department of the treasury internal_revenue_service te_ge eo examinations fulton street room brooklyn ny tax_exempt_and_government_entities_division date release number release date legend org organization name xxx date address address org address certified mail dear taxpayer_identification_number person to contact identification_number contact telephone number last date for filing a pleading with the tax_court the claims_court or the united_states district_court for the district of columbia may 20xx this is a final adverse determination regarding your exempt status under sec_501 of the internal_revenue_code the code your claim as an organization exempt under sec_501 is hereby revoked and you are not exempt under sec_501 of the code effective may 20xx the revocation of your exempt status was made for the following reason s you are not operating exclusively for any religious purpose charitable purpose educational purpose or any other exempt_purpose our examination reveals that you are not engaged primarily in activities which accomplish religious charitable educational or other exempt purposes as required by sec_1_501_c_3_-1 your activities including your financial transactions more than insubstantially furthered non-exempt purposes moreover you failed to establish that you were not operated for the benefit of private interest of your president secretary director and private shareholders or individuals as required for continued recognition of exemption pursuant to sec_1_501_c_3_-1 your income inured to the benefit of private shareholders and individuals contributions to your organization are no longer deductible under sec_170 any contributions to your organization by those who were in part responsible for or were aware of the activities or deficiencies on the part of your organization that gave rise to loss of exempt status will not be allowed as a deduction effective may 20xx 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 you also 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 f you prefer you may contact your local taxpayer_advocate at we will notify the appropriate state officials of this action as required by code sec_6104 you should contact your state officials if you have any questions about how this final_determination may affect your state responsibilities and requirements if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely nanette m downing acting director eo examinations enclosure publication tax_exempt_and_government_entities_division org address department of the treasury internal_revenue_service s gessner m s 4900hal houston tx date taxpayer_identification_number form tax_year s ended person to contact id number contact numbers telephone fax certified 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 for 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 catalog number 34809f 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 internal_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 the most convenient time to call if we need to contact you if you write please provide a telephone number and thank you for your cooperation sincerely vicki l hansen acting director eo examinations enclosures publication publication report of examination letter catalog number 34809f name of taxpayer org form 886-a rev date explanations of items 20xx page of tax identification_number year period ended xx xx legend org organization name state agent thru ind poa poa emp-1 directors xx date address address attn attorney cpa cpa employee dir-1 dir-2 dir-3 co-1 thru co-15 thru companies city city manager manager state agent ind-1 thru ind-10 dir-4 dir-5 issues org does not qualify as an integrated auxiliary under internal_revenue_code sec_501 org city state failed to operate as an organization exempt under sec_501 of the internal_revenue_code loans made to the for-profit and other related entities owned by the president director dir-1 constitute private benefit inurement facts org city state herein referred to as org’ was initially incorporated on may 20xx as a non-profit corporation under the non- profit corporation laws of state this organization was incorporated under the name org article iv of the initial articles of incorporation stated in part said corporation is organized exclusively for charitable religious educational and scientific purposes including for such purposes the making of distributions to organizations that qualify as ‘exempt organizations under sec_501 of the internal_revenue_code or the corresponding section of any future federal tax code’ no part of the net_earnings of the corporation shall inure to the benefit of or be distributable to its members trustees officers or other private persons except that the corporation shall be authorized and empowered to pay reasonable_compensation for services rendered and to make payments and distributions in furtherance of the purposes set forth in article i hereof notwithstanding any other provision of these articles the corporation shall not carry on any other activities not permitted to be earned on a by a corporation exempt from federal_income_tax under sec_501 of the internal_revenue_code or the corresponding section of any future federal tax code or b a corporation contributions to which are deductible under sec_170 of the internal_revenue_code or the corresponding section of any future federal tax code article iv of the initial articles of incorporation stated upon dissolution of the corporation assets shall be distributed for one or more exempt article ii stated the period of duration is perpetual form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service form 886-a rev date name of taxpayer org explanations of items 20xx page of -- tax identification_number year period ended xx xx purposes within the meaning of sec_501 of the internal_revenue_code or the corresponding section of any future federal tax code or shall be distributed to the federal government or to a state_or_local_government for a public purpose any such assets not so disposed of shall be disposed of by a court of competent jurisdiction of the county in which the principal office of the corporation is then located exclusively for such purposes or to such organization or organizations as said court shall determine are organized and operated exclusively for such purpose articles of amendment were filed with the office of the secretary of state of state on november 20xx for the purpose of changing the name of the corporation from org to org city state the trustees directors of org included dir-1 dir-2 spouse of dir-1 dir-3 mother of dir-1 and dir-4 brother-in-law of dir-1 and dir-2 in addition to serving as a director trustee dir-1 was elected the president and secretary per the minutes of org’s organizational meeting held on may 20xx dir-1 signed documents as president or as secretary of org org did not file form_1023 application_for recognition of exemption under sec_501 of the internal_revenue_code to apply for recognition of exempt status under internal_revenue_code sec_501 org did not file form_990 return of organization exempt from income_tax for any period since inception small_business self-employed examination herein referred to as sb_se examined the form_1040 individual_income_tax_return form_1120 corporate tax_return and form_1120s income_tax return for an s_corporation returns for dir-1 and his related corporations during the course of their examination substantial deductions for charitable_contributions were reflected on the form 1040s and form_1120s in questioning the claimed contributions sb_se determined all payments claimed as charitable deductions were made to org sb_se was informed by the power_of_attorney on their case cpa cpa that org was an integrated auxiliary of the co-1 co-1 and as an integrated auxiliary the entity org did not have a filing requirement sb_se was further informed by the bookkeeper tax preparer emp-1 that org was an organization established and controlled by dir-1 to verify the affiliation association a third party contact was made to co-1 by the sb_se revenue_agent trustee ind-1 in a letter dated june 20xx responded on behalf of co-1 as follow want to inform you that this organization is not affiliated with co-2 am unaware who operates this organization or the purpose of this foundation it is not an auxiliary of co-2 in approximately january 20xx sb_se requested a collateral examination of org be conducted by tax exempt government entities exempt_organization herein referred to as te_ge eo an examination was conducted of the books_and_records for org for the periods ending december 20xx and december 20xx by te_ge eo cpa cpa and emp- are discussed later in the report form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service form 886-a rev date name of taxpayer org explanations of items tax identification_number year period ended 20xx page of xx xx opening interview for the examination was held on april 20xx present for the initial interview was dir-1 his power_of_attorney cpa cpa emp-1 bookkeeper for org and for dir-1’ other business entities manager te_ge eo group and revenue_agent forensic investigator during the interview dir-5 stated org was an integrated auxiliary by sharing the same beliefs as co-1 and by virtue of including the name an integrated auxiliary of co-2 city state in the name of the organization dir-5 stated treasury_decision td which was issued on december 19xx decision loosen up the requirements on what was necessary to qualify to be an integrated auxiliary he further stated td made it clear the internal support rule does not apply see attached exhibit a treasury_decision information_document_request idr was issued to request specific details on what affiliation org had with the co-1 specific court cases and research to support org’s position that it was an integrated auxiliary a statement to address why the articles of amendment did not mention any activities relating to being an integrated auxiliary of co-1 and a statement to explain how org became involved with the concept of being an integrated auxiliary the response from poa dir-5 was incomplete did not address all issues and stated the following based on your request am submitting a statement regarding org and treasury_decision issued december 19xx treasury_decision was issued to incorporate the rules of revproc_86_23 regarding the definition of integrated auxiliary of churches regarding the organizations financial support and nature of the organizations activities the regulations of sec_1 g are amended by the decisions in this document the first item amended by this td is the requirement that the organization’s activities are ‘exclusively religious’ subsequent to litigation the irs met with representatives of various church operations to develop a less controversial and more objective standard for identifying an integrated_auxiliary_of_a_church the irs eliminated the ‘exclusive religious’ activity test and stated that the new definition eliminating the ‘exclusive religious’ test is consistent with court holdings and legislative_history also the final regulations do not include the internal support requirement therefore org qualifies as an integrated_auxiliary_of_a_church as part of the audit process org provided complete records for the audit year including statements for the following bank accounts co-3 bo account co-4 co-4 account and co-5 account in addition org provided the general ledger from date of inception may 20xx along with other financial records the older records were not requested for the examination but were voluntarily provided total gross deposits into org’s accounts were as follows year 20xx total deposits comments dollar_figure from general ledger form 886-a department of the treasury-internal revenue service catalog number 20810w -_-publish no irs gov page rom b86 explanations of items paved ns name of taxpayer tax identification_number year period ended org xx 311xx 20xx dollar_figure from general ledger 20xx 20xx 20xx 20xx 20xx dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure co-3 co-3 co-4 - not including interest earned co-5 - not including interest earned total deposits from 20xx through 20xx the analyses of the financial records showed a substantial amount of the deposits were from dir- or from one of his related companies no other sources of deposits were identified some deposits were identified as transfers from one bank account to another account or loans repaid to org the related companies from which payments came included ein co-6 c-corp co-7 co-8 co-9 s-corp s-corp s-corp ein ein ein based on their findings sb_se proposed the disallowance of the charitable_contribution_deduction claimed by dir-1 and dir-2 on their form_1040 and claimed by the related_entity co-6 for the years under examination which included tax years ending december 20xx through december 20xx from the information provided by sb_se the specific amounts of funds claimed as charitable deductions to org were as followings form_1040 tax_year ending december 20xx december 20xx december 20xx december 20xx amount dollar_figure dollar_figure total december 20xx form_1120 the analyses of the financial records reflected the majority of the financial activity related to loans disbursed by org to either companies owned by dir-1 or companies that dir-1 had business dealing with dollar_figure this included the following s although this amount was contributed the actual amount allowed as a charitable deduction on form_1040 was limited to of the adjusted_gross_income agi form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service form 886-a rev date name of taxpayer explanations of items tax identification_number 20xx page of year period ended org xx xx loan to amount date xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx check bo - bo - bo - bo - bo - bo - bo - bo - bo - bo - bo -- bo - bo - bo - bo - bo - bo - bo - bo - bo - bo - co-4 - co-4 - co-10 co-10 co-10 co-10 co-10 co-10 co-10 co-10 co-10 co-10 co-10 co-8 co-11 co-11 co-11 co-11 co-12 co-11 co-12 co-12 co-12 co-8 co-8 total dollar_figure co-10 - dir-1 stated‘ this was a sprinkler company that went bankrupt although dir-1 stated this was a bona_fide loan and repayment was expected the review of the available financial records did not reflect the payment of any interest when repayments were made in addition dollar_figure of the repayment was not directly from co-10 but was from co-11 it was not possible to locate anyone with co-10 to confirm the purpose of the payments co-11 - dir-1 stated this organization was not related to him or to any other trustees board members as an individual or as a business owner but this company was owned by ind-2 the company was for subcontract laborers who did drywall work for one of dir-1’ companies third party contact was made with ind-2 jr in january 20xx ind-2 stated he was the former business partner of dir-1 he and dir-1 started in business together years ago about years ago and a few years back ind-2 decided to break away from dir-1 and start his own business in discussing co-11 and loans to from org - ind-2 stated this was dir-1’ company and the address reflected in the secretary of state records address city state was dir-1’ address not his address ind-2 did not request any loans for this company since it is not his company and he had no knowledge how the books were kept ind-2 stated he thought co-11 was dir-1’ payroll statement made during summons meeting held on october 20xx this meeting is discussed later on in the report ibid form 886-a department of the treasury-internal revenue service catalog number 20810w publish no irs gov page_5 form 886-a rev date name of taxpayer org explanations of items 20xx page of tax identification_number year period ended xx xx company that paid the workers for one of dir-1’ company when informed the secretary of state records reflected him ind-2 as the registered agent and information provided to the service indicated this could be a business owned by him ind-2 stated it was not his business he stated he may have signed some documents given to him from dir-1 or dir-5 but it was definitely not his business and he had no involvement in this entity co-12 co-12 company - dir-1 stated co-12 was a paint contractor who did subcontractor work for one of dir-1’ business dir-1 explained that ind-1 was injured in the hospital and his spouse requested help since they were financially strapped dir-1 stated funds were deposited into ind- 1’s bank account and shortly after repaid third party contact was made to ind-4 and co-12 owner of co-12 company paint company and they were a subcontractor for co-7 their company performed services at the co-13 a k a co-13 in city state ind-3 confirmed that her spouse ind-5 suffered a head injury in late 20xx and was unable to accurately prepare billings so they requested and received a draw advance on funds due to them state testimony was provided that their company is a from ind-3’s records co-12 received advances of dollar_figure from the period 20xx through 20xx and subsequently billed co-7 dollar_figure for services rendered their billings invoices were done by each unit apartment painted ind-3 stated the advanced funds were supposed to be directly deposited from co-7 into their account which was located at the same bank however ind-3 stated they never saw the specific checks being deposited so they were not aware that some funds came from org transfers between accounts included the following date xx xx xx from co-4 from co-4 from co-6 amount transfer to co-3 transfer to co-3 transfer to co-5 __ dollar_figure to determine the actual amount deposited for org’s stated exempt_purpose the amount transferred between accounts and the amount identified as loan repayments had to be removed this was calculated as follows gross deposits less transfers between accounts loan repayments dollar_figure deposits available for exempt_purpose dollar_figure dollar_figure the following was confirmed as paid to co-1 as charitable distributions ibid form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service form 886-a rev date name of taxpayer explanations of items tax identification_number year period ended 20xx page of - rg xx xx the following administrative expenses were paid which relate to org's operation name amount amount date xx xx xx date xx xx xx xx xx dollar_figure dollar_figure dollar_figure dollar_figure co-14 dollar_figure co-14 dollar_figure co-15 co-14 dollar_figure co-14 dollar_figure dollar_figure dollar_figure summary of review of the financial records - the lending of money to organizations companies doing business with dir-1 and the payment of administrative expenses were the main activities of org there was a de minimus amount of funds dollar_figure given out for charitable purposes compared to total contributions of dollar_figure as part of the audit procedures a third party contact was made with ind-6 financial secretary of co-1 to confirm the purpose of the payment from org to co-1 revenue_agent revenue_agent and manager ind-4 manager attended the meeting ind-6 pulled co-1’s donation records back to 19xx and was able to verify a total of dollar_figure in payments as shown above discussed with ind-6 her knowledge or other church members’ knowledge of any other donations or planned donations from org ind-6 stated she had been at the church for four years prior to her the financial secretary position was held by ind-7 the minister of education administration was ind-8 and he had been there for approximately six years the parent’s day out program was run by ind-9 and she had been there since before the program began and had been there for about eleven years ind-6 stated she checked with all of the above members as well as the trustee ind-1 who sent the original response to the internal_revenue_service irs and none of them had any knowledge about org providing support or payments to co-2 city state ind-6 stated ind-10 sent the letter to the irs after he consulted with other leaders ministers of co-1 information_document_request idr was issued concerning foundation classification of org a form ss-4 application_for employer_identification_number ein was submitted to the irs in may 20xx this form ss-4 indicated org was requesting an ein as other nonprofit organization - private_foundation and reflected the principal activity of private_foundation from the testimony provided and the records reviewed the funding of org was from dir-1 or from dir-1’ related companies a written response received from org’s power_of_attorney dir- stated the org was originally formed as a private_foundation on may 20xx as are all nonprofit_organizations org later became an integrated_auxiliary_of_a_church when it amended its form 886-a catalog number 20810w page _7 publish no irs gov department of the treasury-internal revenue service rov date explanations of items 20xx page of form 886-a name of taxpayer org tax identification_number year period ended a xx xx articles of incorporation on november 20xx the organization then became a sec_501 sic organization and had no filing requirement per u s sec_1 in conducting the examination summonses were issued for an in-person interview with each of the trustees directors dir-1 was the only person who was interviewed pursuant to the issued summons although documents provided for the audit including the articles of incorporation bylaws and meeting minutes gave the appearance that other family members were involved in the operation of org dir-1 said the other board members had no involvement with the organization therefore a decision was made to not pursue summons enforcement against the other trustees directors the meeting was held with dir-1' on october 20xx in response to irs summons to obtain information and testimony with respect to the establishment and operation of org present during the meeting was dir-1 his attorney attn agent revenue_agent during that meeting the following information was obtained via oral testimony from dir-1 manager ind-4 manager and revenue v v purpose of setting up org was to give money to help children of the church dir-1 stated org was set up by dir-5 and the plan was to contribute the money to org and later make a large donation dollar_figure to the church for the children he mentioned that he was trying to build up enough money in the account to do something like build a building when asked why org was considered to be an integrated auxiliary of co-2 city state dir-1 stated that dir-5 said it had to be set-up that way but dir-1 was not told why it had to be set up that way at the time org was set-up he was attending church at co-1 but does not attend co- now the leaders at the church changed in 20xx and recently changed again dir-1 stated he did not know anyone at the church now in inquiring as to what discussion if any was held as to why articles of amendments were filed changing the name from org to org city state dir-1 stated that dir-5 told him that he dir-5 had made a mistake but he could not recall any discussion on what the mistake was dir-1 stated that org was set-up and run the way dir-5 verbally told him how to run it dir-5 did not provide any publications or documentation to help him operate org dir-1 acknowledged during the meeting that deposits into org came from him and his companies he also acknowledged that no one else contributed donated to org donations were not solicited from the public when dir-1 was asked about the involvement of the other board member family members in the financial operation of org he stated they had no involvement dir-1 admitted the lending activities did not fulfill org’s exempt_purpose but it did generate some interest_income which could be used for org’s exempt_purpose there were no loan agreements but the loans were for short periods of time ie one-day loans form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service - tax identification_number explanations of items form 886-a rev date nameoftaxpayer- its- s org 20xx page of year period ended xx xx a summary of the meeting was prepared and forwarded to dir-1 as president of org with idr requesting that he review the statement and provide any changes additions to the testimony provided during the meeting this was also sent to org’s power_of_attorney poa a response was requested by october 20xx but no response has been submitted law sec_501 of the internal_revenue_code provides that an organization described in subsection c or d shall be exempt from taxation sec_501 of the internal_revenue_code provides that corporations and any community chest fund or foundation organized and operated exclusively for religious charitable scientific testing for public safety literary or educational_purposes no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual are exempt from federal_income_tax under this section’ sec_508 and b of the internal_revenue_code requires new organizations to apply for recognition of sec_501 status and presumes all organizations are private_foundations sec_508 of the internal_revenue_code states subsection a and b shall not apply to churches their integrated_auxiliaries and conventions or associations of churches or sec_6033 of the internal_revenue_code provides that every organization_exempt_from_taxation under sec_501 shall file an annual return stating specifically the items of gross_income receipts and disbursements and such other information for the purpose of carrying out the internal revenue laws as the secretary may by forms or regulations prescribe sec_6033 of the internal_revenue_code lists the major exceptions which includes churches their integrated_auxiliaries and conventions or associations of churches’ federal_income_tax regulation regulation sec_1_501_c_3_-1 states in order to be exempt as an organization described in sec_501 an organization must be both organized and operated exclusively for one or more of the purposes specified in such code section if an organization fails to meet either the organizational_test or the operational_test it is not exempt emphasis added regulations sec_1_501_c_3_-1 provides an organization is organized exclusively for one or more exempt purposes only if its articles of organization a limit the purposes of such organization to one or more exempt purposes and b do not expressly empower the organization to engage otherwise than as an insubstantial part of its activities in activities which in themselves are not in furtherance of one or more exempt purposes regulation sec_1_501_c_3_-1 defines articles of organization to include the trust instrument the corporate charter the articles of association or any other written instrument by which the organization is created form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service explanations of items 20xx page of tax identification_number form 886-a rev date name of taxpayer org year period ended xx xx regulation sec_1_501_c_3_-1 provides an organization is not organized exclusively for one or more exempt purposes unless its assets are dedicated to an exempt_purpose an organization's assets will be considered dedicated to an exempt_purpose for example if upon dissolution such assets would by reason of a provision in the organization's articles or by operation of law be distributed for one or more exempt purposes or to the federal government or to a state_or_local_government for a public purpose or would be distributed by a court to another organization to be used in such manner as in the judgment of the court will best accomplish the general purposes for which the dissolved organization was organized regulation sec_1_501_c_3_-1 provides an organization will be regarded as ‘operated exclusively’ for one or more exempt purposes only if accomplish one or more of such exempt purposes specified in sec_501 an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose emphasis added it engages primarily in activities which regulation sec_1_501_c_3_-1 provides an organization is not operated exclusively for one or more exempt purposes if its net_earnings inure in whole or in part to the benefit of private shareholders or individuals for the definition of the words ‘private shareholder or individual’ see paragraph c of sec_1_501_a_-1 emphasis added regulation sec_1_501_a_-1 provides the words 'private shareholder or individual’ in sec_501 refer to persons having a personal and private interest in the activities of the organization regulation sec_1 c -1 d ii provides that an organization is not organized or operated exclusively for one or more exempt purposes unless it serves a public rather than a private interest thus for the benefit of private interests such as designated individuals the creator or his family shareholders of the organization or persons controlled directly or indirectly by such private interests emphasis added it is necessary for an organization to establish that it is not organized or operated regulation sec_1_6033-2 states the term integrated_auxiliary_of_a_church means an organization that is i described in both sec_501 and sec_509 or ii affiliated with a church or convention or associate of churches and iii internally supported regulation sec_1_6033-2 states an organization is affiliated with a church for paragraph h ii of this section if i the organization is covered by a group_exemption_letter issued under applicable administrative procedures to a church or a convention or association of churches the organization is operated supervised or controlled by or in connection with a church or a convention or association of churches or relevant facts and circumstances show that it is so affiliated ii iii form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service name of taxpayer org irov date form 886-a explanations of items 20xx page of tax identification_number year period ended xx xx regulation sec_1_6033-2 pertains to the facts and circumstances and states for purposes of paragraph h iii of this section relevant facts and circumstances that indicate an organization is affiliated with a church or a convention or association of churches include the following factors however the absence of one or more of the following factors does not necessarily preclude classification of an organization as being affiliated with a church or a convention or association of churches - i ii the organization's enabling instrument corporate charter trust instrument articles of association constitution or similar document or by-laws affirm that the organization shares common religious doctrines principles disciplines or practices with a church or a convention or association of churches a church or a convention or association of churches has the authority to appoint or remove or to control the appointment or removal of at least one of the organization's officers or directors iii the corporate name of the organization indicates an institutional relationship with a church or a convention or association of churches iv the organization reports at least annually on its financial and general operations to a church or a convention or association of churches v vi an institutional relationship between the organization and a church or a convention or association of churches is affirmed by the church_or_convention_or_association_of_churches or a designee thereof and inthe event of dissolution the organization's assets are required to be distributed to a church or a convention or association of churches or to an affiliate thereof within the meaning of this paragraph h treasury_decision td states this document contains final regulations that exempt certain integrated_auxiliaries of churches from filing information returns these regulations incorporate the rules of revproc_86_23 c b into the regulations defining integrated auxiliary for purposes of determining what entities must file information returns the new definition focuses on the sources of an organization’s financial support in addition to the nature of the organization's activities section dollar_figure of revproc_2008_9 i r b date provides exempt status may be revoke or modified retroactively if the organization omitted or misstated a material fact or operated in a manner materially different from that originally represented government's position form 886-a department of the treasury-internal revenue service catalog number 20810w -_publish no irs gov page_11 form 886-a rev date name of taxpayer org explanations of items 20xx page of tax identification_number year period ended xx xx the term integrated_auxiliary_of_a_church refers to a specific class of organizations that are related to a church_or_convention_or_association_of_churches but are not such organizations themselves a simple definition of an integrated_auxiliary_of_a_church would be an internally supported_organization or entity that is affiliated with a church or a convention or association of churches as described in sec_501 and sec_509 or co-1 did not support org and denied any affiliation with org the facts and circumstances section of regulation sec_1_6033-2 provides six generally accepted tests to indicate that the organization has satisfied the requirement of affiliation as required by the internal_revenue_code and applicable treasury regulation in general if a reasonable number of these paragraphs are true then the relevant facts_and_circumstances_test under regulation sec_1_6033-2 is considered met and the organization is deemed to be affiliated with a church for the purpose of regulation sec_1_6033-2 in reviewing the tests the only factor in org's favor is indicates an institutional relationship with a church although org stated in the official documents filed with the secretary of state of state that it was an integrated auxiliary of co-2 city state’ org did not get permission from co-1 to use their name and co-1 denies any affiliation or knowledge about org in addition even though during the opening interview dir-5 stated org was an integrated auxiliary by sharing the same beliefs as co-1 neither the articles of incorporation nor the bylaw reflected common religious doctrines principles disciplines or practices with co-1 as required by the regulations iii which states the corporate name of the organization based on the definition and facts and circumstances of the regulations org does not qualify as an integrated auxiliary under internal_revenue_code sec_501 a the approximate gross_receipts deposited into org bank accounts in tax periods 20xx though 20xx totaled dollar_figure the majority of the deposits were from dir-1 his spouse dir-2 and dir-1’ various business ventures charitable deductions under sec_170 of the internal_revenue_code were claimed on the dir-1 jointly filed form 1040s as well as on the related business entities’ form 1120-s and form_1120 for the periods ending december 20xx through december 20xx dir-1 himself acknowledged that org did not solicit nor did they receive any donations from the public as reflected under the facts some of the deposits were determined to be non-taxable transfers dollar_figure between accounts and non-taxable loan repayments dollar_figure the financial records indicate there separate payments given out as loans totaling dollar_figure the amount deposited and available to be used for org’s stated exempt_purpose was approximately dollar_figure of this amount only dollar_figure was confirmed as paid to co-1 in addition org had some minor operating_expenses such as the paying of franchise fees and ordering of checks the primary activity of org was the lending of funds to for-profit entities and to entities related to dir-1 rather than the conduct of charitable activity loans made to the for-profit and other related ’ the difference between loans given out and loans repaid was de minimus and not pursued dollar_figure less dollar_figure dollar_figure form 886-a department of the treasury-internal revenue service catalog number 20810w _publish no irs gov page_12 form 886-a rev date name of taxpayer explanations of items 20xx page of tax identification_number year period ended org xx xx entities owned by the president director dir-1 constitute private benefit inurement at the end of tax_year ending december 20xx loans were curtailed and outstanding loans were repaid although org was organized as a non-profit corporation under the non-profit corporation laws of state and held itself out to be a tax-exempt_organization under sec_509 and sec_501 of the internal_revenue_code org failed to operate for an exempt_purpose v w v v loans were made to for-profit and related entities lending activity was the primary purpose compared to charitable activity org did not receive approval from co-1 to use their name and co-1 did not know org held itself out to be an integrated auxiliary of the church based on the above org has failed to operate as an integrated auxiliary of the co-1 and failed to meet the operational_test of sec_501 of the internal_revenue_code taxpayer’s position from discussion held with power_of_attorney poa on august 20xx taxpayer is in agreement with proposed revocation conclusion e e e e based on the facts presented above the service proposes to revoke org’s tax-exempt status effective may 20xx date of formation any contributions to org are no longer deductible as charitable_contributions any contributions to this organization by those who were in part responsible for or were aware of the activities or deficiencies on the part of the organization that gave rise to loss of exempt status will not be allowed as a deduction effective the date of revocation sbse is making the appropriate adjustment on all tax returns required to be filed form_1120 for org is not required to be filed since there is little to no tax_liability org will be required to distribute all remaining assets for one or more exempt purposes within the meaning of sec_501 of the internal_revenue_code or to the federal government or state_or_local_government for a public purpose any charitable donation deductions disallowed sb_se will not be considered assets of org since the org has agreed with the proposed revocation distribution of assets can be made at any time at the discretion of org when this proposed revocation becomes final appropriate state officials will be advised of the action in accordance with internal_revenue_code sec_6104 and applicable regulations form 886-a of the treasury-internal revenue service _publish no irs gov department catalog number 20810w page_13


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi - plr-130037-02 date date x a d1 dear this letter responds to a letter dated date submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 a the sole shareholder of x represents that x was intended to be an s_corporation effective d1 however no form_2553 election by a small_business_corporation was timely filed for x sec_1362 of the code provides that if -- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation effective d1 accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 effective d1 along with a copy of this letter with the appropriate service_center within days from the date of this letter then such election will be treated as timely made for d1 plr-130037-02 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 including whether x was or is a small_business_corporation under sec_1361 of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being forwarded to x’s authorized representative sincerely yours matthew lay acting chief branch associate chief_counsel passthroughs and 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 plr-105827-00 date date legend x individuals d1 dear this letter responds to a letter dated date written on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a partnership facts according to the information submitted individuals formed x a foreign eligible_entity classified as an association under sec_301_7701-3 which is engaged in an internet gaming operation x intended to file an election under form_8832 entity classification election to change its classification to a partnership effective d1 however the form_8832 was not timely filed plr-105827-00 x requests a ruling that it will be recognized as a partnership effective d1 law and analysis sec_301_7701-3 provides that an eligible_entity may elect to be classified as other than its default classification in sec_301_7701-3 by filing form_8832 with the appropriate service_center sec_301_7701-3 provides that unless the entity elects otherwise a foreign eligible_entity is classified as an association if all its members have limited_liability if a foreign eligible_entity has more than one owner it may elect to be taxable as a partnership pursuant to the rules in sec_301_7701-3 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date on which the form is filed under sec_301_7701-3 an election will not be accepted unless all of the information required by the form and instructions including the taxpayer identifying number of the entity is provided on form_8832 see sec_301_6109-1 for rules on applying for and displaying employer identification numbers under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government plr-105827-00 conclusions based solely on the facts submitted and the representations made we conclude that good cause has been shown and the other requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied consequently x is granted an extension of time to elect under sec_301_7701-3 to be treated as a partnership for federal tax purposes effective d1 an extension is granted until days following the date of this letter the election should be made by following the procedure set forth in form_8832 a copy of this letter should be attached to the election a copy is enclosed for that purpose except as specifically set forth above no opinion is expressed or implied as to the federal tax consequences of the transaction described above under any other provision of the code specifically no opinion is expressed about the tax consequences of making an election for x to become a partnership this ruling is directed only to the taxpayer on whose behalf it was requested sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter will be sent to your authorized representative sincerely yours paul f kugler associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service department of the treasury index numbers constitution ave nw washington dc number release date contact person telephone number refer reply to cc dom fi p plr-119850-98 date date legend state fund advisor this letter responds to your request for a ruling dated date and subsequent correspondence dated date submitted on behalf of fund that the award of points under an airline awards program will be treated for federal_income_tax purposes as an adjustment of an investor’s purchase_price for its shares and will result in an adjustment to its basis in those shares and that the operation of the airline awards program including the redemption of points will not result in the payment of preferential dividends by fund within the meaning of sec_562 of the internal_revenue_code facts fund is organized as a corporation under the laws of state it is registered as an open-end management investment_company under the investment_company act of u s c 80a-1 et seq as amended the act fund has elected to be operated in such a manner as to qualify as a regulated_investment_company ric under subchapter_m part of the code and intends to continue to qualify as such advisor serves as the investment_advisor administrator and distributor of fund fund currently sells shares at net asset value without the imposition of a sales charge plr-119850-98 shares of fund are sold subject_to a plan adopted pursuant to rule 12b-1 c f_r 12b-1 under the act rule 12b-1 plan and also to a shareholder services plan advisor in its capacity as distributor for fund proposes to adopt an airline awards program as an incentive to the purchase of shares in fund the additional assets thus attracted will benefit fund’s shareholders by maximizing economies of scale the airline awards program the program is proposed to be adopted as follows a qualifying investor who chooses to participate in the program will be awarded one point for every new dollar invested in the fund a qualifying investor is any investor other than ira accounts k plans and other qualified_retirement_plans who cannot hold awards of the type proposed because of prohibitions under erisa on their receipt by custodians or trustees or their distribution to ira account owners or plan participants a qualifying investor will be asked in the fund’s account application whether the investor desires to participate in the program a qualifying investor who has accumulated points can redeem these points for one round-trip coach ticket including all taxes and fees for travel in north american on any airline up to a maximum ticket price of a qualifying investor who chooses to participate in the program will be subject_to a contingent deferred sales charge equal to of the net asset value of shares at the time of purchase if the shares subject_to the program are redeemed within_12_months of the purchase date of the shares a qualifying investor who is awarded points under the program will be informed of the fair_market_value of the points and informed that the investor’s basis in the shares giving rise to the award of points should be adjusted downward by the fair_market_value of the points as a purchase_price_adjustment advisor will arrive at a fair_market_value for the points based on a comparison of the costs of purchasing frequent flyer miles and by taking into account the following additional factors estimates on the probabilities that the points will eventually be redeemed by shareholders the fact that points can be utilized only within the confines of fund’s program and cannot be combined with any other frequent flyer program the fact that the maximum value of one point cannot exceed one cent because under the program’s terms a holder of points is entitled to a maximum benefit of advisor represents that all points issued under the program will have the same fair_market_value to all investors participating in the program in consideration of the foregoing factors advisor anticipates that the fair_market_value of one point under the program will be between plr-119850-98 reinvestment of dividends and capital_gains do not create points a maximum of points will be awarded to an investor in any calendar_year adjustments may be made to the program if for example it appears that investors are redeeming and repurchasing shares for the purpose of creating points advisor in its capacity as the distributor for fund will purchase the airline tickets out of its own resources neither its compensation as advisor nor as administrator nor as distributor will be in any way adjusted for or dependent upon the expenses of ticket purchase advisor in its capacity as the distributor for fund will be free to alter change or discontinue the program at any time in its sole discretion it will issue statements quarterly to each investor who holds points accounting for the redemption of points will be on a first-in_first-out basis all points will expire three years from the date of the last investment of or more points are nontransferable and are not redeemable for cash law analysis sec_851 of the code defines a regulated_investment_company in part as a domestic_corporation which at all times during the taxable_year is registered under the investment_company act of as a management company sec_851 of the code limits the definition of a regulated_investment_company or ric to a corporation that elects to be a ric and that meets certain gross_income and diversification requirements a corporation that is a ric within the meaning of sec_851 of the code and that is taxable under subchapter_m part i of subtitle a of the code pays tax on its investment_company_taxable_income under sec_852 of the code sec_852 of the code imposes a tax on the excess if any of the net_capital_gain of a ric over its deduction for dividends_paid determined with reference to capital_gains dividends only sec_852 of the code provides that a ric is not taxable under subchapter_m part i unless its deduction for dividends_paid as that term is defined in sec_561 with certain modifications for the taxable_year equals or exceeds a specified portion of its taxable_income with certain adjustments and its net tax-exempt_interest income sec_561 of the code sets forth a definition of the deduction for dividends_paid rules applicable in determining dividends eligible for the dividends_paid deduction are provided in sec_562 except as otherwise provided sec_562 plr-119850-98 states that the term dividend includes only dividends described in sec_316 which provides a definition of dividends for purposes of corporate_distributions sec_316 defines the term dividend as any distribution_of_property made by a corporation to its shareholders out of its earnings_and_profits accumulated after date or out of its earnings_and_profits of the taxable_year computed as of the close of the taxable_year without diminution by reason of any distributions made during the taxable_year without regard to the amount of the earnings_and_profits at the time the distribution was made sec_562 of the code provides that the amount of any distribution shall not be considered as a dividend for purposes of the dividends_paid deduction under sec_561 unless the distribution is pro_rata does not prefer any shares of stock of a class over other shares of stock of that same class and does not prefer one class of stock over another class except to the extent the former class is entitled without reference to waivers of their rights by shareholders to be preferred the proposed award of points to investors in fund upon the purchase of shares in fund is integrally related to that purchase it is well established that if as part of a transaction involving a purchase of property the purchaser receives other consideration either from the seller of the property or from a third party as an inducement to the purchase the fair_market_value of the other consideration received is treated as a rebate that adjusts the purchase_price of the property accordingly a downward adjustment to basis in the newly purchased shares is required under sec_1016 revrul_76_96 1976_1_cb_23 rebate paid_by automobile manufacturer to customer who purchased automobile from dealer holdings based on the facts as represented by fund we rule as follows the award to an investor in fund of points under the airline awards program described in this letter will be treated for federal_income_tax purposes as an adjustment of the investor’s purchase_price in its shares and will result in an adjustment to its basis in those shares the award to an investor in fund of points under the airline awards program described in this letter and the operation of that program including the redemption of points for airline tickets will not result in the payment of preferential dividends by fund within the meaning of sec_562 of the code no opinion is expressed nor was a ruling requested as to whether the award of points in general constitutes the payment of dividends required to be reported under the provisions of sec_6042 further no opinion is expressed as to whether the award plr-119850-98 of points is properly treated as an adjustment to the purchase_price of shares or as to whether the award of points or operation of the airline awards program gives rise to the payment of preferential dividends if changes or adjustments are made to the airline awards program described in this letter no opinion is expressed as to the appropriate valuation of the points awarded under the airline awards program described in this letter finally no opinion is expressed as to whether fund qualifies as a ric that is taxable under subchapter_m part i of the code this ruling is directed only to fund sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter should be attached to the federal_income_tax return of fund for each taxable_year in which points are awarded under the airline awards program described in this letter sincerely assistant chief_counsel financial institutions products by william e coppersmith chief branch


george c huff petitioner v commissioner of internal revenue respondent docket no filed date claiming to be a bona_fide_resident of the u s virgin islands the virgin islands during and and claiming he was qualified for the gross_income tax exclusion provided by sec_932 p a u s citizen filed terri- verdate 0ct date jkt po frm fmt sfmt v files huff2 sheila united_states tax_court reports torial income_tax returns with and paid income_tax to the virgin islands he did not file federal_income_tax returns or pay federal_income_tax for those years r determined that p was not a bona_fide_resident of the virgin islands and was not qualified for the gross_income tax exclusion as claimed p moves to interplead the virgin islands in this proceeding asserting that the u s and the virgin islands have adverse and independent claims under fed r civ p a a for tax on the same income held because this court lacks juris- diction to redetermine p’s virgin islands tax_liabilities p will not be permitted to interplead the virgin islands william m sharp lawrence r kemm joseph a diruzzo iii and marjorie rawls roberts for petitioner daniel n price ladd christman brown jr and justin l campolieta for respondent opinion jacobs judge this matter is before the court on peti- tioner’s motion to interplead the government of the u s virgin islands virgin islands in this proceeding for the reasons set forth infra we shall deny petitioner’s motion i procedural background background the basic facts in this case are set forth in 135_tc_222 we thus recite only those facts required to resolve the motion before us petitioner is a u s citizen who claims he was a bona_fide_resident of the virgin islands during and petitioner filed territorial income_tax returns with and paid income_tax to the virgin islands bureau of internal revenue bir for each of these years petitioner claimed he qualified for the sec_932 gross_income exclusion consequently he did not file federal_income_tax returns or pay federal_income_tax respondent determined that petitioner did not meet the requirements of sec_932 and therefore should have filed tax returns with and paid income_tax to the united_states unless otherwise indicated all section references are to the internal_revenue_code in effect for the years at issue and all rule references are to the tax_court rules_of_practice and proce- dure verdate 0ct date jkt po frm fmt sfmt v files huff2 sheila huff v commissioner ii the virgin islands the virgin islands are an insular area of the united_states they are not part of one of the states or the dis- trict of columbia they are generally treated as a foreign_country having a mirror_tax system for u s tax purposes ie the virgin islands use as their tax law the tax laws of the united_states in this regard u s c sec_1397 provides that the u s internal_revenue_code is to be used by the virgin islands with virgin islands substituted for united_states and vice versa sec_932 provides the taxation and filing require- ments for individuals for tax_year sec_2002 and that section provided as follows sec_932 coordination of united_states and virgin islands income taxes c treatment of virgin islands residents - application of subsection -this subsection shall apply to an individual for the taxable_year if- a such individual is a bona_fide_resident of the virgin islands at the close of the taxable_year or b such individual files a joint_return for the taxable_year with an individual described in subparagraph a filing requirement -each individual to whom this subsection applies for the taxable_year shall file an income_tax return for the tax- able year with the virgin islands residents of the virgin islands -in the case of an individual- a who is a bona_fide_resident of the virgin islands at the close of the taxable_year b who on his return of income_tax to the virgin islands reports income from all sources and identifies the source of each item shown on such return and c who fully pays his tax_liability referred to in sec_934 to the virgin islands with respect to such income for purposes of calculating income_tax_liability to the united_states gross_income shall not include any amount included in gross_income on such return and allocable deductions and credits shall not be taken into account in the statute was amended by striking at the close of the taxable_year and inserting during the entire taxable_year each place it appears effective for tax years ending verdate 0ct date jkt po frm fmt sfmt v files huff2 sheila united_states tax_court reports after date american_jobs_creation_act_of_2004 publaw_108_357 d 118_stat_1656 an individual who is a bona_fide_resident of the virgin islands and incurs income_tax obligations to both the united_states and the virgin islands may satisfy his reporting and payment requirements by filing only with and paying tax only to the virgin islands if he satisfies each of the three requirements of sec_932 if the individual fails to meet any of these requirements he must file a federal_income_tax return with the internal_revenue_service see s rept pincite consequently an individual failing to satisfy all three requirements of sec_932 may be required to file an income_tax return and be liable for taxes to both the united_states and the virgin islands to redetermine a virgin islands tax_deficiency determined by the bir a virgin islands taxpayer may petition the u s district_court district of the virgin islands in the same manner as a u s taxpayer may petition this court sec_6212 sec_6213 mirror code v i code ann tit sec_943 see 185_fsupp2d_500 d v i the u s district_court district of the virgin islands has exclusive jurisdiction over the income_tax laws applicable to the virgin islands except the ancillary laws relating to the income_tax enacted by the legislature of the virgin islands u s c sec a discussion the sole issue before us is whether petitioner may interplead the government of the virgin islands in general our rules do not provide for interpleading a third party in the absence of an express rule rule b provides that the court may prescribe the procedure giving particular weight to the federal rules of civil procedure to the extent that they are suitably adaptable to govern the matter at hand see 134_tc_211 estate of proctor v commis- sioner tcmemo_1994_208 see also 135_tc_461 denying intervention by a third party verdate 0ct date jkt po frm fmt sfmt v files huff2 sheila huff v commissioner petitioner relies on rule of the federal rules of civil procedure which governs interpleading a third party in much of the federal court system rule a of the fed- eral rules of civil procedure provides rule interpleader a grounds by a plaintiff persons with claims that may expose a plaintiff to double or multiple liability maybe joined as defendants and required to interplead joinder for interpleader is proper even though a the claims of the several claimants or the titles on which their claims depend lack a common origin or are adverse and independent rather than identical or b the plaintiff denies liability in whole or in part to any or all of the claimants the purpose of interpleading a third party is to allow a party who fears being exposed to the vexation of defending multiple claims to a limited fund or property that is under his control a procedure to settle the controversy and satisfy his obligation in a single proceeding charles allen wright arthur r miller federal practice procedure 3d ed pincite wright miller accordingly inter- pleader allows a stakeholder who admits it is liable to one of the claim- ants but fears the prospect of multiple liability to file suit deposit the property with the court and withdraw from the proceedings 501_f3d_271 3d cir the result is that t he competing claimants are left to litigate between themselves while the stakeholder is discharged from any further liability with respect to the subject of the dispute id 553_f3d_258 3d cir interpleading a third party forces the claimants to contest what essentially is a controversy between them without embroiling the stakeholder in the litigation over the merits of the respective claims wright et al federal practice and procedure sec pincite 3d ed petitioner asserts that the case at bar is the exact type of case in which this court should exer- cise its discretion to interplead the government of the virgin islands under rule a that is because respondent as the taxing authority for the united_states government has asserted that petitioner is liable for unpaid taxes based on the same items of income that the virgin islands has already taxed and has already collected petitioner does not seek to interplead the government of the virgin islands through the stat- utory interpleader provisions of u s c sec_1335 u s c sec_1397 and u s c sec consequently we need not and do not address those provisions verdate 0ct date jkt po frm fmt sfmt v files huff2 sheila united_states tax_court reports from petitioner consequently petitioner’s income may be subject_to double_taxation which by definition is a double liability a double tax_liability is a situation that rule seeks to address petitioner further asserts that the united_states and the virgin islands have adverse and independent claims under rule a a of the federal rules of civil proce- dure and should respondent ultimately prevail in the case petitioner would have a claim against the virgin islands for appropriate tax refunds thus petitioner posits that although during the pendency of the instant litigation the potential claim against the virgin islands may be in doubt if petitioner is deter- mined to have been a bona_fide virgin islands resident or if the statute_of_limitations prevents respondent from assessing against peti- tioner he will dismiss any outstanding actions against the virgin islands interpleading the virgin islands government is still appropriate because it will avoid multiple legal actions and relieving sic petitioner from having to anticipate the strength of the virgin islands’ claims by moving to interplead the virgin islands petitioner in essence asks this court to redetermine his virgin islands tax_liability we do not have jurisdiction to make that redeter- mination this court is a court of limited jurisdiction and we may exercise jurisdiction only to the extent expressly authorized by congress sec_7442 85_tc_527 we lack authority to enlarge upon that statutory jurisdiction 66_tc_61 and petitioner’s invocation of rule a of the federal rules of civil procedure cannot expand our jurisdiction see eg fed r civ p these rules do not extend or limit the jurisdiction of the district courts or the venue of actions in those courts wright et al supra sec as we noted in 115_tc_142 we have jurisdiction to redetermine deficiencies in federal income estate gift and certain excise_taxes see secs rule we also have jurisdiction over cer- tain other federal tax issues eg sec_6512 refund actions regarding overpayments determined by the court in petitioner in his motion states he will rely on the doctrines of statutory mitigation and equi- table recoupment in his proposed refund action against the government of the virgin islands since the period of limitations has closed for the years at issue verdate 0ct date jkt po frm fmt sfmt v files huff2 sheila huff v commissioner certain circumstances sec_7436 determination of employment status actions in sum we are limited to the adjudication of federal tax matters ie in this case we may only redetermine the correct amounts of petitioner’s federal_income_tax liabilities for and we have found no authority and petitioner has cited none which would permit us to redetermine petitioner’s virgin islands tax_liabilities or the disposition of moneys which peti- tioner has paid to the virgin islands should respondent ulti- mately prevail in this case we would have no jurisdiction to discharge petitioner from liabilities determined by the government of the virgin islands direct the virgin islands to refund to petitioner the amount of taxes petitioner paid to the bir or order the virgin islands to pay any moneys to the united_states as noted supra p u s c sec a explicitly pro- vides that the u s district_court district of the virgin islands is the sole court that may determine the correct amount of petitioner’s virgin islands tax_liabilities for and petitioner would have to appear before that court to seek refunds from the virgin islands consistent with the foregoing petitioner’s motion will be denied to reflect the aforesaid an appropriate order will be issued f verdate 0ct date jkt po frm fmt sfmt v files huff2 sheila