_of_practice and procedure respondent determined a deficiency in petitioners' federal_income_tax for the taxable_year in the amount of dollar_figure the sole issue for decision is whether petitioner richard g greene an assemblies of god missionary was an employee or an independent_contractor in the answer will determine whether his expenses constitute deductible business_expenses on schedule c under sec_62 or are miscellaneous_itemized_deductions allowable on schedule a under sec_67 to the extent that they exceed percent of petitioners' adjusted_gross_income findings_of_fact some of the facts have been stipulated and they are so found petitioners are husband and wife and resided in bangladesh at the time that their petition was filed with the court general background petitioner richard g greene petitioner was licensed and ordained as a minister of the national assemblies of god church the national church in date and date respectively petitioner pastored an assemblies of god church in leesville louisiana at least from the time he became licensed until date at which time he resigned as a pastor in order to pursue a career as a missionary during petitioner performed services as an assemblies of god missionary pursuant to sec_7482 the parties stipulated that the venue for purposes of an appeal from this decision will be the u s court_of_appeals for the district of columbia circuit - nextrecord - the national church is a nonprofit corporation headquartered in springfield missouri the national church operates in accordance with the constitution and bylaws of the general council of the assemblies of god constitution and bylaws the constitution and bylaws explain the national church's internal laws structural organization polity and guiding policies these laws and policies are administered at the national level through the general council and its various agencies the general council which consists of a body of ordained ministers and delegates of the affiliated local churches is charged with preserving and promoting established positions on the faith and practice of the national church it meets biannually to conduct the general business of the national church and determine the services that it will provide the laws and policies of the national church are administered at the district level through district councils the united_states is divided into geographical district councils which serve as the connecting link between the affiliated local churches and the general council local churches apply for affiliation at the district level each district council which is subordinate to the general council consists of ordained ministers licensed ministers and delegates from the local churches within the district the district councils supervise all of the national church's activities within their prescribed field the district councils examine approve - nextrecord - and recommend candidates who qualify as certified licensed and ordained ministers final approval and issuance of ministerial credentials however is made by the general council's credentials committee the credentials committee petitioner met all of the requirements set forth by the national church and as indicated is a licensed and ordained assemblies of god minister individuals holding ministerial credentials are amenable to both the district council and the general council in matters of doctrine and conduct causes for the discipline of a minister include any moral failure involving sexual misconduct any moral or ethical failure not involving sexual misconduct general inefficiency in the ministry a failure to represent the pentecostal testimony correctly a contentious or the bylaws of the national church provide qualifications for ministerial licensing and ordination the bylaws provide inter alia that in order to be licensed as a minister an applicant must have a thorough understanding of and be in agreement with the national church's doctrinal position as contained in the statement of fundamental truths have an active loyalty to the national church's constitutional agreements a cooperative spirit and a readiness to seek and receive the counsel of older brethren demonstrate religious knowledge acquired through education or experience by passing a standard test and be interviewed and recommended by a district credentials committee licensed ministers must meet additional requirements in order to be ordained for example a licensed minister must complete consecutive years of full-time preaching ministry pass at least one written test and submit to additional interviews according to the constitution and bylaws the credentials committee consists of the executive presbytery - nextrecord - noncooperative spirit an assumption of dictatorial authority over a church an arbitrary rejection of district counseling a declared open change_of doctrinal views habitual debt that harms the church's reputation and a marriage in violation of the church's stand on marriage and divorce the credentials committee has final authority in matters of doctrine and the personal conduct of all ministers including the power to withdraw the approval and recommend the recall of ministerial credentials missionary service the national church as one of its stated missions seeks to promote and encourage world evangelization towards this end the national church created the division of foreign missions the dfm an unincorporated agency to coordinate foreign missionary efforts the dfm is supervised by the foreign missions board and together they select endorse establish requirements and uphold standards for missionaries a the endorsement process the process of becoming an endorsed missionary is lengthy and is handled primarily at the national level by the dfm and the foreign missions board an individual applying for a missionary position must submit an application along with an autobiography character references and transcripts to the dfm the applicant must obtain formal approval from his or her appropriate district before the dfm will begin to process the application after an - nextrecord - applicant has obtained district approval and completed the application the dfm evaluates the application at some point during evaluation a dfm representative conducts a home-interview with the candidate finally if all indications are favorable the dfm asks the candidate to travel to springfield missouri for additional orientation tests and interviews the applicant's geographical foreign field location is defined in the final interview if the tests and interviews are satisfactory the dfm will recommend the candidate to the foreign missions board for endorsement b the missionary's 5-year cycle the national church and the missionary candidates consider missionary service to be a lifetime career missionary service however is generally divided into repeating 5-year cycles missionaries spend the first year in the cycle frequently referred to as the year of deputational ministry itinerating local assemblies of god churches seeking financial support for the foreign mission they spend the remaining years in the cycle ministering in the foreign field at the conclusion of the fourth year in the foreign field missionaries return to the united_states and begin another year of deputational ministry thus initiating a new 5-year cycle the dfm provides no formal training with respect to deputational ministry generally missionaries solicit funds from churches and individual donors through pledges that - nextrecord - demonstrate the donor's commitment to support the missionary on a monthly basis the donor can pledge to support a missionary for life one 5-year cycle or less however if support is limited to one 5-year cycle or less the missionary must visit the donor during the next phase of deputational ministry in order to renew the financial commitment if a donor fails to provide the pledged support the dfm will not send a past due notice to or make any other contact with the donor rather the individual missionary is responsible for contacting the donor and re- establishing the financial support deputational missionaries may at their own expense hire individuals to assist them in their fund-raising efforts the dfm provides donors with a receipt verifying the amount of the pledge and certifying that the dfm as an agency of the national church is a tax-exempt_organization contributions made to and receipted by dfm are not personally owned by the missionary even though they may be designated for that missionary's ministry rather the dfm owns the funds raised by the missionaries and maintains administrative control of such funds the dfm deposits contributions into an individual_account maintained for each missionary missionaries must raise sufficient funds to support their foreign ministry before the dfm will clear them for departure to their foreign field in this regard the dfm prepares a proposed budget for endorsed missionaries to use as a guideline - nextrecord - in determining the amount of funding necessary to support their foreign ministry needs deputational missionaries however are not required to comply with the exact figures in the budget so long as they obtain adequate funding for their ministry deputational missionaries are required to file with the dfm monthly deputational reports that detail the offerings received and the expenses_incurred by the missionary along with the deputational report missionaries forward the net cash offerings and receipts verifying the offerings and expenses additionally during their deputational ministry missionaries prepare a field budget approximating the amount of mission-related expenses they will incur in the foreign field once a missionary departs for the foreign field the dfm advances funds to the missionary from his or her dfm missionary account to cover the anticipated mission expenses missionaries in the foreign field are required to file quarterly field reports with the dfm explaining how the budget advances were spent during both deputational and foreign field ministry the dfm records the reported expenses and the pledges received on behalf of the missionaries and mails monthly disbursement statements to each missionary detailing the missionaries' total pledged support and expenses missionaries are free to resign at any time however missionaries are not entitled to the balance of their dfm account upon resignation rather a resigning missionary may reallocate the funds in his or her foreign ministry account to another - nextrecord - missionary's ministry c compensation and benefits missionaries are paid a monthly living allowance a personal allowance from the funds secured_by them in their year of deputational ministry the dfm sets an upward limit on the personal allowance amount that missionaries may receive from their respective accounts the dfm does not guarantee missionaries a minimum level of support in fact missionaries have the power to designate any amount below the limit set by the dfm as their personal allowance the dfm maintains an association group health care plan administered by the christian fidelity life_insurance co christian fidelity the dfm informs missionaries with respect to the plan but does not require them to participate in the plan the monthly premiums are transferred from each missionary's account with dfm to christian fidelity the disbursement reports mailed to petitioner in indicate that petitioner participated in the health insurance plan the dfm maintains a group retirement_plan called the minister's benefit association mba plan the mba plan allows missionaries to defer a portion of their monthly living allowance to the plan for retirement the dfm does not require missionaries to participate in the plan the disbursement - nextrecord - reports mailed to petitioner in indicate that petitioner participated in the mba plan the dfm has no official policy with respect to sick leave however it does recommend that missionaries limit their vacation days to or fewer per year missionaries are not required to report to the dfm either sick leave or vacation days taken thus the dfm does not maintain any records reflecting the days and hours worked by its missionaries missionaries continue to receive their personal allowance while on vacation and sick leave d communication with the dfm apart from the monthly deputational and disbursement reports petitioner and the dfm communicated on an irregular basis during his year of deputational ministry the dfm did not contact petitioner at all during that year and petitioner called the dfm only occasionally for information relating to shipping his belongings to bangladesh other than the quarterly field reports and the monthly disbursement reports there was no regular form of communication between petitioner and the dfm during his foreign field mission work the dfm requires missionaries to attend the school of missions during their deputation year of each 5-year cycle the school of missions is not for training purposes rather it is a spiritual debriefing for missionaries and their families that have been exposed to foreign cultures for long periods of time this is the only meeting that missionaries are required to - nextrecord - attend e disciplinary matters disciplinary matters related to missionary status are handled by the dfm causes for disciplinary action with respect to missionary status include inter alia any conduct unbecoming to a missionary as a representative of christ and the assemblies of god loss of ministerial credentials with the national church indiscretions concerning morals failure to properly manage and report the use of mission funds a declared open change in doctrinal views or practices resulting in variance from those of the national church or deliberate variance from the values purposes or objectives of dfm and a contentious or noncooperative spirit the dfm has no authority to recall a missionary's ministerial credentials the most severe form of discipline that the dfm can exercise is to withdraw its endorsement of and effectively disassociate itself from a missionary in the event that the dfm withdraws an endorsement the dfm notifies the missionary's district closes the missionary's account and returns to the donors any future offerings received on behalf of the missionary - nextrecord - f unendorsed missionaries ministers may serve as assemblies of god missionaries without official endorsement from the dfm assemblies of god churches can and do financially support unendorsed assemblies of god missionaries the dfm provides no assistance of any kind to unendorsed missionaries thus unendorsed missionaries must personally collect pledges issue receipts and maintain financial records with respect to their foreign ministry g the missions manual the dfm has written and produced a missions manual the missions manual containing both general and specific information about foreign ministry the dfm provides all endorsed missionaries with a copy of the missions manual the missions manual provides information about the structure of the dfm the endorsement process deputational ministry budgeting personal allowances disciplinary action equipment overseas freight and shipping health insurance the pension program children of missionaries foreign field housing and vacation jerry burgess mr burgess is a member of the foreign missions committee that is responsible for establishing foreign mission practices and procedures and for implementing the decisions of the foreign missions board mr burgess also worked as the financial comptroller of the dfm for years mr burgess testified at trial as follows a q a - nextrecord - the missions manual is a guide you know if reverend greene needs to know what he should do in a certain situation that might relate to a move on the field or how he can best accomplish some part of his ministry a good place for him to go is to the missions manual or ask another missionary on the field but essentially it is a guide and a broad set of parameters as to how the cooperative relationship should work are the provisions of this manual enforceable against a dfm missionary well the provisions of the manual relate to the activities of missionaries most of those are suggestions anyway and we don't even intend to enforce them some of the provisions in the manual define the cooperative relationship between the missionary and the division of foreign missions and if that missionary chooses to be uncooperative and to do things that are harmful or detract from the work then the manual spells out our prerogative to disassociate ourselves from that missionary and we no longer have an obligation to process his finances or to cooperate with him if he won't cooperate with us mr burgess' testimony which we accept also revealed many persons in top management positions of dfm have not read the missions manual and the dfm considered missionaries to be independent contractors not employees the missions manual states that the dfm does not consider their relationship with missionaries to be one of employer and employee petitioner's missionary experience - nextrecord - in petitioner's final interview in springfield illinois petitioner identified bangladesh as the country in which he wished to minister the dfm expressed reservations about petitioner's choice but petitioner made the ultimate decision petitioner began itinerating local churches and raised approximately dollar_figure in monthly support before he was officially endorsed in petitioner received a proposed budget from the dfm detailing the amount necessary to sustain years of foreign ministry in bangladesh however petitioner set a fund-raising goal in excess of the amount proposed because he desired to do things not accounted for in the proposed budget petitioner maintained a routine schedule during his deputational ministry on wednesday evenings and sunday mornings petitioner ministered at assemblies of god churches raising support for his mission the dfm did not require that petitioner adhere to a particular schedule or method of fund-raising in his year of deputational ministry in deciding the best way to prepare and present his deputational services on sundays and wednesdays petitioner talked with experienced missionaries and coordinated with the pastor of the church that was hosting him petitioner spent approximately days per week locating and contacting new churches to itinerate and writing thank-you notes to donors petitioner also prepared and distributed a newsletter to encourage donors to contribute towards his ministry - nextrecord - occasionally petitioner hired individuals to assist him in producing his newsletter however the assistants usually declined payments for their services the dfm did not provide petitioner with an office supplies support staff car or any other equipment to facilitate his work petitioner used his personal car to itinerate local churches and used his personal telephone to contact such churches petitioner withheld these expenses from the pledges received prior to forwarding the balance to the dfm petitioner began receiving a personal allowance on date in the amount of dollar_figure per month petitioner was eligible to receive a monthly allowance before that time however he declined to receive his allowance for some time because his wife was working and the family was able to meet its expenses without depleting petitioner's missionary account with the dfm petitioner and his family departed for bangladesh on date the dfm did not assign petitioner to work on a particular project in bangladesh petitioner chose to become involved in student ministry development in bangladesh that involves teaching classes in an assemblies of god bible school petitioner also coordinates an outreach program where he supervises students that are starting new churches in various villages petitioner was not directly supervised or evaluated by anyone from the dfm or elsewhere - nextrecord - while serving as a missionary petitioner became aware of widespread drug addiction in bangladesh petitioner has traveled to drug-infested areas in bangladesh and has visited with many of the drug-addicted individuals petitioner's experiences and conversations with the local bengalis have led petitioner to believe that there is a need for a drug-rehabilitation program in his area in his next phase of deputational ministry petitioner plans to raise funds to sponsor such a program petitioner has not informed the dfm of his interest in sponsoring a drug- rehabilitation clinic and to the best of his knowledge the dfm is unaware of his activity in this area at the time of trial petitioner intended to return to the united_states in date to begin his second_phase of deputational ministry although most missionaries serve years in the foreign field before returning to the united_states petitioner planned to return after approximately years in making this decision petitioner considered the needs of his school-aged children and the schedules of other missionaries in his region additionally petitioner was eager to begin soliciting funds necessary to support his drug-rehabilitation program it appears that the dfm's involvement in planning petitioner's field departure date was minimal and that petitioner decided on his return date independent of the dfm petitioner owns a copy of the missions manual but he has never actually referred to it in making his missionary decisions - nextrecord - rather he has consulted fellow missionaries when he has had questions about missionary activities petitioners' tax_return and the notice_of_deficiency the national church issued petitioner form 1099-misc such form reflected nonemployee compensation_for services rendered and indicated that federal_income_tax was not withheld from that compensation petitioner reported his missionary-related income and expenses on schedule c respondent does not challenge the amount of petitioners' claimed business_expenses rather in her notice_of_deficiency respondent determined that petitioner was an employee rather than an independent_contractor in as a result of this determination respondent reclassified the expenses claimed by petitioner on his schedule c as schedule a expenses deductible only as miscellaneous_itemized_deductions subject_to the percent limitation under sec_67 ultimate finding of fact petitioner an endorsed assemblies of god missionary was an independent_contractor in opinion petitioners contend that petitioner was an independent_contractor and as such was entitled to deduct the full amount of his business_expenses on schedule c pursuant to sec_162 respondent determined that petitioner was an employee during petitioners bear the burden of proving that respondent's - nextrecord - determination is not correct rule a 290_us_111 whether an individual is an independent_contractor or a common_law_employee is a question of fact 862_f2d_751 9th cir affg 89_tc_225 570_f2d_278 8th cir weber v commissioner 103_tc_378 among the relevant factors to consider in determining the nature of a work relationship are the following the degree of control exercised by the principal over the details of the work which party invests in the facilities used in the work the taxpayer's opportunity for profit or loss the permanency of the relationship the principal's right of discharge whether the work performed is an integral part of the principal's business what relationship the parties believe they are creating and the provision of benefits typical of those provided to employees nlrb v united ins co 390_us_254 professional executive leasing inc v commissioner f 2d pincite t c pincite weber v commissioner supra pincite 64_tc_974 no one factor is determinative rather all the incidents of the relationship must be weighed and assessed 503_us_318 nlrb v united ins co supra pincite 388_f2d_74 8th cir weber v commissioner t c at - nextrecord - a degree of control the principal's right to control the manner in which the taxpayer's work is performed is ordinarily the single most important factor in determining whether a common_law employment relationship exists azad v united_states f 2d pincite 104_tc_140 weber v commissioner t c pincite in order for a principal to retain the requisite control_over the details of a taxpayer's work the principal need not stand over the taxpayer and direct every move made by that person weber v commissioner t c pincite professional executive leasing inc v commissioner t c pincite simpson v commissioner t c pincite in addition the degree of control necessary to find employee status varies according to the nature of the services provided weber v commissioner t c pincite finally we must consider not only what actual control is exercised but also what right of control exists as a practical matter professional executive leasing inc v commissioner f 2d pincite t c pincite- weber v commissioner t c pincite in determining whether an individual is under sufficient direction and control of another to warrant the finding of an employer-employee relationship the courts often have referred to the regulations promulgated under the employment_tax provisions - nextrecord - professional executive leasing inc v commissioner t c pincite under sec_31_3401_c_-1 employment_tax regs an employer-employee relationship-- generally exists when the person for whom services are performed has the right to control and direct the individual who performs the services not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished that is an employee is subject_to the will and control of the employer not only as to what shall be done but how it shall be done in general if an individual is subject_to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result he is not an employee as a preliminary matter we note that the parties dispute the identity of the principal in applying the control test petitioners contend that in analyzing whether petitioner is an employee only the control exercised by the dfm should be considered respondent contends that the dfm is a division of the national church and that the collective right to control maintained by the dfm and the national church must be considered we agree with respondent on this point the national church prosecutes its activities in part through general offices such as the dfm the dfm is merely an extension of the national church charged with the specific task of coordinating assemblies of god missionary efforts outside the united_states as an agency of the national church the dfm performs this task on behalf of the national church thus we think that the control exercised by both the national church and the dfm should be considered together in determining whether petitioner is an - nextrecord - employee respondent contends that the dfm exercised control or had the right to exercise control_over petitioner to such a degree that we must conclude that he was an employee in this regard respondent points out that as a missionary petitioner qualifies as a professional who required little supervision and that the absence of actual control should not be confused with an absence of the right to control the threshold level of control necessary to find employee status is generally lower when applied to professional services than when applied to nonprofessional services azad v united_states supra pincite professional executive leasing inc v commissioner t c pincite however the precise degree of control required to find an employer-employee relationship varies with different occupations 397_us_179 in the present case even applying a lower standard of control because of petitioner's status as a professional we find that neither the national church nor the dfm exercised or had the right to exercise a sufficient degree of control to support a finding that petitioner was an employee neither the national church nor the dfm provided any type of professional training for petitioner the dfm did not assign petitioner to minister in a particular country petitioner selected bangladesh notwithstanding the reservations expressed - nextrecord - by the dfm the dfm did not direct petitioner to work on a particular project in bangladesh rather petitioner independently chose to become involved in student ministry petitioner decided to expand his foreign ministry to include a drug-rehabilitation program he was able to make this decision without seeking permission from the dfm in fact it appears that at the time of trial the dfm was not even aware of petitioner's plans to initiate a drug-rehabilitation clinic in bangladesh petitioner determined his own work days and hours he was able to use his vacation and sick leave without notifying or seeking permission from the dfm petitioner decided to return from his foreign ministry after only years in the foreign field he made this decision considering the needs of his school-aged children and the schedules of the other missionaries in his area it appears that the dfm played little or no role in determining petitioner's field departure date petitioner decided when his personal allowance would begin and he had the power to designate the amount of his personal allowance up to the limit imposed by the dfm petitioner was required to attend only one meeting every years apart from filing periodic disbursement deputational and field reports petitioner and the dfm did not communicate regularly specifically the dfm did not contact petitioner at all during petitioner's year of deputational ministry likewise - nextrecord - the dfm communicated with petitioner infrequently while petitioner served in the foreign field petitioner was not directly supervised or evaluated by anyone respondent emphasizes that the dfm maintained control_over petitioner through its missions manual that dictated the manner in which petitioner was to conduct his deputational and foreign ministry we think that respondent overstates the role of the missions manual the missions manual was intended by the dfm to be an informational reference for missionaries not a set of rules controlling their day-to-day conduct we recognize that the missions manual contains extensive information with respect to foreign ministry however most of the manual's provisions provide general information and guidance rather than impose requirements on missionaries to the extent that the missions manual appears to impose requirements on missionaries we are reminded of mr burgess' testimony that the dfm never intended to enforce the manual's provisions in this regard the dfm's only method of enforcing the manual's provisions is to withdraw its endorsement of a missionary we observe that the withdrawal of a missionary's endorsement does not prevent the missionary from serving in the foreign field rather it merely precludes the missionary from using dfm's services thus to a substantial degree mandatory provisions in the missions manual are toothless because the dfm intended that the missions manual be used only as a guideline - nextrecord - and because the dfm lacks any real ability to enforce its provisions we reject respondent's contention that the manual dictated the manner in which petitioner performed his missionary duties in summary the dfm lacked the control and lacked the right to control the manner and means by which petitioner performed his duties as a foreign missionary rather the dfm facilitates foreign ministry by processing a missionary's collections and pledges and providing useful information to missionaries through the missions manual and a proposed foreign living budget in other words we view the dfm as a service provider relieving endorsed missionaries from the administrative burdens of collecting and processing their pledges and obtaining information regarding their country of service respondent also contends that the record in this case shows that the national church exercised control or had the right to exercise control_over petitioner's ministerial credentials to such a degree that we must conclude he was an employee in support of her position respondent points out that the national church maintains specific requirements for ministerial licensing and ordination has the authority to discipline ministers based on their behavior and conduct and has the authority to withdraw ministerial credentials specifically respondent argues that the national church's ability to revoke petitioner's credentials if petitioner did not perform his - nextrecord - duties in the correct manner gives the national church the power to control his day-to-day conduct respondent's emphasis on the national church's control of petitioner's ministerial credentials is misplaced for two reasons first although petitioner was an ordained assemblies of god minister he was engaged as a missionary the national church's requirements for ministerial licensing and ordination as well as its authority to discipline petitioner and withdraw his ministerial credentials have little or no bearing as to the details and means by which petitioner performed his duties as a missionary second we do not think that the control test is satisfied where the manner in which a service is performed is controlled by the threat of the loss of professional credentials carried to its logical extreme this argument would serve to classify all ordained ministers as employees of the national church regardless of the type of service performed we reject respondent's contention that the national church's ability to revoke petitioner's ministerial credentials dictated petitioner's daily conduct as a foreign missionary we are aware of the recent case alford v united_states civil no in which the district_court for the western district of arkansas considered whether an assemblies of god ordained minister serving as a pastor of an affiliated local church was an employee or an independent_contractor the - nextrecord - district_court concluded that the local church through its supervision by the district council and the national church demonstrated significant control_over the manner in which the taxpayer performed his work and therefore held that the pastor was an employee in so holding the district_court emphasized the national church's control_over the taxpayer with respect to preaching doctrine and conduct we observe as an initial matter that we are not bound by the district court's holding in any event we think that petitioner's circumstances in the present case are very different from those of the taxpayer's in alford v united_states supra petitioner was employed as a foreign missionary not a pastor we think that the national church's authority over the manner in which a pastor performs his or her duties is not highly probative in analyzing the national church's control_over the daily activities of a foreign missionary this is because pastoring a local church and engaging in foreign mission work are two different jobs involving different qualifications duties and bodies of authority pastors are subject_to the controls of a local church whereas missionaries are subject_to the authority of the dfm as previously discussed the dfm exerted very little control_over petitioner in summary the dfm's and national church's lack of control_over and lack of the right to control the manner and means by which petitioner performed his duties as a foreign missionary support a finding that petitioner was an independent_contractor - nextrecord - not an employee b investment in facilities and equipment petitioner's sole compensation as a missionary was in the form of a personal allowance secured from funds that he raised during his deputational ministry in this regard we observe that if a donor fails to remit a pledged amount the dfm makes no effort to contact the donor much less obtain the donation additionally the national church does not guarantee missionaries minimum compensation or support petitioner used his personal car and telephone to raise funds during his deputational ministry petitioner occasionally hired assistants at his own discretion and accepted responsibility for paying those assistants respondent contends that petitioner was reimbursed for his expenses when he withheld costs from the offerings remitted to the dfm even if petitioner were regarded as receiving reimbursement for his expenses this matter is more than outweighed by other evidence probative of his being an independent_contractor eg petitioner's efforts in securing the funding for his foreign ministry and his investment in his automobile and telephone thus this factor supports a finding that petitioner was an independent_contractor not an employee c opportunity for profit or loss - nextrecord - the national church does not guarantee missionaries minimum compensation the compensation received by missionaries is in the form of a personal allowance the amount of which depends in part on the total amount of funding that missionaries are able to secure during their deputational ministry additionally upon resignation missionaries forfeit any account balance they may have with the dfm and must reallocate their funds to another ministry because petitioner had some opportunity for profit and risk of loss this factor supports a finding that petitioner was an independent_contractor not an employee d permanency of the relationship petitioner concedes that missionary ministry is a lifetime career this factor supports a finding that petitioner was an employee e dfm's right of discharge the dfm did not have the power to prevent petitioner from serving as an assemblies of god missionary in bangladesh the dfm's most extreme form of discipline is the withdrawal of a missionary's endorsement for a missionary the practical consequence of losing the dfm's endorsement is one of administrative inconvenience namely that the missionary must collect and process pledges without the assistance of the dfm - nextrecord - in any event unendorsed assemblies of god missionaries can and do serve in the foreign field respondent contends that because petitioner is an assemblies of god minister the general and district councils have the right to revoke petitioner's ministerial credentials and that therefore the national church can effectively discharge petitioner indeed the credentials committee has the authority to withdraw the approval and recommend the recall of ministerial credentials although petitioner is an assemblies of god minister subject_to the disciplinary proceedings in the constitution and bylaws he presently serves in the capacity of a foreign missionary thus we think the more appropriate analysis considers the dfm's right to discharge petitioner in his capacity as a missionary rather than the national church's right to recall petitioner's ministerial credentials because the dfm lacked the power to discharge petitioner as a missionary to bangladesh this factor supports a finding that petitioner was an independent_contractor and not an employee f integral part of business the dfm's primary mission is world evangelism petitioner's work as an assemblies of god missionary was directly related to the accomplishment of that mission this factor supports a finding that petitioner was an employee - nextrecord - g relationship petitioner and dfm believed they had created jerry burgess who had worked as the financial comptroller of the dfm for years testified that the dfm considered its missionaries independent contractors not employees mr burgess' testimony is supported by the fact that the national church issued petitioner form 1099-misc reflecting nonemployee compensation_for services rendered additionally the fact that federal_income_tax was not withheld from petitioner's compensation is consistent with the dfm's view that petitioner was an independent_contractor petitioner also thought he was an independent_contractor as evidenced by the fact that he reported his foreign ministry receipts and expenses on schedule c because the national church and petitioner thought that petitioner was an independent_contractor this factor would support a finding that petitioner was an independent_contractor not an employee h employee-type benefits the dfm offered petitioner access to the mba pension_plan and a health insurance plan petitioner participated in the mba pension_plan and the health insurance plan the premiums for petitioner's health insurance and the money transferred into petitioner's mba account were paid directly from petitioner's account with the dfm - nextrecord - the dfm has no policy regarding sick leave and does not maintain records reflecting either vacation or sick leave taken by missionaries missionaries continue to receive their personal allowances while on vacation and sick leave although the matter is not free from doubt we think that these facts support a finding that petitioner was an employee not an independent_contractor i conclusion some aspects of the relationship between petitioner and the national church indicate that petitioner was an employee whereas other aspects of the relationship indicate that he was an independent_contractor after weighing the above factors giving particular weight to the lack of control and the lack of the right to control that the national church and the dfm had over endorsed missionaries we conclude that petitioner was an independent_contractor and not an employee in because of our determination that petitioner was an independent_contractor for purposes of sec_62 petitioner's trade_or_business_expenses are deductible above_the_line on schedule c and need not be relegated to schedule a - nextrecord - to reflect our conclusion herein - nextrecord - decision will be entered for petitioners


internal_revenue_service number release date index number ------------------------------------ ------------------------- ------------------------------------------- --------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no -------------- telephone number ---------------------- refer reply to cc psi b01 plr-135683-15 date date trust trust original trust decedent beneficiaries state date date date trustee court dear ----------------- ----------------------------------------------------------------------------------------------------- ---------------- ------------------------------------ -------------------------- --------------------- ---------------------------------------------------------------------------------- -------------- ------------------------ -------------------- ----------------------- ------------------------ --------------------------------------------------------------- this responds to a letter dated date and additional information submitted on behalf of x by x’s authorized representative requesting a ruling under sec_678 of the internal_revenue_code facts plr-135683-15 original trust was established by decedent on date decedent died on date on date court ratified the division of original trust into separate trusts for the benefit of each child of decedent and his or her spouse and issue trust resulted from this division the governing document for trust trust agreement authorizes trustee at any time to distribute all or any portion of the net_income or principal or both of trust directly to any one or more of the beneficiaries living at the time of such distribution or to the trustees of any trust of which such beneficiary is a beneficiary pursuant to the authority granted to the trustee under the trust agreement the trustee proposes to transfer funds from trust to trust which also benefits beneficiaries beneficiaries rights to distributions under the trust agreement are the same as those under the trust agreement the governing document of trust trust agreement provides that trust retains the power solely exercisable by trust to revest the net_income of trust in trust provided however that such power shall lapse on the last day of such calendar_year the trust agreement provides that income includes i any dividends interest fees and other_amounts characterized as income under sec_643 of the code ii any net capital_gains realized with respect to assets held less than twelve months and iii any net capital_gains realized with respect to assets held longer than twelve months law and analysis sec_671 provides in relevant part that where it is specified in subpart e of subchapter_j that the grantor or another person shall be treated as the owner of any portion of a_trust there shall then be included in computing the taxable_income and credits of the grantor or the other person those items of income deductions and credits against tax of the trust which are attributable to that portion of the trust to the extent that such items would be taken into account under this chapter in computing taxable_income or credits against the tax of an individual any remaining portion of the trust shall be subject_to subparts a through d of subchapter_j sec_1_671-2 of the income_tax regulations provides that for purposes of subchapter_j a grantor includes any person to the extent such person either creates a_trust or directly or indirectly makes a gratuitous transfer of property to a_trust sec_1_671-2 provides that if a_trust makes a gratuitous transfer of property to another trust the grantor of the transferor trust generally will be treated as the grantor of the transferee trust see also sec_1_671-2 example plr-135683-15 sec_673 through specify the circumstances under which the grantor or a person other than the grantor is treated as the owner of any portion of a_trust sec_678 provides that a person other than the grantor shall be treated as the owner of any portion of a_trust with respect to which such person has a power exercisable solely by himself to vest the corpus or the income therefrom in himself or such person has previously partially released or otherwise modified such a power and after the release or modification retains such control as would within the principles of sec_671 to inclusive subject a grantor of a_trust to treatment as the owner thereof sec_1_671-3 provides that when a grantor or other person is treated under subpart e sec_671 and following as the owner of any portion of a_trust there are included in computing his tax_liability those items of income deduction and credit against tax attributable to or included in that portion sec_1_671-3 provides that if the grantor or another person is treated as an owner solely because of his interest in or power over ordinary_income alone he will take into account in computing his tax_liability those items which would be included in computing the tax_liability of a current income_beneficiary including expenses allocable to corpus which enter into the computation of distributable_net_income sec_643 defines the term distributable_net_income as the taxable_income of a_trust with certain modifications under sec_643 gains from the sale_or_exchange of capital assets are excluded from distributable_net_income to the extent those gains are allocated to corpus and are not either a paid credited or required to be distributed to any beneficiary during the year or b paid permanently set_aside or to be used for charitable purposes under sec_643 losses from the sale of capital assets are also excluded except to the extent those losses are taken into account in determining the amount of capital_gains that are paid credited or required to be distributed to any beneficiary during the year conclusion trust will be treated as the owner of the portion of trust over which they have the power to withdraw under sec_678 accordingly trust will take into account in computing their tax_liability those items which would be included in computing the tax_liability of a current income_beneficiary including expenses allocable to which enter into the computation of distributable_net_income additionally trust will also take into account the net capital_gains of trust except as specifically determined above no opinion is expressed or implied concerning the federal tax consequences of the transaction described above plr-135683-15 sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representatives sincerely faith p colson faith p colson senior counsel branch passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi b01 plr-116722-00 date oct legend x state d1 requesting relief under sec_1362 of the internal_revenue_code this responds to the letter dated date submitted on behalf of x facts x was incorporated under state law x’s shareholders intended that x be a subchapter_s_corporation effective d1 however an s_corporation_election under sec_1362 was not timely filed s_corporation sec_1362 provides that a small_business_corporation may elect to be an law and analysis sec_1362 provides the rule on when an s election will be effective if an s election is made within the first two and one-half months of a corporation’s taxable_year then that corporation will be treated as an s_corporation for the year in which the election is made if an s election is made after the first two and one-half months of a corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if an election under sec_1362 is made for any taxable_year after the date prescribed for making such election for such taxable cc psi b01 plr-116722-00 year and the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for such taxable_year x did not timely file an election under sec_1362 to be treated as an s_corporation effective d1 x however has established reasonable_cause for not making a timely election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and representations made and assuming that x otherwise qualifies as a subchapter_s_corporation as of d1 we conclude that x will be recognized as an s_corporation effective as of d1 x should file a completed form_2553 with a copy of this ruling attached reflecting its election of subchapter_s_corporation status as of d1 with the applicable service_center within days of the date of this letter except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code specifically no opinion is expressed concerning whether x otherwise satisfies the s_corporation eligibility requirements this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely s dianna k miosi dianna k miosi chief branch associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


department of the treasury internal_revenue_service washington d c april number release date cc dom fs proc tl-n-53-00 uilc internal_revenue_service national_office field_service_advice memorandum for district_counsel georgia cc ser geo from deborah a butler assistant chief_counsel field service cc dom fs subject modified expedited refunds in joint_committee case this field_service_advice responds to your memorandum dated date field_service_advice is not binding on examination or appeals and is not a final case determination this document is not to be cited as precedent legend corp x authorized representative year year year year year year year date a date b date c date d date e date f issues what discretion does the service have to issue an expedited refund pending the completion of a tax examination after accepting a surety bond to secure the refunded tax if the service has discretion to issue an expedited refund under these facts what factors should the service consider in obtaining security for the potential recovery_of the refunded amount conclusion in considering a request for an modified expedited refund in a joint_committee case the service may only refund the amount that is determined by the service as the minimum amount of overpaid tax that is due to the taxpayer if the determined refund exceeds dollar_figure million the refund must first be submitted for approval by the joint_committee determined refunds based upon partial agreements that do not exceed dollar_figure million may be refunded under the service’s refund procedures without obtaining joint_committee approval the service may not however refund tax to the taxpayer even with joint_committee approval if such tax is not overpaid because we conclude that the service may not issue the expedited refund sought in this case we will defer answering what action is necessary to secure the refunded amount facts for year through year corp x was a member of a consolidated_group and had its income reported on the consolidated_return filed by the consolidated_group for each tax_year on date a in year corp x was split-off from the consolidated_group corp x’s income for year through date a was reported on the group’s consolidated_return corp x reported its own income for the short taxable_year beginning after date a on a separate_return for year after filing a corporate_income_tax return for year on date b corp x filed an amended_return form 1120x on date c to claim a tax_refund of dollar_figurem for year based upon the carry forward of losses_incurred by the consolidated_group in year through year on date d corp x filed a second amended_return to claim an additional refund of dollar_figurem for year based upon the carry forward of losses from the consolidated group’s year through year while these refund claims were pending the service initiated an audit of corp x’s income_tax liabilities for year and year on date e corp x agreed to the assessment of deficiencies for year and year which did not take into account the pending refund claims the deficiencies were assessed and corp x paid the full liabilities with underpayment interest on date f the service has not completed its consideration of corp x’s two pending refund claims and has not yet made any determination with respect to those claims any_action on the claims has been delayed pending completion of a separate audit of the consolidated group’s liabilities for year through year sec_4 that audit is not expected to be completed until at least another year corp x has requested that the service make an expedited refund of its claimed overpayment of income_tax for year while the service’s review of the refund claims is pending because the audit is not expected to be completed for at least one year the requested tax refunds are in excess of dollar_figure the taxpayer has agreed to provide security in the form of a security_agreement and a surety bond legal analysi sec_1 authority to issue expedited refunds in joint_committee cases sec_6402 of the internal_revenue_code is the sole code provision that affirmatively authorizes the service to make refunds to a taxpayer sec_6402 provides that service may refund any balance of any_tax overpayment to a taxpayer after crediting the amount of such overpayment against any outstanding tax_liabilities of the taxpayer an overpayment although not exhaustively defined in the code is the amount by which a payment of tax exceeds the correct total amount of the taxpayer’s liability for a tax period or any amount that was assessed or collected after the expiration of the applicable_period of limitations sec_6401 332_us_524 the service is not required or authorized by statute to refund tax_payments claimed by a taxpayer if an overpayment has not been determined lewis v reynolds 281_us_201 sec_6511 provides the limitations_period within which a taxpayer must file a claim_for_refund of any_tax overpayments the general procedures for making an claim_for_refund of income_tax are found in sec_301_6402-2 sec_3 the service will issue a refund under these procedures only if it determines based upon the grounds set forth and detailed in a timely filed refund claim that there is an overpayment_of_tax sec_301_6402-4 of the regulations which addresses a claim_for_refund included on a tax_return provides one exception to the necessity that the service first determine that there is an overpayment_of_tax before making a refund if an overpayment is claimed on the taxpayer’s return to recover payments made before the return was filed the service may credit or refund payments in excess of the amount of tax_shown_on_the_return without awaiting examination of the completed return and without awaiting filing of a claim_for_refund implicit in this exception for refunds claimed on the return is the understanding that the service must otherwise make a determination with respect to the taxpayer’s refund claim before crediting or refunding claimed overpayments under sec_6402 sec_6411 also provides a special procedure under which a taxpayer may apply for the tentative_carryback_adjustment of tax for a prior taxable_year affected by certain carrybacks from another taxable_year because the service must quickly respond to these carryback applications the service makes a limited review of the application only for material omissions and computational errors before either disallowing the application or making a tentative refund under sec_6411 sec_1_6411-3 the application_for a carryback adjustment must be filed within twelve months after the source year in which the loss or credit to be carried back arose except for determining overpayment interest the application is not a claim for credit or refund sec_6411 last sentence see thompson v united_states u s t c big_number fed cl 492_fsupp_530 n c aff’d without pub op 638_f2d_1351 4th cir corp x’s refund claims are not applications under sec_6411 in general except with respect to refunds claimed on the taxpayer’s original tax_return or on an application_for tentative carryback on which a taxpayer claims an overpayment_of_tax the service does not make refunds of tax unless it has first determined that there is an overpayment_of_tax to be refunded refund claims submitted pursuant to sec_301_6402-2 and sec_3 do not in themselves provide a basis for making a refund of tax until the service determines that an overpayment exists and that the taxpayer is entitled to the refund if the overpayment once determined by the service is very large the service cannot refund_or_credit the overpayment unless it also satisfies the additional requirement under sec_6405 that the refund be approved by the joint_committee on taxation sec_6405 prohibits the refund_or_credit of income_tax in excess of dollar_figure until after a report is submitted to the joint_committee on taxation the service’s current procedures for submitting proposed refunds for approval by the joint_committee are found in irm joint_committee handbook under the normal procedure a report is prepared and a case is submitted for joint_committee review only if there is a net overpayment to be refunded or credited to the taxpayer in excess of dollar_figure million after the service has completed an examination of one or more tax years a regular report is used if refunds have already been made eg in response to a sec_6411 tentative_refund_claim so that less than dollar_figure million is left to be refunded and an expedited report is made if there is a net unpaid refund in excess of dollar_figure million to be made see irm and a supplemental report is filed if further adjustments are made after one report has been filed see irm irm also provides for a modified expedite refund report to be prepared when the service has not completed action on a case it may be used when there are unagreed issues as shown in section or unexamined source years as shown in section cases involving unagreed issues are those in which the taxpayer and the service are prepared to make a partial agreement for the assessment or abatement of some tax_liabilities without resolving all of the pending issues for a tax period cases involving unexamined source years are those in which the service and the taxpayer have resolved the issues for the tax_year with the exception of carrybacks or carryforwards from other source years that are still being examined in both situations the refund must first be approved by the joint_committee the modified expedite refund report is the mechanism for seeking such approval for an expedited refund without waiting until all issues affecting the tax period have been resolved the handbook requires certain conditions to be met before a modified expedited refund report can be prepared and sent to the joint_committee a b c d there must be a claimed sec_6405 refund amount subject_to joint_committee review in excess of dollar_figure in an unexamined or unsurveyed source or carryback_year irm the examination of the unagreed issues or the source year will require a substantial period of time six months or more to resolve and the delay would deprive the taxpayer of a timely refund to which the taxpayer is clearly entitled irm and the taxpayer must post an acceptable bond or similar security irm and irm the report must contain an explanation of why the refund is being issued before the case is completed or surveyed including a conclusion that no disadvantage to the government will occur as a result of the early refund irm and e f g the refund may reflect only the minimum amount to which the taxpayer is entitled regardless of the outcome of the unagreed issue irm and a supplemental report must be submitted at the end of the examination or survey irm and and the refund may not be one involving tentative refunds irm and the key requirement for both unagreed issue cases and unexamined source year cases is that the modified expedite report procedures apply only to the minimum amount to which the taxpayer is entitled and only if that amount is over dollar_figure million irm in this case the amount claimed by corp x is over dollar_figure million but the service has not determined that corp x is entitled to recover any portion of that claimed amount before determining that corp x is entitled to the refund of any portion of the amount claimed by corp x on its two refund claims the service will need to determine the amount of the losses or credits generated by the consolidated_group in year through year which portion if any of those losses is allocable to corp x and which portion of the losses allocable to corp x is available for carryover to year until those determinations are made and some of corp x’s year tax_liabilities are abated there is no overpayment_of_tax to be refunded the modified expedited refund report process could apply if instead of determining a deficiency for corp x’s year the service had determined that corp x had overpaid its year income_tax_liability by more than dollar_figure million pursuant to a partial agreement the service would have authority to refund the agreed overpayment to corp x while the determination of corp x’s claims for the carryforward of losses from year through year was still pending however because the agreed overpayment would have exceeded dollar_figure million any refund would first be subject_to joint_committee review by filing a modified expedite refund report that explained the amount and reason for the refund as well as the action still pending on the carryforward claim the service could solicit the necessary joint_committee review the service could then make the refund after obtaining the bond or other security from the taxpayer to ensure than the service could recover the refunded amount if the service in the course of completing the examination of the source years determined that the taxpayer had not overpaid its income_tax and was not entitled to the expedited refund of tax chapter of the joint_committee handbook rev revised the language manual provisions concerning modified expedited refunds before date use of the modified expedited report procedures had been authorized at irm revised whenever a taxpayer requested that a refund be made prior to the completion of survey or examination action these procedures could be applied where a b c d e f a refund was claimed in excess of dollar_figure any examination or survey action was not expected to be completed within six months a modified expedite refund request report was sent to the joint_committee the taxpayer posted bond or other security as required by the service to secure repayment if necessary of the tax being refunded the taxpayer provided an executed written security_agreement and the service found that no disadvantage to the government would occur thus before date the manual provisions did not explicitly require that the service determine that a taxpayer was entitled to a refund if the expedited refund was sought before the tax examination or survey was completed since the service is not authorized to refund tax unless the tax is overpaid the service’s determination that the taxpayer is entitled to a refund is a condition_precedent for finding that there is no disadvantage to the government like the current manual provisions the former manual provisions provided a mechanism under which the service could expeditiously make a refund subject_to joint_committee approval based upon a partial agreement rather than waiting until all adjustments were completed for a tax period nevertheless some taxpayers may have interpreted the failure to include an express limitation prohibiting refunds unless there was a service determination of an overpayment_of_tax as an indication that refunds could be made solely if claimed by a taxpayer under this misinterpretation taxpayers claiming refunds of more than dollar_figure million would be able to obtain an immediate refund of any taxes previously paid_by claiming a refund and posting a bond because sec_6402 does not authorize such refunds we do not believe that this interpretation of either the former or current manual provisions is correct on the facts presented the service does not have the authority to make a refund of tax in exchange for a bond or other security unless it first determines that there is an overpayment_of_tax to be refunded to the taxpayer the service has not determined that corp x overpaid its tax_liability for year thus no portion of the previously paid tax_liability may be refunded to corp x under the expedited refund procedures for joint_committee cases case development hazards and other considerations we believe that the service can rely upon the current provisions of chapter of the joint_committee handbook to decline taxpayer requests to have proposed refunds submitted for joint_committee review even if the taxpayer offers to provide a bond or other security the handbook reflects the service’s limited authority to issue refunds of overpayments under sec_6402 a modified expedited refund report for joint_committee review should only be prepared for a proposed refund that exceeds dollar_figure million and represents the minimum amount to which the service determines the taxpayer is immediately entitled in a case involving either additional unagreed issues for the same tax_year or carrybacks or carryforwards from unexamined source years since use of the modified expedited refund request procedures is not appropriate in this case we have not addressed the question of what type of bond or other security must be posted by the taxpayer under those procedures please call if you have any further questions


department of the treasury internal_revenue_service tax bxempt and government entities division release number release date date date uil code certified mail - return receipt r employer_identification_number person to contact identification_number contact telephone number in reply refer to last day for filing a d petition with tax_court february 20xx dear this is a final adverse determination revoking your exempt status under sec_501 of the internal_revenue_code our adverse determination was made for the following reasons -has failed to provide evidence you are currently operated exclusively for exempt purposes within the meaning of internal_revenue_code sec_501 you are nota charitable_organization within the meaning of sec_1_501_c_3_-1 in that you failed to establish that you were operated exclusively for an exempt_purpose you did not respond to our request for documentation to substantiate your activities and fiscal operations based upon the above we are revoking your organization’s exemption from federal_income_tax under sec_501 c of the internal_revenue_code effective august 20xxx contributions to your organization are no longer deductible under sec_170 of the internal_revenue_code you are required to file federal_income_tax return form_1120 these returns should be filed with the appropriate internal revenue campus for the year ending september 20xxx and for all years thereafter processing of income_tax returns and assessment 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 in court you must initiate a suit for declaratory_judgment in the united_states tax_court the united_states claim court or the district_court of the united_states for the district of columbia before the day after the date this determination was mailed to you contact the clerk of the appropriate court for the rules for initiating suits for declaratory_judgment you also have the right to contact the office_of_the_taxpayer_advocate however you should first contact the person whose name and telephone number are shown above since this person can access your tax information and can help you get answers you can call and ask for taxpayer_advocate assistance or you can contact the taxpayer_advocate from the site where the tax exempt status was faxing determined by calling revenue service taxpayer advocates office _or writing to internal taxpayer_advocate assistance cannot be used as a substitute for established irs procedures formal appeals process etc the taxpayer_advocate is not able to reverse legal or technically correct_tax determinations nor extend the time fixed by law that you have to file a petition in the united_states tax_court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling we will notify the appropriate state officials of this action as required by sec_6104 of the internal_revenue_code lf you have any questions please contact the person whose name and telephone number are shown in the heading of this letter - sincerely vickie l hansen acting director eo examinations internal_revenue_service department of the treasury internal_revenue_service date date taxpayar identification_number form_990 tax_year s ended duly 20xx person to contact id number contact numbers telephone fax cortified mail - return receipt requested dear we have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the internal_revenue_code code is necessary if you accept our findings take no further action we will issue a final revocation letter if you do not agree with our proposed revocation you must submit to us a written request for appeals_office consideration within days from the date of this letter to protest our decision your protest should include a statement of the facts the applicable law and arguments in support of your position an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures jor unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in publication if we issue a determination_letter to you based on technical_advice no further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice letter rev catalog number 34808f if we do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the intemal revenue service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the code you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have 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 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 thank you for your cooperation sincerely vicki l hansen acting director eo examinations enclosures publication publication report of examination letter rev catalog number 34809f oo form_886 a deparement of the treagucy - interna revenue service explanation of items issue organization not responding to document request by the rs __ name of taxpayer cin l schedule no or exhibit year period ended failing to respond to document requests july oc xx issue whether internal_revenue_code inc qualifies for exemption under sec_501 of the facts internal_revenue_service has previously attempted to request thru correspondence that exempt_organization make documents available for an examination of the returns form_941 for the periods ending march 20xx june 20xx september 20xx- december 20xx march 20xx june 20xx september 20xxi and december 20xx letters have been mailed out on september 20xx’ november 20xx december 20xxby certified mail and january 20xx by certified mail letter stating the service’s intent to revoke exempt status under sec_501 of the internal_revenue_code was mailed on january 20xx by certified mail agent also made severa attempts over telephone to talk to the officers of the organization with no success messages identifying agent and contact information were left on voice mail exempt_organization failed to respond to the internal_revenue_service correspondence or telephone calls you were recognized as exempt in december of 20xx you have not responded to requests for information about form sec_941 you have not responded to requests for financial information and information about your activities and the internal_revenue_service has no record of a change_of address since the form_990 for the year ending july 20xx was filed law internal_revenue_code sec_501 provides that an organization described in that section must be both organized and operated for exempt purposes and that no part of its net_earnings may inure to the benefit or any private_shareholder_or_individual sec_6001 of the internal_revenue_code provides that every person liable for any_tax must keep adequate_records as the secretary may from time to time prescribe sec_6033 provides that every organization exempt from tax shall keep such records as the secretary may from time to time prescribe form 886-a rev department of the treasury - internal_revenue_service page -1- department of dre treasury - ineermal revenue service fora a an name of t axpayer not issue - organization schedule noe ol exhibit year period ended explanation of items ganization nol responding to document request by the irs july xx ves - sec_1_6001-1 requires that books_and_records are to be kept at all times and made available for inspection by the service as long as the contents are material to the administration of the internal revenue laws _ sec_1_6033-1 requires every organization that has been recognized as exempt whether or not it is required to file a return to submit information as may be required for the purpose the service's inquiry into its exempt status revrul_59_95 c b provides that the failure of an organization to provide requested information about its financial status and operations may result in revocation of its exempt status on the grounds that the organization has not established that it is observing the conditions required for the continuation of exempt status taxpayer’s position government’s position because you have not responded to our requests for information or otherwise provided information establishing that you are operated for exempt_purpose your status is revoked conclusion it is the irs's position that the organization failed to meet the requirements under sec_6001 and sec_6033 to be recognized as exempt from federal_income_tax under sec_501 c accordingly the organization dollar_figure exempt status is revoked effective august 20xx form_1120 returns should be filed for the tax periods ending on or after july 20xx please feel free to contact agent listed on first page of letter if further assistance in this matter is required fortin 886-a rev departmen of the treasury - internal_revenue_service page -2-


department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c o f f i c e o f t h e c h i e f c o u n s e l date cc psi b05 genin-148423-09 number info release date uil ----------------------- ----------------------------------------------------------------------- ------------------------------- ------------------------------------------------------- ---------------------------- -------------------------------------------- dear ------------ this letter responds to your date letter requesting confirmation that disaster relief credits that are returned in may be reallocated in in your letter you reference and attach a portion thereof an undated u s department of treasury memorandum stating in part that a go_zone low_income_housing tax_credit lihtc that was allocated in and returned in may be reallocated within the go_zone in lihtcs allocated under the authority of the gulf opportunity go_zone act of p l and the heartland disaster tax relief act of p l heartland act thus the statement in the treasury memorandum that a go_zone lihtc that was allocated in and returned in may be reallocated within the go_zone in applies also to disaster credits allocated under the authority of the heartland act accordingly we can confirm that lihtcs allocated in under the authority of the heartland act that are returned in may be reallocated in the treasury memorandum you reference is intended to encompasses disaster we appreciate your interest in this matter and hope that we have been of assistance to you if i can be of further assistance please call me or ------------------at --- --------------------- sincerely yours paul f handleman chief branch office of the associate chief_counsel passthroughs special industries