tax_exempt_and_government_entities_division release number release date uil code department of the treasury internal_revenue_service te_ge eo examinations commerce street dallas tx date taxpayer_identification_number person to contact employee identification_number employee telephone number phone fax last date for filing a petition with the tax_court certified mail -- return receipt requested dear this is a final adverse determination_letter as to your exempt status under sec_501 of the internal_revenue_code your exemption from federal_income_tax under sec_501 of the code is hereby revoked effective january 20xx our adverse determination was made for the following reasons organizations described in sec_501 and exempt under sec_501 must be you have failed to both organized and operated exclusively for exempt purposes produce documents or otherwise establish that you are operated exclusively for exempt purposes and that no part of your net_earnings inures to the benefit of private shareholders the manner in which you operate demonstrates you are operated or individuals therefore you are operated for a primarily to further your insiders’ business interests substantial nonexempt purpose in addition your operations further the private interest of accordingly you are not operated exclusively the persons that finance your activities for an exempt_purpose described in sec_501 c contributions to your organization are no longer deductible under sec_170 of the internal_revenue_code you are required to file federal_income_tax returns on form_1120 if you have not already filed these returns and the agent has not provided you instructions for converting your previously filed forms to forms you should file these income_tax returns 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 you may file an action for declaratory_judgment under the provisions of sec_7428 of the code in one of the following three venues united_states tax coutt the united_states court of federal claims or the united_states district_court for the district of columbia a petition or complaint in one of these three courts must be filed before the 91st day after the date this determination was mailed to you if you wish to seek review of our determination please contact the clerk of the respective court for rules and the appropriate forms regarding filing petitions for declaratory_judgment by referring to the enclosed publication please note that the united_states tax courtt is the only one of these courts where a declaratory_judgment action can be pursued without the services of a lawyer you may write to the courts at the following addresses united_states tax_court second street nw washington dc us court of federal claims madison place nw washington dc u s district_court for the district of columbia constitution ave n w washington dc 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 if you prefer you may contact your local taxpayer_advocate at taxpayer_advocate_service if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely yours margaret von lienen director eo examinations enclosutes publication form b86 explanations of items name of taxpayer 20xx tax identification_number year period ended schedule number or exhibit page of issues whether is operated as a church within the meaning of sec_501 and sec_170 of the internal_revenue_code whether sec_501 of the internal_revenue_code is operated exclusively for any exempt purposes within the meaning of facts organization ' the nonprofit corporation law on december 19xx herein referred to as - was incorporated under the the articles of incorporation filed with secretary of state of the state of purposes for which was formed are states the a b the specific and primary purposes are to operate a church for religious purposes the general purposes and powers are to have and exercise all rights and powers conferred on nonprofit_corporations under including the power to contract rent buy or sell personal or real the laws of property provided however that this corporation shall not except to an insubstantial degree engage in any activities or exercise any powers that are not in furtherance of the primary purposes of this corporation to unlock the spiritual potential of christians in the three major institutions within our society the home the school the church all of this potential must be designed and developed for the or such other individual as the board_of directors may so designate form_1023 and exemption_letter filed form_1023 application_for recognition of exemption under sec_501 of the internal_revenue_code on november 19xx revenue service’s administrative file was not the complete file operational information would have been reported on page of form_1023 but that page was not retained so it is not possible to provide the narrative description of the activities as provided by application available in the internal part ill activities and information provided on the form_1023 included a response to part iii line concerning sources of financial support specifically stated department of the treasury-internal revenue service form 886-a catalog number 20810w page_1 publish no irs gov schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended page of explanations of items a support of church church activities will be from tithes offerings and gifts of the supporter of the church b and or any similar educational_institution will be supported by tuition which will be competitive with other schools of the same nature and purpose this without discrimination to any race color or creed form_1023 part ill line requests information on the organization’s governing body responded by stating there were two members on the board_of directors - president director minister and the same address instructor director both were listed at the articles of incorporation filed with secretary of state of the state of director at the same address as and included a third stated purpose and planned activities reported to the internal revenue on the basis of service service the internal_revenue_code irc on march 19xx the service further determined a private_foundation within the meaning of sec_509 of the internal_revenue_code because was granted exemption from federal_income_tax under sec_501 of was not was an organization described in sec_509 and sec_170 the determination_letter letter fl-1256 issued on march 19xx stated church the letter includes the requirement that if your purpose character or method of operation is changed you must let us know so we can consider the effect of the change on your exempt status purpose was as a no changes amendments to the original articles of incorporation governing documents or operations were reported to filed with the service notice of church_tax_inquiry and responses information was available to support the reasonable belief that was not operating as a church and thus a letter was issued to beginning of a church_tax_inquiry herein referred to as ncti described in sec_7611 during the the church_tax_inquiry phase a list of questions relevant to the inquiry was submitted to questions were provided to give __ the opportunity to satisfy all of the service’s concerns without an examination on january 20xx this letter served as the notice of the the questions were broken out into two sections - questions on information posted on website concerning its activities and questions on claim of church status response was dated january 20xx the response was submitted by herein referred to as who signs the correspondence as founder director publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w -page_2 schedule number or exhibit form 886-a rev date explanations of items name of taxpayer 20xx tax identification_number page of year period ended the response included a cover page and five tabs and president labeled preface - provided background on why was formed and information on the original founders - and questions and answers - restated the questions raised by the service and provided answer to the questions conclusion - information in this section relates to question which requests to provide any additional information they wanted considered concerning their charitable and or religious operations 20xx vision for - this was provided in response to providing schools_for the preparation of its ministers study of philemon - this was provided in response to having literature of its own document was just some possible ideas a vision information for the first three of these sections is discussed in further detail throughout the document the 20xx vision for statement of potential future training for ministers and the creation of a community of five different charities that come together to share resources and synergistically amplify the effectiveness of one another in harmony and included the blending of financial profit centers into the picture to provide sustained economic support for the charities this was just an idea and was never formed or pursued based on provided information the study of philemon was a collection of previously published writings document there was the annotation that this was a study by it was noted that at the beginning of the june-july 19xx this is not a current document literature and no further discussion is warranted in this report about this write-up preface - some comments from included in this section state the first thing you will notice is that the name that there is no attempt to call it a church and it has no location associated with it is precisely correct in the ministry of lifestyle change to become more much more charitable has truly been life changing for many adopting a true questions answers website information the service reviewed information posted on engaged primarily in the commercial promotion of tax and wealth management strategies also was operating in a manner materially different from that the information reviewed indicated was no longer described in operating as a church described in sec_170 therefore questions were asked to obtain operational information form_1023 application_for recognition of exemption and website that indicated appeared to be publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w -page_3 form 886-a rev januaty explanations of items name of taxpayer 20xx tax identification_number year period ended schedule number or exhibit page of website were several structural charitable tools including integrated auxiliary of a on church international charitable corporation charitable investment_trust and business investment_trust was requested to describe in detail each of these structural tools and how operation and or promotion of these tools supports charitable and or religious purposes believes an integrated auxiliary is was incomplete and provided general statements that did not fully did not provide a detailed description on how any of the structural the response received from answer the questions charity tools activities supported charitable and or religious purposes for example in regards to what perspective it does provide a fairly reasonable structural tool that can and is often used to expand the various ministries of a church don't forget for a second that the purpose is what really drives the need to have some structure to define who what why where when how etc of any particular ministry initiative program project etc the integrated_auxiliary_of_a_church just happens to be the irs version of a structure for a sub-set of a church activity response stated from the church the ncti response concerning the international charitable corporation charitable investment_trust and business investment_trust structural charitable tools are included in the administrative record for each tool answer the question how the operation and or promotion of these tools supported a chartable and or religious purposes did not provide the requested detailed description and failed to was asked if any board members officers ministers or key employees financially benefit responded by stating from its operation and or promotion of the above structural tools no one associated with any of the information on the website has any financial benefit from anything to do with this statement was contradicted by financial information provided for the audit from the records reviewed account from the amount deposited received some payments from individuals that were deposited into one of of the funds for the personal_use of diverted to this is discussed more in-depth later in this report and his spouse was asked if the organization at any time conveyed a portion of a cash gift or grant to entities controlled directly or indirectly by the donor of the funds responded by stating in part if the question being asked is has anyone ever made a charitable_contribution to and took a charitable_contribution_deduction off his personal income_tax and then forwarded those funds to an entity that was controlled by the donor of the charitable_contribution then the answer is no or at least not to the best of my knowledge can say this with a very high degree of confidence in that the process we would go through to was involved was very elaborate and specifically get to the point where designed with a church in mind publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page_ schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended page of explanations of items remembering we always started with a purpose or mission statement and never with the to become involved the nature tool that would eventually be used for purpose of the charity that was being proposed would need to fit into the by this mean it would need to be something that a church would commonly get involved with this would exclude many possibilities that the irs would see as being charitable but would not fit into the ministry of then we would consider the practicality of what was the essence of the charity itself only after we had a pretty good idea that something was actually going to work did we even begin to think about what structure would be best ' if after all of this it was self evident that it would be a ministry that a church would logically become involved with then and only then did we start to consider a irs letter of determination as the charity that would involve the sponsoring charity the above statements appeared to address two issues - the outcome of funds donated to may sponsor other organizations possible through fiscal and situations in which sponsorship information was secured in the audit that contradicted these statements for example information was received that some funds donated to returned to the control of the donor and there appeared to be no oversight control when deciding to fiscally sponsor an entity the specific problems and findings with the disbursements are discussed later in this report were ultimately website were several organizations listed as integrated_auxiliaries of é was on asked to describe in detail each of these and supports charitable and or religious purposes identified entities information provided by activities section of this report was requested to explain how these programs provided a written response to each of the and the services’ comments are included in the given that the various initiatives of service requested details on integrated_auxiliaries of were conducted as integrated_auxiliaries of the rationale for claiming that the entities discussed above were the ncti response received stated in part the spirit of the question could best be answered when we understood the essence of the integrated auxiliary we realized that we could structure several of the initiatives that we were working on as integrated_auxiliaries which we really did not care about anyway it would mean that those elements could be audited catalog number 20810w - page__5 publish no irs gov department of the treasury-internal revenue service form 886-a schedule number or exhibit form 886-a rev date explanations of items page of name of taxpayer questions and answers claim of church statu sec_12 20xx tax identification_number year period ended the current treasury regulations do not define a church so the service considers all the facts and circumstances in determining whether an organization is operating as a church the service website or any other public website to confirm was unable to find any information posted on operation as a church therefore during the church_tax_inquiry phase a list of questions relevant to claim of church status was submitted to response prepared and submitted by included in part the following e mission stated the mission had never changed and it is the core mission of is to change lives for the good that important expression of love or charity this should be the work of any and all churches it is not about attending church it is about a lifestyle change e creed stated the following in regards to their creed the concept of creed is not found in scripture it is something manufactured to call attention to the differences between various belief systems those of us who have studied theology are somewhat offended by any attempt to define by using differences the holy bible is the inspired only infallible and authoritative word of god and is accepted as the final authority in all rules of faith and practice in life jesus christ is the only divinely begotten son of the living god the holy spirit is a person who can and does indwell the life of each and every christian basically the christian church creed affirms the father son and holy spirit as revealed in the holy bible it sounds pretty simple until you get into it and start dealing with all of the teachings in the new testament not to make fun of some of my elders but grew up ina church that had a catch phrase that actually pretty well sums it up the bible says it it and that settles it believe e formal code of doctrine stated the following in regards to their code of doctrine the best possible answer would be the christian church faith which is also my personal statement of faith statement of believe the holy bible to be the inspired only infallible authoritative word of god and accept the bible as the final authority in all rules of faith and practice in life believe that there is one god eternally existent in three persons father son and the holy spirit department of the treasury-internal revenue service form 886-a catalog number 20810w - page_6 publish no irs gov schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended page of explanations of items i believe jesus christ to be the only divinely begotten son of the living god believe in his virgin birth in his sinless life in his miracles in his atoning death through his shed blood in his bodily resurrection in his ascension to the right hand of the father and in his personal return to earth for his bride the church believe in the spiritual unity of believers in our lord jesus christ i believe in the present ministry of the holy spirit by whose indwelling the christian is enabled to live a godly life e formal code of discipline references scriptural disciplines and later states in part understanding the anything about a code of discipline would be found in the scriptures creed and doctrine the only obvious place to find e providing of religious services in the response provided co-hosts an and stated in part one of the online prayer and meditation service every wednesday pincite pm eastern conducted by minister world it is unknown how many people attend this format it could be tens of thousands itis a google plus based format open to anyone across the stated they provide services groups in the service’s question was actually a multi-part question and asked specifically for detailed no real information the answers provided by details were provided on the wednesday services no physical street addressed provided for was very non-specific in the number of people who participated in the on- any facility and line activity which could be tracked by the number of visitors to the site did not fully address the questions - ie after receiving the response from website located at http statements inspire you to take action in addition the website for this group mentioned on wednesday there was a weekly show on _ in march 20xx conducted a review of this group’s is a c non profit ministry of at that time the website included the called we org with also known as stated on the website - ny a more current review november 20xx of this same website did not mention any radio show broadcast in checking the archives of the website in august 20xx there was the annotation of please join our community not only will you be showing your support you will receive our newsletter once a month with stories that will warm your heart and feel your soul website did not reflect the offering of any religious services publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page_7 form 886-a rev date explanations of items name of taxpayer 20xx tax identification_number year period ended schedule number or exhibit page of currently located in conduct of religious services which specifically stated does not have a physical location for the response to the ncti included a comment in the preface the first thing you will notice is that the name that there is no attempt to call it a church and it has no location associated with it is precisely correct in e distinct body of members ie members who do not belong to or attend other churches and or fellowship stated they had a distinct body of members during the audit testimony was provided by another church in herein referred to as member of another church in one acknowledged being a member of and both attended also another individual listed as an officer was interviewed and indicated he was a during the course of the examination no and attending services held by e e stated they have membership requirements but formal membership requirements provided no details as mentioned above during the course of the examination no one acknowledged being a member of meetings held for members the following statements concerning the meetings stated they hold meeting for their members and provided a frequency of meetings - meetings of this nature are frequent even several times a day there is no schedule of meetings they occur in the natural conduct of ministry activities b meeting location - on the simple end of the spectrum a meeting could be as simple as a phone call of which there would be several each day somewhat more complicated and formal would be a conference meeting on the phone where several people are given the time and number to call into c nature purpose of meetings with your members - provided three statements in regards to the nature purpose of the meeting with its members this included normally we are always trying to assist others in their more charitable walk or project they are trying to work with fundraising is always important the vast majority of the meetings will be involved with could be considered as meetings as to how to fund a particular ministry or mission the nature of these meetings would be to define what truly is a charitable project one which we as an outreach ministry the ministry of lifestyle change is not easy a church could and would be proud of and support as form 886-a catalog number 20810w - page_8 publish no irs gov department of the treasury-internal revenue service form 886-a rai jaresary iba explanations of items name of taxpayer e operate within or as part of any other church or fellowship organization stating yes the national convention is the is part of a larger group of independent christian churches responded by 20xx tax identification_number year period ended schedule number or exhibit page of when the financial records were reviewed there was no indication that anyone with attended the annual national convention of the audit year during the ordained ministers provided by responded by stating went on to state was ordained on june 19xx had ordained ministers and the response did not answer the part of the question concerning if ordained ministers are selected after completing school or other prescribed studies as a fund raiser for professional experience listed on his resume posted on the does not mention his ordination as a minister in reviewing website’ states development in the area of charitable corporations his research included both the legal and tax aspects of using a charitable corporation for estate_planning purposes and to fund charities particularly significant number of documents on charitable corporations and founded a consulting company providing support for charitable corporations resume performed extensive research and _ in addition to extensive lecturing he has authored a inquired as to the number of baptisms weddings and funerals conducted in 20xx responded on behalf of and stated the last wedding preformed was on march 20xx did not conduct any baptisms weddings or funerals in 20xx am scheduled to conduct a memorial service in early february for one of our members who passed away last year requested information on who is authorized to perform sacerdotal ie priestly activities for and or on behalf of authorized response stated were and was interviewed as part of the audit and he stated he did not perform sacerdotal activities and was not authorized to perform these duties member of another church in other information concerning in this report and was not involved with as a church is discussed under officers board_of directors later stated he was a resume posted on website was shared with when the notice of church_tax_examination ncte was issued on april 20xx department of the treasury-internal revenue service form 886-a catalog number 20810w - page_q publish no irs gov schedule number or exhibit form 886-a feav jarniary explanations of items page of year period ended tax identification_number name of taxpayer e fees for the sacerdotal activities no fees were charged per 20xx e questions were asked concerning clergy as stated in the written questions submitted to during the church_tax_inquiry phase the term clergy includes but is not limited to clergymen clerics parsons preachers reverends and ministers specific questions asked and answer provided by included a how do the individuals who want to become part of clergy become associated with responded by stating in they would need to be presented to the board_of directors and then hired for the job some but not all cases there may be a laying of hands on an individual or couple as an indication of the church's embracement of their particular ministry b who worked for as a member of its clergy during 20xx responded by stating only clergy members were job title was president director of and his duties included shepherding and his responsibilities included assisting in lifestyle change job title was president and director duties included providing executive leadership and organizational oversight and his responsibilities included administrative oversight and program development both of these individuals allegedly were working hours per week as shown above discussed more in-depth later in this report lists the title of president for both of these individuals officers are c what is the educational and religious background of each member of clergy response submitted by stated in part grew up in the christian church only knowing very few times when dad was not the minister attended years and went to work for bible college in did not graduate but rather left after two when wa sec_27 19xxx during the 19xxs and early 19xxs worked my way up through the ranks of the to their advanced program in the 19xxxs then spent the next years working and studying within was ordained in 19xx before have spent most of my life as a student and teacher having taught in several christian and baptist churches prior to 19xx page _publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w form 886-a rev date explanations of items name of taxpayer 20xx tax identification_number year period ended schedule number or exhibit page of no information is provided on the listed clergy person d does offer and or provide educational courses and or training for its clergy response stated no the typical model is the systems of bible colleges around the country does not provide educational courses or training for the clergy e inquired about literature relating to its religious beliefs doctrines codes of doctrine and discipline and or religious services etc response stated typically none of the christian churches generate any specific literature of their own the message is really to look to the bible as the only authority however as a student and teacher have crafted various studies that have used as a teaching aid from time to time it does come to me to include these writings as part of the web site e e inquired about offering religious instruction eg sunday schools_for younger members response stated sunday school for youth does not offer anything that could be thought of as inquired who within directors ministers etc response stated is responsible for religious or doctrinal decisions eg board_of the governance of founders and has always been a small board_of directors primarily the and around the end of the 19xxs both resigned from the board_of directors during the rebuilding years which continue to this day was added to the board_of directors as the company secretary and treasurer due to some personal problems in his life and a conviction that he was unfit to be the president of stepped down as the president and assumed the position as the president of in 20xx and his wife are both members of the board_of directors the information provided by religious or doctrinal decisions but does provide information that very few individual were and involved in the oversight and control of resigned from the board_of directors in the late 19xxs from the response received does not answer the question of who is responsible for parents after may have been the sole person running the organization _publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page_11 schedule number or exhibit form 886-a rev date explanations of items name of taxpayer 20xx page of tax identification_number year period ended e e e e e e e e inquired about the current board_of directors’ members officers trustee and or key employees hours per week his spouse week was president director working was a director working less than hours a was founder and director working hours per week and responded by stating was corporate secretary and director working hours per week inquired about former board_of directors’ members officers trustee and or key employees - who served during 20xx and 20xx name titles duties responsibilities etc responded by providing the same four individuals’ inquired how members of trustees were appointed selected and or elected board_of directors and or board_of written_statement stated the board_of directors replace themselves by a majority vote of the existing board members if not controlled by the board_of directors inquired who controlled response stated there is no other controlling individual or entities other than the operations board_of directors inquired procedures if any were in place to ensure that members of its clergy staff members employees and or volunteers if any did not utilize response stated that there were no procedures in place since fhere private benefit has never been a need for any procedures as the funding available has never been significant enough to warrant any real concern all of the directors pretty much work on a volunteer basis often contributing monies to keep on keeping on funds and or its assets for their employment_tax filing for period ending december 20xx employment_tax forms have been filed by anyone working with or associated with cover basic operating_expenses response stated no any distributions of cash to has not even been enough to inquired who was responsible for distributing records during 20xx responded by stating this was handled by and checks and maintaining its accounting and or any individuals and or entities acting on its behalf enter into any inquired if employment contracts or agreements with any members of its clergy its staff and or its employees there was an agreement with response stated during the early days of the 19xxs basically the essence of the agreement was to reimburse out-of-pocket expenditures that were spent doing something associated with automobile expenses including any rent or lease gas oil insurance etc any travel this would include all _publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a rev date explanations of items page of tax identification_number year period ended name of taxpayer 20xx expenses lodging food air bus etc regular office related expenses computer copy office supplies etc and full health care as a paid benefit then there was a monthly stipend living allowance of dollar_figure themselves are rarely reimbursed that would be paid if available which has rarely been paid the expenses stated no documents are current available to reflect the agreement concerning an employee handbook and or employee policy manuals stating no such documents exist responded by business address and the nature of the business office space and or inquired about facilities specifically requested information on the street address a description of the office space how the space is used the number of people who work in the location and inquired whether the location was used as a residence response provided the address of record and stated it is a postal mail box service no information was provided as to the actual physical address of the business nor was information provided on activities conducted in the space during the audit it was determined there was no physical location for a church nor was there a business office an area which appeared to be the dining living room the activities conducted were not church activities but rather activities related to the various programs projects and structural charity tools discussed earlier in this report activities were conducted out to personal_residence in inquired about business records maintained by relating to of its board_of directors the donations receipts etc response stated operations which would include among others records relating to the activities received title transfer documents bills of sale sales and specifically inquired about records there really just is not that much activity it can easily be clearly articulated with a simple checking account register does keep good records of programs and what is being accomplished inquired if controlled organizations electing exemption from employer social_security and medicare taxes filed irs form_8274 certification by churches and qualified church response stated am not sure if it was filed it would have been in the 19xxs or 19xxs please appreciate that did not take a leadership position with until the mid to late 19xxs it was actually 20xx when we realized that the only thing left of and my being the sole remaining director was the name e e e e publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a heey danvary explanations of items page of tax identification_number year period ended name of taxpayer 20xx of interest the response specifically stated in 20xx the only thing remaining was the name of the organization and was the only remaining director also worthy of note response refers to as a ministry or charity - not as a church although a ministry and or charity would be exempt under sec_501 it would not be considered the same as a church under sec_170 additional information service inquired if charitable and or religious operations wanted considered concerning their operations the letter from the had any additional information for the service to consider relating to in response to this question they are a church the following information is some of the statements provided by provided a written_statement concerning position on why appreciating that when consideration with how the irs viewed a church the only model that was used and thought to be accurate was the early church as reflected in the book of acts and then the many letters that the apostle paul wrote to the various churches throughout the known world in the first century what was considered as a true reflection of the true first century new testament church was formed in 19xx there was absolutely no do not want to get into the complex discussion of what is a church and what is the church the answers are coming from two different places for two different purposes with two different visions and two different outcomes l would simply ask for a grace period long enough for us to focus on the irs characteristics of in to full and complete compliance my suggestion would a church and bring be for a grace period of one year after which time these issues would be revisited to more carefully examine the reality of irs as a church within the understanding of the the reason am asking for one year even though we could accomplish the cosmetic enhancements more quickly this reasonable_time would give time to demonstrate a viable track record the evangelistic growth from a core group that is already in place today to a much larger membership the expansion of the board_of directors the selection and recruitment of a quality qualified staff for new ministerial positions the appropriate record keeping of ministry activities the demonstration of weddings baptisms and funerals along with other measures of a church we will have no struggle with the mechanics of being a church virtually all of this work is either already in place or very easily developed or attained from quality sources by mechanics am thinking about what it takes in terms of meeting place advertising staffing etc sufficient publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a rev date explanations of items page of name of taxpayer tax identification_number year period ended 20xx in reviewing louthian and miller defining 'church' -the concept of a congregation had not realized just how important the criterion of the concept of a congregation actually was to the irs nor was aware of exactly what the irs would consider as being a congregation with this newfound understanding for me it is now more evident than ever what needs to be accomplished to fully comply with the vision of the irs with respect to identifying what is a church circa response then goes through the fourteen or fifteen points criteria discussed in the eo cpe article and states what they plan to change to address the points a few of the points response provides additional insight comments not addressed mentioned in this section of or full addressed earlier in this report the following italicized information which includes the response number provided by is some of the direct statements provided by a formal code of doctrine and discipline looks to the scripture to provide insight with respect to how to currently handle discipline issues within the church however this approach where scriptural lacks the clarity and appreciation of those members as to what to expect in terms of corporate could easily take the lead in adopting a more formal code of discipline etc doctrine and discipline which is sorely needed today as so many churches have drifted so far away from any reality of doctrine and discipline membership not associated with any other church or denomination currently there are several of us that consider our membership with even though from time to time we have visited and worshiped with other groups we have never places our membership with another group congregation or denomination nor do any of us serve in any formal capacity with any other church or denomination acceptable to both the irs and not be in conflict with core scriptural teaching would work out some wording and understanding that would be ordained ministers selected after completing prescribed studies does have a standard of prescribed studies that are currently required it took me almost years before was accepted as an ordained minister by and was one of the founders the formalization of what is required to be a minister is absolutely no problem and quickly accomplished as it will be needed to hire the proper pulpit ministers this was from irs’s exempt organizations’ eo cpe text topic a defining church available at www irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w _publish no irs gov page schedule number or exhibit form 886-a rev date explanations of items page of tax identification_number year period ended name of taxpayer 20xx established places of worship has not focused on a place of worship as it tends to distract currently one of the more significant concerns deals from the core message of with the example of stewardship of resources church facilities tend to be underutilized and overly expensive in nature it is hard if not impossible to proclaim a message to wise stewardship from the pulpit when the church campus is so obviously overly indulgent and wasteful even a modest rented facility is terribly expensive for the utilitarian value of what it is used for regular congregations currently a congregation even though getting the message of being charitable and a significant change in lifestyle is a message that resonates and we have been extremely successful in broadcasting far and wide our approach does not fit the model that the irs is looking for does not focus on developing what would be considered but in my agreement that we would do everything necessary to fully comply with every characteristic appreciated by the irs as being what would be considered as a church we could easily and would have a regular congregation regular religious services currently the type of religious service that is part of evangelistic nature and not really what would be considered as a regular religious service really is better served with one-on-one more focused the focus of personal involvement with those individuals who have expressed a passion for being charitable and not really a larger regular religious service tends to be of an sunday schools_for religious instruction of the young currently reason that what is needed is a lifestyle change and commitment to a service and charity a message that tends to resonate better with adults particularly older adults with an appreciation for needing to give back this is really just a product of our experience more than a universal reality does not really focus on younger people for the simple life of dedicated other facts and circumstances that may bear upon the organization's claim for church status currently it has been about message and what is the most efficient and effective methodology for getting that message out and of the various members' lifestyle of commitment to charity it is an extremely close reflection of the first century new testament church being very supportive _publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page_16 schedule number or exhibit form 886-a rev date explanations of items name of taxpayer 20xx tax identification_number page of year period ended could make a compelling argument that even though a few of surely the characteristics that are expected by the irs are not as present as would be desired by is truly a very real church and the irs on balance all things considered has always been the based than the vast majority of what are considered by the irs as being churches message is even more scriptural and biblically given the rich traditions and scriptural focus of changing experience of becoming more charitable as a measure of that god-focused life it would be impossible for the irs to take the position that church looking for that life is nota ends its response by providing a few statements about how they currently are a church and how a one-year grace period to further demonstrate the characteristics should be acceptable to the service specifically stated in part it would seem on the surface that accomplishing all of the various characteristics that are considered by the irs when determining if a faith based organization is a church or just another religious_organization it would not be all that difficult for and accepted by the irs to more fully comply with what is expected is actually quite close to fully as an indication of my serious commitment to completely satisfying the concerns of the irs would also agree to remove any and all of the material found in the section of the and for profit web site web site to a commercial platform a for profit corporation where at this moment everything seems a bit cloudy largely because adequate_records are not available they do not exist for the service to carefully examine and the protracted process of launching a full-fledged church examination is not going to provide any additional information that is not already being disclosed it would seem that everyone would appreciate my proposed solution of a one-year grace period where we would be able to accomplish and demonstrate several critical points namely the irs will have an opportunity to observe me for a year after which time the service will clearly realize that simply do not have the interest or time to pursue the type of commercial activity that the irs is assuming has already taken or will take place and will have the fair opportunity to provide the necessary full and complete accomplishment of each of the points used by the irs when determining if a church is really a church or just another faith based organization appreciating that the original vision for is based entirely on the model of the first century new testament church as depicted in the book of acts and not the characteristics as observed by the service in judging what a church is _ publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended explanations of items page of this one-year grace period simply provides appropriately accommodate the wishes of the service without any theological argument the opportunity to notice of church_tax_examination pre-examination conference provided in response to the ncti and review of information websites a reasonable belief continued to exist that in evaluating all the information posted on a church and an examination of the books_and_records was determined to be necessary to resolve the service’s concerns on april 20xx the notice of church examination herein referred to as ncte was mailed to provided to option to have a pre-examination conference with service officials to try to resolve the concerns and alleviate the need for further action as required by sec_7611 of the code the ncte included the acopy of all information that caused the service’s concerns was was not operating as opted to participate in the pre-examination conference and the conference was held via teleconference on tuesday may 20xx participating in the conference was representing and four irs officials - the assigned revenue_agent first and second line managers and an attorney - representing the service as explained during the pre- examination teleconference part of the examination of the church is to determine if the organization is operating as a church and if not operating as a church if the organization had some of tax-exempt purpose under sec_501 based on available information the service activities were commercial in nature or tax-exempt activities if tax-exempt would evaluate if activities we would determine if the activities were commensurate of a church provided the following information via testimony during the teleconference has been dormant for the last couple of years father formed in the mid-19xxs and later stated he was one of the original founders wanted to hold on to it since his dad gave it to him has been thinking about starting a brick and mortar church - small community church or possible something for the retirement community such as retirement community care center assisted living center he thought the name was a clever name for a retirement community was not sure he needed a new church with a new name and keep the irs out of if’ have the resources now to keep running stated he may want to form stated he did not lifanewchurch was formed it would get closer to the values of a church but stated this was not did not like the established church he was involved in - people were too involved in petty things and not spiritual things vision - new direction was formed since intention when was e e form 886-a catalog number 20810w page _ publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items page of tax identification_number year period ended name of taxpayer 20xx stated the entity he was president of - no longer existed was something stated he wrote about since people kept asking about it and so he wrote and posted the information on the website and it was available to everyone for free later when people asked for assistance or information on the program would refer them to the website stated he doubt it would pass the church test’ however thought maybe community assisted living center or other purpose it could be exempt in the future under something else - retirement discussed voluntarily giving up exemption rather than have it taken away by the irs explained what considered to be integrated_auxiliaries these were departments of deposited in be multiple accounts - and then were essentially expense accounts relating to each of the integrated_auxiliaries bank account s - initially sounded like one account but then corrected to stated there would be sub-accounts that all income from the integrated_auxiliaries were stated fiscal sponsorship was an idea which did not really take off since thought the fiscally sponsored entities would have their own donor list but it turned out those to help them with the fundraising organizations wanting to be fiscally sponsored wanted was not good at fundraising indicated they had lots of ideas but there were no profit centers - by that he stated there was a problem with meant none of them generated any money faith-base designation people would ask for the irs exemption_letter and when it was provided and the letter stated then people did not want to get involved was exempt as a church questions would be asked and examination the pre-examination conference did not resolve any of the service concerns therefore the examination for the period ending december 20xx commenced on july 20xx some of the information provided during the examination included the following _ publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended page of explanations of items officers directors articles of incorporation filed december 19xx states the three original directors shall be the governing board_of filed on november 19xx listed only two members of and this included and governing body - the form_1023 and during the opening conference officers directors of provided the following testimony concerning the and and were married to each other and is their son both resigned from the board_of directors around the end of the 19xxs for two or three years after and resigned there was nothing going on by the year 20xx website and no secretary of state filings the name ___ and the service's letter which stated stated the only thing which remained was was tax-exempt as a church had no activities no income no assets to distribute no officers no when a decision was made to have state board_of equalization to have the articles of incorporation reinstated be active again _ had to file paperwork with stated these were the board_of directors as stepped down assumed in approximately 20xx the second life cycle for rebuilding years and the company secretary and treasurer was added to the began in approximately 20xx due to some personal problems in his life as president of - but the position as president of remained as a director at that time per written_statement provided in response to the ncti and his spouse are both members of the board_of directors the above statement concerning response to the ncti other information shared about the worked hours a week and was also represented as a clergy member performing services for represented as responsible for distributing during 20xx worked hours a week for included as a church and he was checks and maintaining its accounting_records stepping down was shared by as part of the during the opening conference to be interviewed to obtain information directly from them concerning the activities of time officer directors in name only were not actively involved in was notified that stated that the and would need at that and were given the inconsistent information an interview was conducted on june 20xx with near his home in during that interview confirmed he form 886-a catalog number 20810w page _publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rav jeneary i explanations of items page of name of taxpayer tax identification_number is not a currently active in area in approximately 20xx stated he never notified and has not been active since he moved back to the stated he does not consider himself to be an officer but he that he was resigning his officer board_of directors position also stated his spouse caretaker has no involvement in is disabled and year period ended 20xx is her when he stated in the early 20xxs he met had lived in area in the spring of 20xx in approximately 20xx stated he left at a meeting in and returned to the approached to become the president of after was best if someone else was the president of had some legal issues and thought it in inquiring what knew about stated it was his impression that was a dual part public faith-based charity and church that was started by the was in the faith-based part of the organization stated his involvement in stated he is not actively involved in running in 19xx not the church part and he is actually a member of a church in any wedding ceremonies or any other religious services such as sacerdotal duties for was not involved in responsible for distributing during 20xx he was interested in helping people not the church part of years since he has had contact with stated he was interested in the faith-based charity side of as a church - he is not a priest minister he did not conduct andhe checks and maintaining its accounting_records stated it had been since summary of officers directors - the information provided in the written response provided by on behalf of during the church_tax_inquiry phase was not accurate and for are not actively involved in and did not spend the time performing services the only two individuals possibly involved in leadership positions with were and provided activities operations it was not clear how much leadership 20xx website states isa -year-old c faith-based public charity a the website goes on to list various components of these components were listed under a hyperlink to some of the components review of the components revealed which provides the knowledge and tools and included and considered to be form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended explanations of items page of integrated_auxiliaries of - but all were actually part of corporation and are the operating arms for organized and operated in addition divisions operating arms __ similar to a division within any these were not separate entities independently was personally involved in all of these integrated_auxiliaries e - listed under on website - represented himself as the president of this component division of from website stated it was an integrated auxiliary of division operating arms separate website website to which is there was a hyperlink term for one of its website mentions this organization is an extensive learning center designed to provide the information about personal private charities the website goes on to state a personal private charity is not funded with donations from the general_public thus the qualifications of net_worth and income are quite necessary the website mentions that a personal private charity is not for everyone and is designed for high-dollar taxpayers the client should have a net_worth threshold of dollar_figure million and annual income of dollar_figure million review of the extensive information included on website revealed is soliciting high-dollar taxpayers to set-up what is termed a personal charity and or private charity as explained on formed organization personal charity would be an integrated auxiliary of charity’ would form a charitable investment_trust naming the donor as its trustee and the trustee of the charitable investment_trust makes an investment in a royalty type investment structure website the structure formation of the newly the personal charitable investment_trust was described per a document posted on the website as ny charity is original ministry church speak for mission was to be a new way of life for the christian community the name pretty much hit the nail on the head with the vision - an website discusses the core structure and explains the parent the founded in 19xx by and community the explanation goes on to state the current ministry is to provide the tools and capability for church members to enjoy an enhanced charity experience allowing an individual to take the step and as an integrated auxiliary of form 886-a catalog number 20810w page__22 publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items page of tax identification_number year period ended name of taxpayer 20xx _ the private charity would enjoys all those attributes of the website promotes some advantages of being an integrated auxiliary of and part of the includes not having to submit form_1023 application_for recognition of exemption under sec_501 of the internal_revenue_code to obtain a separate tax- exemption_letter no private_foundation chapter compliance restrictions no public charity accountability issues and the ability to receive grant funding from private_foundations a few of the relevant comments stated on website include the blending of various charitable tax-exempt entities with commercial for-profit taxable entities does require some basic understanding but they do work together in ways that are easy to grasp and simple to work with all charities are allowed even encouraged to invest the monies in the charity and do the actual charitable work out of the earnings_of the investments the investment portfolio of a charity is called the endowment fund indicating that it is an investment fund for charitable purposes endowment fund requirements are that the investment must be passive in nature all charities are prohibited from being in trade_or_business if a charity were to be allowed to be in trade_or_business it would have an unfair advantage over a commercial business in that it would not have to pay taxes on profits a charity is encouraged to be a passive investor and yet is prohibited from being actively involved in a trade_or_business there are ways to structure a charity properly so that it would never become actively involved in a trade_or_business - and ways to assure that taxable taxpayers make only a marginal profit and tax_liability is therefore minimized an integrated_auxiliary_of_a_church is not a coined term it is a concept defined in the internal_revenue_code explaining how churches function with subset elements of the parent public_charities a church is the only type of charity authorized to birth independent autonomous charities as a public charity the integrated auxiliary has access to the typical sources of charity funding’ makes an excellent asset holding tax-exempt_organization the licensing of the technology i is a tax-exempt form of funding and makes an excellent endowment investment_company investment earnings are a tax-exempt form of funding to avoid slipping into something that could be viewed as being actively involved in a trade_or_business it is important to have a taxable taxpayer as the operational part of the structure form 886-a catalog number 20810w __publish no irs gov page department of the treasury-internal revenue service schedule number or exhibit explanations of items page of tax identification_number form 886-a rev date name of taxpayer year period ended 20xx there is absolutely nothing wrong with a captive management-development taxable taxpayer the integrated auxiliary could even fund and own the captive management-development company this would provide the greatest element of control especially in structuring contracts with the various charities that will be involved the business investment_trust a sibling trust of the charitable investment_trust is specifically designed to provide a structural tool that provides the necessary taxable taxpayer element and at the same time interfaces with the various charity components like the charitable investment_trust both the grantor and the beneficiaries of the business investment_trust are charities this effectively separates the ownership elements that are always associated with corporations and provides direct linkage to and from charities the business investment_trust resembles and aligns with the charitable investment_trust making it an excellent tool for accomplishing the critically important responsibilities of the taxable taxpayer there is additional discussion and multiple documents posted on the website about using this type of structure two items are included as exhibits to this report to provide an overview this includes a flowchart that shows how the personal charity model would work exhibit a and is a private charity right for you exhibit b one of the hyperlinks on website was to information relating to a former for-profit organization and the information posted provided tax and wealth management strategies secretary of state filings per the organized for-profit corporation formed by operate in the mid-20xx and is currently listed on the secretary of state website as permanently revoked maintained after the mid-20xxs had its own website which ceased to be was a separately that ceased to in july 20xx_ the ncti response received from longer exists as a separate_entity - possibly went away or stated in part years ago no stated this was going to be a for-profit organization in the business of providing educational tools the educational materials were written during the 19xxs through 19xxs at one time this was a business that the business partner from it never went anywhere provided information on how to live more charitable this business was gone as of early 20xx and as a business it never got traction’ stated this ultimately became a charitable and educational program of posted on and the historical stuff’ was website to help people be more charitable this is all educational and free for stated this ended up being a consulting model that put money into but form 886-a of the treasury-internal revenue service _publish no irs gov department catalog number 20810w page form 886-a ireeis anwary explanations of items name of taxpayer tax identification_number year period ended schedule number or exhibit page of 20xx the taking did not help anyone directly and stated he would tell people it was available on the website but he stated he was not compensated the service asked questions about the relationship between and the for-profit business and asked a question if any board members officers ministers or key employees financially benefited from the activities with and or promotion of tax and wealth strategies the ncti response stated in part there is no relationship with exist in any form it was part of the learning curve with some very uncomfortable experiences in attempting to market concepts but today there are only some papers that were written years ago - many still relevant today the salient point there are absolutely no marketing activities or promotions associated with it does not the response received from wascontradictory partof statement indicated no longer exists but later stated in part of their written response that they folded everything into the adopted the catch phrase of as stated previously review of included hyperlinks to documents labeled provided tax and wealth strategies such as current website and those documents c charity the private foreign charity is controlled by the donor a capturing capital_gains for charity - which suggests donating highly appreciated b case study - income_tax reduction which suggested setting up a private foreign assets to a qualified_tax exempt_organization the charity then sells the assets and the proceeds are not taxed the qualified charity is something the donor sets up as an international charitable corporation that is set up as a private charity the private charity is controlled by the donor charitable_contribution followed by grant to donor's private charity which suggests donating real_estate selling the real_estate and then a significant portion of the proceeds from the closing of escrow are then granted to the donor’s private charity granted to the donor’s private charity the private charity is controlled by the donor as integrated auxiliary of formed on september 20xx corporation certificate number identification_number these are just a sample of the documents listed on the website the response to the ncti stated the entity is not really an website had a hyperlink to a separate website for nonprofit corporation and employee term for one of its division operating arms and that website stated this was one of publish no irs gov department website - formally known integrated auxiliary which catalog number 20810w but rather it is a - listed under form 886-a on page is e - of the treasury-internal revenue service schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended explanations of items page of per the response to the ncti the purpose is to provide all charities with the same type of tools and capabilities that are enjoyed by what could be called the small_group of super charities those charities with either a net_worth income or contributions of dollar_figure more this would be less than the largest charities charities to develop equity or of was a way for smaller of the approximately explained charities about stated has not filed for tax-exempt status yet since realizes he ha sec_27 months to apply for exemption when was part of it was difficult to get contributions and grants since people did not want to be involved in faith-based charity therefore this program files for its own articles of incorporation under the nonprofit statutes of the state of checking the revoked secretary of state website this organization's current status is in __ in its response did not provide information on the activities of and did not address why at one time this was considered to be an integrated auxiliary of did not provide information on how the operation of this specific program in addition supported a charitable and or religious purpose e - listed under on website to from stated it was an integrated auxiliary of which is arms separate website website - there was a hyperlink website term for one of its division operating the ncti response stated in part solutions to environmental challenges when say failed the people working with was a failed effort at providing became distracted with commercial enterprises and were not able to sustain the purpose and could have been great but never really got any traction and did not happen is just one of many examples of such an experience it verbally stated this entity was the idea of two individuals - but nowin but now living in originally from these individuals had bright ideas from and both were previously disaster first responders so the organization was going to work with resolving environmental challenges although intentions were good they did not follow through with the plans valuable and stated resources such as energy food water etc are was going to address those resources originally and and - stated in early 20xx to help his neighbors ' left also stated and moved to walked away from but tried to take the ideas and make it into a for-profit business _publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended page of explanations of items in 20xx there were transactions involving dollar_figure a connection to payments and were described as either a donation or loan in bank account under payments were deposited into one of payment information is discussed later in the report under financial information’ the funds were received as two dollar_figure received from financial records these control the specific that had testimony provided by limited to the following concerning the dollar_figure transaction included but was not - - - - - - called and le j were involved in a forming a new for-profit business and they were looking for a source of funding introduced to and there was a meeting between them to make a deal’ the deal was for this would be considered an investment of _ if get dividend checks’ to make a dollar_figure and and funds would then be given to the for-profit company made money then would stated the ownership of would be donation to integrated auxiliary and the point of the meeting was for and only made two dollar_figure payment was never made contributions donations - both in 20xx - the a information_document_request idr was issued on july 20xx part of the idr the response to idr requested information on individuals involved in and other documents reviewed showed this to be a business arrangement between the individuals involved in some capital as an investment the response also stated transaction to allow him to pay his personal expenses- __- retained payments from a for-profit corporation and was a way for to receive was involved in the of the dollar_figure the structuring of the transaction allow donated to multiple times through situation accounts and then the funds would be given to although did not take a tax-deduction for his payments to does not have first-knowledge about a tax-deductible donation for the dollar_figure stated which went tax from the response provided shareholder and not for funds from profit corporation is one of bank accounts under less the dollar_figure __ were transferred to did not have any documentation to show ownership of retained by is stating is a division of would be the and the bank account control the majority of the a for- _publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a ray date explanations of items page of name of taxpayer operation and why it was considered provide information on how the operation of this did not provide any details on to be an integrated auxiliary of specific program supported a charitable and or religious purpose 20xx tax identification_number nordid year period ended in response to the ncti comment that solutions to environmental challenges idr was issued to request specific information on was a failed effort at providing specific activities of the program project when these activities took place who this project assisted and how this program project’s activities furthers one or more of the tax-exempt purposes stated in sec_501 of the internal_revenue_code in response to idr never really did all that much these comments stated gave the impress that information was obtained during the examination which indicated was still actively conducting business during the audit year and tax-exempt status to attempt to conduct other business as discussed under other activities later in this report was not an active division of used __ but the information posted on listed did not appear to support a charity and or religious purpose and activities listed did not appear to support any exempt_purpose on the bottom on the website was copyright 20xx separate website was available via a hyperlink from website website was reviewed and the activities although claimed that failed the records did and to obtain information on the dollar_figure to which subsequently paid to is and is one of the original board members owners of dollar_figure - members contact was made with both payments made by the current president of not support this claim in addition to the dollar_figure other items to form 886-a stated he is part owner of stated in when first formed and was one of the founding needed an infusion of capital and was approached to be an investor specifically they wanted for ofthe stock the funds were supposed to be sent through to contribute or bank account in two separate payments of dollar_figure each and this was or stated paid in about june 20xx the funds first in either charitable donation since not very familiar with how this works since he uses a cpa for return preparation but made the payments as requested after the transactions were completed received a written acknowledgement receipt from him for his donation - copy of the receipt was provided for the audit and was shared with was a recognized faith-based charity told him by depositing would get a stated he is and account he __ signed by thanking cash initially put into stated he also contributed such as building items - platform for the vehicles - which he built through catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended explanations of items page of his company either he and or his personal for-profit companies would financially benefit from this arrangement and then contributed directly to acknowledged stated he did not initially get any stock but was informed a couple of years later the shares would be forthcoming stated he was not on the board_of directors for as an investor statements did not know the reason for the delay and they the company treated him provided several e-mail messages to support confirm his in discussing he thought knowledge of and and were both vehicles used by stated and to raise capital to his knowledge did not believe there was a church involved and there was never a discussion on religious doctrine never attended and never heard of anyone attending any church services conducted by creed or beliefs he on behalf of stated he had never heard hold himself out as a minister stated to his knowledge and conduct charitable activities with the exception of one time when provide a special dollar_figure marine activity of the local casinos but it never occurred and then event to easter but it just never came about to just went to expenses dollar_figure and may have been used to pay for contribution did not actually was asked to talked about moving the knowledge his dollar_figure contribution personal contribution around christmas to do something for stated the activity was supposed to be fundraising party at one received a charitable donation acknowledgment receipt from _ for the the receipt for the dollar_figure receipts received by report acknowledgements to payment and dollar_figure were not the only charitable acknowledgement as discussed in detail under other activities later in the lent some money to and for those loans issued written thanking him for his donation to stated presented the concept of a charitable investment_trust to him and provided some documents concerning the charitable investment_trust but stated he did not set up a_trust - stated he has known since about 20xx or 20xx both he and but they did not serve together d the common background of previously serving in the about the time could do an investor to help fund the business was being formed was one of the original founders of told about and since and what needed and introduced to page _publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended explanations of items page of president since proposal activities had money available to invest was not a charitable_organization and stated this was a business does not do charitable stated he was apprehensive about bringing in an unknown investor and after talking to and learning about decided to utilize for his services stated since was a newly formed business and did not have its own bank be paid to another bank account the decision was made to have the investment from account until after the check cleared after the funds from be good the funds would then be transferred into further stated charitable ministry account than once the purpose of the transaction was to be sure the funds were good and and were held in new bank account funds were paid to account located at cleared and were deemed to account was used as the escrow agent holding account not care which account it went through as long as it did not go directly into the transactions occurred exactly as planned - escrow holding account to business account funds were funneled through the stated more stated he did account_stated for this service of the investment stated the fee was partial a finder fee for introducing the parties and dollar_figure helping the business go forward and was paid in part to compensate locating a building to conduct the business prior to were both living out of state and needed assistance to locate a business property from the amount stated it was his understanding that for his help in received dollar_figure formation afee-- paid and was going to pay part to stated he had no knowledge on how and who helped locate the facility split the funds with but the payment of the fee was also done to prevent anyone from having a future claim against review of discussed later confirmed when payments were made to cash was withdrawn and recorded in records as payments to or financial records for the investment dollar_figure and stated account was used only as an escrow account and although did not really care which account the funds were sent through one of the documents provided this e-mail provided by to message was an e-mail dated 20xx from the account number to be used to make the deposit per e-mail to here are the wiring instructions that were provided by for the deposit using in order to make it a donation and get the tax deduction this statement seems to contradict which bank account the funds went through statements that he or did not care _publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a row date name of taxpayer 20xx tax identification_number year period ended explanations of items page of stated was a for-profit organization and not a charitable_organization so the agent inquired about the issuance of stock for the shares purchase there was a delay in getting the shares issued and they had planned to issue the shares earlier to some problems for the corporation was always intended to be an investment in refused to sign a non-disclosure agreement nda which created account deposited into stated the dollar_figure but stated the agent inquired as to what thought the charitable purpose was for stated he thought was a means to raise funds for charitable and humanitarian purpose inquired if undertaken completed by knew of any specific charitable did not know of any explained to that his father had a non-denominational church that could help with financing philanthropic and humanitarian projects stated he was told this was not a traditional church but was a faith-based organization formed by who was not happy with traditional churches stated was not aware of any church gatherings prayer groups etc has never peached to him and never suggested mentioned attending church at did not hold himself out to be minister reverend and he stated stated in about 20xx or 20xx about the concept of charitable investment_trust personal or private charity that used alternative to donating to a private_foundation or a public charity discussed and tried educating him that this was a it was explained to ein for operation it was explained this was an in discussing involvement in knowledge of acknowledged his and stated helped him set-up as an integrated auxiliary of per was trying to teach people in central america to avoid deforestation and teach reforestation in 20xx and the funds they received were used for travel to one of the countries where they were considering performing services in regards to who controlled the accounting of acknowledged that received some funding fast as it was created however stated it wasn’t him and it might be stated the intended project died almost as e - listed under was previously shown to be integrated auxiliary of inquiry stated but rather it isa of - website - this entity the response to the notice of church is not really an integrated auxiliary of non profit corporation formed on september 20xx __publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a rev date explanations of items name of taxpayer 20xx page of tax identification_number year period ended corporation certificate number and employee identification_number we are still in the process of crafting exactly what will be we are working with the concept that high value individuals those with high net_worth or high income really need much more guidance in how to interface with a charity and that many challenging problems can be resolved with the proper application of the correct resources website had a hyperlink to a separate website for integrated auxiliary which is website stated this was one of division operating arms and that term for one of its website reflected activities that are not in furtherance of review of a tax-exempt purpose listed in sec_501 the activities are not activities of a church and statements were included which may preclude this organization from exemption under sec_501 the website stated this program organization is marketed towards high wealth individuals stated this organization was geared towards wealthy professional athletes and teaches them how to be more efficient in charity giving state website this organization’s current status is revoked in checking the secretary of - listed under of website - there was a hyperlink website to from stated it was an integrated auxiliary of - whichis arms separate website term for one of its division operating website stated this organization was an integrated auxiliary of divisions and operating arms and this part of the organization focused on six life-sustaining resources how to be more efficient and better stewards of our given resources there was not an actual separate organization with its own ein and there was no money generated from this activity of ways to save resources stated his involvement included research and the study stated that one of is that we all have the per the response to the ncti one of the core beliefs of greatest responsibility to be wise stewards of resources particularly life sustaining resources was crafted to come such as air water food energy health and shelter up with solutions to doing more with less currently we are focused on being able to provide food with high performance growing systems that also manage water and power efficiently thus the cost is comparable with farm grown crops with an even smaller carbon footprint _publish no irs gov _epartment of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended explanations of items page of website stated an environmental nonprofit organization and approach to real_estate ownership energy performance management and capital_investment strategies actively promote an exclusive and unique did not provide any details on operation and why it was considered did not provide information to be an integrated auxiliary or mission ministry of on how the operation of this specific program supported a charitable and or religious purpose nor did stated they are currently focused on being able to provide food with high although performance growing system no information was provided during the audit to support doing this type of activity wa sec_2 if fiscal sponsorship e - is not listed on website but there was a separate bank account as in the name of during the opening conference this was a non-exempt explained by program project for an overseas activity using this program project and donors received tax-deductible acknowledgement receipts from exemption contributions were solicited for represented this to be program project fiscally sponsored by information_document_request idr issued on july 20xx requested information on specifically asked for the contact information and any the transactions involving documents relating to the fiscal sponsorship arrangement - such as the request to be fiscally sponsored the actual fiscal sponsorship agreement any periodic reports submitted by and any other written correspondence between officers directors and including contact with including and or no contact information was available but written response provided background and explained how got involved in and wife are sisters there was no rescues orphans we got involved simply because written agreements of any kind big mistake at first it was simply a forwarding agent for their it was simply at first and all foreign ministry of the work was simply pro bono our gift to the is a religious mission that it fit nicely with the mission etc ministry was ended up working for about hours per week she even did a news letter for them managed everything imaginable and never received a penny as we were not surviving per website is a privately held corporation _publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended explanations of items page of and rules had collected and was warehousing over dollar_figure in cash changed the wanted both and to get paid one for using and the other for the man hours that was committing to their project well anyway decided to take when found out what we were doing she managed to get account did nothing about that because of my relationship with his anyway out of their account which needless to say it did damage our relationship with did at my insistence removed from the and being and_ well the financial records reflected the following amounts were withdrawn to compensate for her time and to pay for using 20xx dollar_figure 20xx dollar_figure 20xx dollar_figure 20xx dollar_figure dollar_figure and other activities caused a problem for ordistributed to account received for managed to get - removed from the account is not operating as a church it is operating for a charitable purpose and the withdrawal actions taken by had no longer transactions into provide any information on how has claimed to be tax-exempt as a church under sec_509 and sec_170 statements were made access to the bank account cut-off therefore after mid-year may 20xx there are did not although of the internal_revenue_code in various discussions with that even if activities continue to be charitable in nature idr was issued to request a detailed statement to address program services and exempt_purpose achievements during the period 20xx through the present the idr explained a program service is an activity of an organization that accomplishes its exempt_purpose the response from stated simply are required to share much it is a biblical truth which becomes the mantra provided no information on any of the activities of believes and preaches that those who have been given much success being defined as those who have much significance being those who department of the treasury-internal revenue service catalog number 20810w form 886-a publish no irs gov share and page schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended page of explanations of items the response provides various biblical quotes and numerous comments regarding the irs stated have largely chosen web sites as an inexpensive way to get the message it is a very biblical centered message that would be life changing if it were to be spread out far and wide it is a message that has been around for centuries and feel called to share that message any way can this written_statement gives the impression that activities and or charitable activities that would be for an sec_501 purpose may not have any activities that are church directly provide information on its exempt_activities the agent in addition to requesting reviewed various documents and information posted on by third party contacts the items reviewed did not support tax-exempt purpose some documents were shared with administrative record website and documents provided operating as a church or for a and are included in the for example one document reviewed was a letter addressed to written by sent on letterhead dated march 20xx sent to via e- mail this letter stated in part the following our meeting yesterday afternoon was very productive giving us a lot of common ground to work with on some pretty amazing projects a lot of this shall we say has a direct charity possibility more important we have the knowledge skill sets and tools necessary to know how to very nicely blend this entire project together into a charity platform supported by various for- profit models as an example what we call the paul newman model a product which is commercially sold with all of the net after-tax profits going directly into a charity things like that we have a host of different models for blending commercial enterprises with charity was using was involved in or attempting to be the agent also requested and received some e-mails concerning activities of the e-mails many of them indicated involved in for-profit activities and not activities of a church charitable nature other e-mails tax-exempt status to solicit individuals to set up what is indicated represented as a private or personal charity all e-mails are included in the administrative record but as a sample some of information from the e-mails are extracted and discussed is operated exclusively for a purpose below none of the e-mails provided indicated that stated in sec_501 at least one of the e-mails reflect individuals on how to write grant proposals to secure funds to be used for private benefit and there were e-mails concerning a tax-shelter product charitable investment_trust examples tax-exempt status being used to market what appears to be is instructing in reviewing e-mail from to dated september 20xx with subject of what happened catching up - sort of pepartment of the treasury-internal revenue service form 886-a catalog number 20810w page_ publish no irs gov schedule number or exhibit form 886-a ei donuary explanations of items page of name of taxpayer tax identification_number year period ended 20xx have a group that could be a source of funding your large intercity food growing projects - they say they have and appetite and capability north of dollar_figure require a fairly well developed business plan etc if this proves out to be real and i can help will be right here of course they will we are working on a very interesting consulting group that you will want to be part of- it involves filling in the gaps of five different industries that fit nicely together into a fairly unique package high value individuals high income and high net_worth eb-5 visa investors with dollar_figure charities the national faith based charitie sec_4 assisted care and retirement communitie sec_5 net-zero energy systems both energy production and energy conservation to invest in job producing projects to dollar_figure got a guy with a new where have we heard that before narrow vein gold mining technology any interest e-mail from shown in the extracted message below these do not appear to be organized and operated for a tax exempt_purpose one of the items referenced a-- 20xx0616-- dated june 20xx that listed various topics as to - was reviewed and the following was extracted from that document from toe cc sent subject follow up on our 20x06 dun 20xx10 -24 am meeting 20xx06 pdr my comments and ecdcitional information for your consideration in structuring more based on our meeting last week several thoughts in an effort to pull things together into plan of action we can live with and a few supporting attachments am 20xkx06 precise strategies b 20xx06 inetiateve c1 throunh c7 d- with project appreciating that you are extremely busy right now still lets keep these projects in mind and be moving them forward will continue to focus on getting the early cocuments in place simple drawings showing the besies for the large project in north doe the basic outline articulating the vition for the is very real note the detail associated of this nature and this is chapter project pdf the - thank you for the very detailed and candid explanation of what is going on and why it all makes sense and if there is a there there -this could very easily be big your being directly involved as the architect of various business opportunities is a fantastic possibility for you if they extend to you the proper respect and latitude to actually get things done you will do an excellent job of steering a very large ship __publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page form 886-a rev date name of taxpayer schedule number or exhibit explanations of items page of tax identification_number year period ended 20xx nonprofit corporation formed back in september 20xx we need to qualify public charity as quickly as possible we don't need to invest a lot of time right now with all of the possibilities that significant player in supporting many other charities could accomplish let's just say that could be a very asa - currently a is clearly our platform and our focus for doing the things we have dreamed of doing for decades vision it as a much more powerful charity than imagined stepping away from a faith-based charity is a very significant step ever the thing we need to do would be to build charity of course fund raising is the primary activity of development department we have been moving toward as a full-service charity support public that professional not a charity we can quickly bring one into existence currently am using as a consulting firm the concept of dates back to - or whatever when we need a commercial element which is the 19xxxs still very relevant today there would be a logical need for a commercial marketing company associated with the technology it will be interesting to see what products come out of that technology development effort e-mail from subject of this e-mail message instructs how to get a grant and how to commercialize a grant and use it to make money’ of to dated february 20xx with specifically instructs to get a grant designed for tax-exempt purposes and use it to conduct potentially taxable activities and use it to benefit himself some specific statements made in this e-mail include rather than spending a lot of foolish time struggling with attempting to get grants it will make a lot more sense if you understand what we are needing to do this knowledge base is something that you will not find anywhere those who do not know do not know those who do know are sure never going to tell you after some plus years working with charities know what know as you look at the big pictures of getting grants from either a government agency or a private_foundation what you tell them will determine if you get the grant or not well duuuuhhhhaaaa my value added contribution to the process is knowing what works getting grants and more important how to commercialize a grant and use it to make money - a lot of money this is really why am valuable as a coach my knowledge translates into your saving money in getting grants and then in making money with the grant process publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a rev date explanations of items page of tax identification_number year period ended name of taxpayer 20xx there is no need for us to waste a lot of expensive time and effort doing stupid things that will not work get it correct and getting a grant is relatively easy get it wrong as most do and getting grants is much more difficult so what you are about to learn is worth tens of thousands of dollars especially if you are planning on getting any grants grants all grants are all about public benefit and not private profit if your idea of a grant looks like it will generate a private benefit profit to an individual or company selling either a technology or product the grant will struggle to be awarded on the other hand if there is a clear articulation of obvious public benefit getting a grant is much much easier just the mention of a product name or company telegraphs that there is an undercurrent of private benefit involved in other words if it looks like a private company is going to make money because of the grant the tendency will be to not let the grant always focus on what the benefit would be to the largest number of potential beneficiaries never suggesting that the product has focused private benefit always partner with a proven granted player say a university they can easily get grants and provide the third party technology verification in one simple step be prepared to share of the proceeds from the grant you will the grant proceeds with them figure at least always get more out of the grant than the university just consider it a cost of getting the grant besides the money is not in getting the grant - it is what you do with the grant that is where the real money is take the results of the grant funded independent study shoot it off to the marketing department and make a lot of money on the marketing side as the proven winner by the way - if all that you have is a bunch of bull shit then good luck the key is winning the demonstration project not being proven as a stupid fool then again winning could be worth tens of millions perhaps hundreds of millions of dollars that is how you make money with a grant it is never about the grant it is always what can be done with the grant funded demonstration study if it is only the grant dollars that are important the true opportunity will be missed e-mail from conference call to signs this e-mail as the executive director of dated january 20xx with the subject c t other individuals included in the e-mail stream series included director and attorney of the cit stands for charitable investment_trust which is one of the products marketed offered by and referenced on website this e-mail message was prepared in response to concept specifically questions and makes the follow statements who was questioning the _publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page_38 schedule number or exhibit form 886-a rev date explanations of items page of tax identification_number year period ended name of taxpayer 20xx will have to actually put some thought into specific issues really am having a difficult time with the concept in its entirety if understand this at least partially correctly the way this works is isacharitable nonprofit with tax exempt status - - you then formed a charitable_trust within - - you are the trustee of your trust and trust - once donations are made to your trust you as trustee have the right to invest them in appropriate charitable endeavors one of which apparently is - you as trustee are responsible for the trust and are entitled to dollar_figure expenses is the trustor and owns the assets of the per hour plus we have discussed that any taxes owed to the federal government could be placed into the trust instead of being paid to the government - obviously the first issue is whether this is legal - also obviously if so you and your contacts who understand have been doing this a long time have the appropriate legal opinions to substantiate this - assuming this to be the case it appears the goal is to then invest the trust money and grow the trust assets assuming the trust grows it appears the beneficiaries are charitable tax exempt_organizations - what is the benefit of growing a_trust the assets to which neither myself nor my heirs would have access - while realize an hourly rate can be charged if the benefits of growth go elsewhere dollar_figure per hour seems like nothing more than a substantial headache - what benefit to receive as trustee of a growing trust if the asset growth is untouchable some other thoughts understand putting tax_payments in if this is a legal tax_shelter and there is some - benefit to be gained but do not see the wisdom of putting all assets in - what benefit does - are my tax financial and legal fees associated with the trust and being trustee covered expenses - what qualifies as appropriate charitable investments get from administering this form 886-a catalog number 20810w _publish no irs gov page 2epartment of the treasury-internal revenue service schedule number or exhibit explanations of items page of form 886-a rev date name of taxpayer tax identification_number year period ended 20xx in a nutshell while have no real interest in lining the government coffers with my tax dollars if there is not some tangible benefit to myself or heirs than is do not see the purpose my main concerns are as we have discussed mainly the legality of paying no taxes to the government - does this include taxes to the state of - and at some point having the government come knocking for all of the back taxes that would then be owed additionally it is unclear to me exactly how it is structured - you have mentioned that would be in charge of the trust and that could pull a salary as trustee on which would be then taxed is this accurate and if so it seems like am avoiding paying taxes by paying into the trust but at the same time then pulling some of the money back out do have this right assuming can pay what would otherwise be owed to the government to the charitable_trust who then dictates how and where this money is spent responded in the e-mail by stating you cannot avoid paying either state or federal taxes rather you can make a charitable donation and deduct that donation from your taxes of your donation can be used by to form a charitable investment_trust with you as the trustee of that trust in that since the funds in the trust are no longer yours and therefore not income to you that can be taxed you are simply the custodian of the funds in consideration of your position as trustee you can be compensated by the trust such compensation when received would be taxable_income to you and must be claimed on your state and federal returns in the year that it is received the balance of the funds in the trust called the endowment remain tax exempt and may be invested by you the trustee for the benefit of the trust about this process or activity to either accountants or the irs it is all well with the guidelines and standard activities of public_charities the new and unique thing is that typically tax payers are not introduced to this model or able to access faith-based public chartites who are willing to establish this type of trust on their behalf this activity is also tax exempt there is nothing particularly creative or unique as the trustee of the trust it falls to you as the trustee to invest the endowment wisely and in the best interest of the trust if you fail at this the trust will become insolvent and there will be no endowment to invest in the future one of the e-mails sent from that and way or another for you’ to ends with making the comment would explain the concept and would clear it up one other charitable investment_trust information received from one of the third party contacts was an e-mail with attachments from dated march 20xx with the subject form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items page of tax identification_number year period ended name of taxpayer 20xx - charitable investment_trust informational questionnaire this e-mail and the attachments - including trust informational questionnaire and understanding and properly using the charitable investment_trust were shared with administrative record these documents provided more details as to what investment_trust was and how it could be used and are included in the charitable one other observation concerning activities of status to raise funds for the purpose of the e-mail messages was to him from borrow funds for personal_use example there was an e-mail from dated july 20xx with subject line of the not so good the good and the great this e- mail was a plea from dollars from you again the e-mail message states in part personal_use secured from requested to to requesting to borrow another couple of thousand tax-exempt using were some e-mail sent concerns to and are in financial trouble again we really need to borrow another couple of thousand dollars from you again you have become our safety net our only safety net again if we do not have our rent paid tomorrow monday we will need to move we are up against it with no solution in sight we really need to borrow another dollar_figure from you of course both have rescued us the couple of times in the past and have always been grateful and appreciative when you or dollar_figure stated whenever he would loan money to the for their personal_use - such as paying of rent mentioned in the message above - acknowledgement from also provided various e-mails supporting his statements concerning the charitable acknowledgement receipts provided to these receipts were in addition to the receipts received for his investment in for the dollar_figure thanking him for his charitable_contribution to for amount_loaned by he provided for the event would get via e-mail an to and receipt financial information did not maintain financial records for its operations stated they primarily used debit cards and everything went through the bank accounts so to prepare for the audit stated he went to and received a copy of all the bank statements for 20xx did not request or receive the supporting substantiation for the transactions in the went through each of the transactions in bank account after receiving the statements the bank accounts and prepared an microsoft office excel spreadsheet herein referred to as spreadsheet itemizing the income expenses and miscellaneous transactions in addition to the spreadsheet stated they had receipts to support some of the expenses but not all the expenses the audit was conducted with the available records identified bank accounts form 886-a department of the treasury-internal revenue service catalognumber 20810w _publish no irs gov page_41 schedule number or exhibit form 886-a stead lanery name of taxpayer 20xx tax identification_number year period ended explanations of items page of e e e represented had business bank accounts in 20xx as follows - - this is main checking account the transactions in this account are discussed later in this report - - this account was under the control of and was specifically for a program project called discussed more in-depth earlier in the report under activities and operation - fiscal sponsorship this program project was activity was the transfer of funds in and out of this account - - this was an investment account and only _ - this was the savings account for the investment account above and the only activity was the transfer of funds in and out of the account in addition to the of its officers this information was requested for the audit but provided by business accounts identified provided personal bank information for as follows e _ - account account and account a copy of the bank statements for the above business and personal accounts were provided for the audit reviewed the transactions in the bank accounts and noted the following e accounts there were various cash transactions involving funds withdrawn from one of and re-deposited into or was not re-deposited at all for most of these cash transactions no verification of business_purpose of the transfers was available and or provided personal account account examples amount withdrawn from account acct date 20xx 20xx 20xx 20xx dollar_figure dollar_figure dollar_figure dollar_figure form 886-a catalog number 20810w publish no irs gov page department of the treasury-internal revenue service schedule number or exhibit form 886-a fo jeng ie explanations of items page of name of taxpayer tax identification_number year period ended 20xx note - these were not the only identified cash transfers but are examples of some of the transfers e there were several on-line transfers from account account to personal account account examples amount date 20xx 20xx 20xx 20xx dollar_figure dollar_figure dollar_figure dollar_figure note - these were not the only identified on-line transfers but are examples of some of the transfers there were also some transfers from business accounts into and or personal bank accounts account but the amounts were smaller in addition there were amounts transferred account to accounts which may have been funds originally from business accounts banks statements and spreadsheet can be reviewed to identify other transactions e there were several cash or counter‘ withdrawals from the business accounts for a couple of the withdrawals withdrawals no information or documentation provided - no business_purpose established for the cash withdrawals provided a written comment on the spreadsheet but for other cash examples a the spreadsheet provided shows on june 20xx there was adollar_figure payment to investment or loan dollar_figure dollar_figure and dollar_figure payment to from grant and cash withdrawals dollar_figure in reviewing the bank and dollar_figure statements all of the above transactions were shown to be withdrawal made in a branch store made on june 20xx although grant to information was provided for any of the cash withdrawals information was gathered during the audit that the dollar_figure business account name of transferred to discussed in-depth below withdrawal was subsequently deposited into another one of the funds in this account were subsequently this account was in the no actual supporting bank account the was a payment to identified the dollar_figure payment as a account is account prepared spreadsheet listing the withdrawals as cash withdrawals and the bank statements show these amounts to be withdraw made in a branch store however the source documents are not available and given the amounts such as dollar_figure 0rdollar_figure it is possible the amounts were counter checks and or cashier checks did not provide the bank information for and this was obtained through other means dollar_figure publish no irs gov epartment of the treasury-internal revenue service form 886-a catalog number 20810w page form 886-a rev date explanations of items name of taxpayer 20xx tax identification_number year period ended schedule number or exhibit page of b july 20xx - dollar_figure cash withdrawn from business account with account withdrawn but no supporting information provided on the use of the cash c august 20xx--dollar_figure cash withdrawn from business account with account withdrawn but no supporting information provided on the use of the cash d august 20xx - dollar_figure cash withdrawn from business account with account the cash withdrawn but no supporting information provided on the use of note - these were not the only identified cash withdrawals without supporting document but are examples of some of the transactions e transactions - there were two deposits into bank account for dollar_figure february 20xx for dollar_figure on december 20xx there were two small deposits into fordollar_figure for anddollar_figure__ payments deposited into information was not requested on the personal account but given the later transactions where personal may 20xx account account the payments received in february and may could be personal account provided only -_ bank accounts for another bank account was identified as an account this had signature_authority on this account and conducted some transactions within this account provided a the written response stating this was an account used for __ which is discussed previously under activities idr was issued on august 20xx to obtain information on this account and per the written response received from on behalf of when banking account was opened in it was a simple account to keep finances separated we did not want more than one person having access to any one account were blended together an where lived although is verifying operations’ funds raised for and diverted into was opened under unidentified bank account adivision operating arm of in the name ein and form 886-a of the treasury-internal revenue service _publish no irs gov department catalog number 20810w page schedule number or exhibit explanations of items page of form 886-a rev date name of taxpayer 20xx tax identification_number year period ended conversely the banking account was clearly the responsibility of and to a greater extent they would know the nature of all of the deposits and withdrawals during the brief life of the account requested information concerning the purpose of the two deposits into this account from received in 20xx including dollar_figure written_statement on 20xx and dollar_figure on 20xx per would be the person who would know about the nature of the two deposits from the perspective of the couple of very generous contributions they were properly receipted beyond that we really don’t know anything about home_office made a since this is an account in the name control of and receipts were issued for the donations should have knowledge about the transaction in this account and should be responsible for obtaining information relating to this account information_document_request idr was issued on august 20xx on the various activities identified on complete written response from stated never really did all that much this statement is contradicted by the substantial financial transaction reflected in the account and information discussed under the activities operations section of this report website one specific activity asked about concerning the given the incomplete information in response to idr and contradictory information provided to idr issued idr on march 20xx to clarify the information needed on the account and to allow one more opportunity to comply with the request for information the written response received from stated in part my recollection is that there really was not any formal entity the blending was to combine our efforts thoughts manpower commitment vision etc working together on the same things rather than working on separate things blending together two different entities was not at all what was happening the things remember had to do with us working together to accomplish whatever we could accomplish it was nothing more complicated than our being impressed with a very good idea and our all agreeing that if we could make something happen we would idr inquiring specifically why name of rather than under its own name opened a bank account in in the response stated form 886-a catalog number 20810w page _ publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended explanations of items page of it was my understanding that a project program etc that fit into the overall mission of was not its own entity it was nothing more than if there was no entity which was our understanding right from the start and we wanted a bank account for this project it would be in the name of something that did not exist and not response to idr stated the bank account in was done to keep finances separated and they did not want more than one person having access to any one account’ idr requested a written_statement to explain why it was necessary to keep finances separate if these were all part of the same tax-exempt_organization response stated the question suggests that there is something wrong with a church having more than one bank account the explanation was perfectly acceptable and was precisely what was needed it was just as necessary to keep financial records as it is for my wife and to have separate bank accounts every church have ever known in my entire life has had more than one bank account for a variety of different reasons many of which do not have anything to do with other c activities it was necessary because it was what we chose to do idr requested a written_statement to state specifically what c activities were conducted by as to the activities conducted response stated shown below did not answer the question the question assumes that two different entities were blended together all activities no matter what they were were conducted by project that we were all working on was a given that called again information on the two deposits from deposit of dollar_figure response stated has taken the position there is no separate_entity organization and all income expenses were _income expenses requested totaling dollar_figure and unknown am not personally familiar with purpose of the two deposits was charitable_contributions from did email a thank you note having never met him talked to him etc the deposit was determined to be part of the funds received from the dollar_figure discussed earlier in this write-up it was confusing that spreadsheet reflected the withdrawal as paid directly into dollar_figure anything other than an investment was an investment no one ever suggested that the use of funds was when that is not what happened response also stated the purpose of the going to idr requested information and verification supporting document of the business_purpose on any debit withdrawal transaction over dollar_figure documentation did not clearly reflect the c purpose of the use of the funds the idr specifically stated if the supporting was form 886-a department of the treasury-internal revenue service _publish no irs gov catalog number 20810w page_46 form 886-a rev date explanations of items name of taxpayer tax identification_number schedule number or exhibit page of year period ended requested to provide a written_statement to address the tax-exempt purpose of the use of the funds response stated 20xx supporting documentation for_the_use_of funds don't have a clue what that means have never heard of such a thing in years of pretty active work in many different churches those individuals who are authorized to have access to any account are trusted to not abuse their responsibility to handle a checking account exactly the same as any organization checking questions concerning the activity of this account need to be directed to the individuals who obviously have authorization to manage the account there were no abuses of this or any other bank account a meeting was held with and to allow between statements he made and information secured from third party contacts for example in response to idr program project of is not a separate_entity but is a stated he has no knowledge of to verbally clarify information and to clear up discrepancies on april 20xx to discuss in part the response to idr stated however activities or financial transactions and thus deferred the request for information on this account to others this is particular concerning given was set up in the name and ein of and had signature_authority on the account another concern as stated earlier the bank account used for was not disclosed for the audit even though it was a division operating arm of during the april 20xx meeting provided the following information concerning e did not generate any funds for internal partof when asked why but was on the bank accounts in was an had no control_over the expenditures stated she was on the account to have control of the account but she expenditures and _ did not have any of the records for discussed knowledge of met him through business involvement with stated and had no knowledge of who is shown to have a position with was a friend of someone and stated he had no involvement in and he did not think was part of reviewed with operations earlier in this report these e-mails were dated 20xx and 20xx the two e-mails messages previously discussed under activities form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items page of tax identification_number year period ended name of taxpayer 20xx concerning charitable investment_trust cit that was being presented to an attorney the e-mails indicate the product of cit was being marketed to these e-mails included not only distribution but also and he was questioning the legality of what is being proposed and name on them in the is listed as executive director’ of and is listed as director in response to presentation of this information involvement with with these individuals specifically cits and people knew and presented information on cit people had a charitable intent denied all knowledge or stated he had no recollection of a call on cti stated there was no formal marketing of further stated if was interested in helping them e inquired if there were any legal opinions private letter rulings concerning cit to which stated there were no legal opinions but he had spoken to about this concept and he note - confirm any information with met and through died in approximately november 20xx so it was not possible to since information was obtained through third party contacts re-visited the issues on the transfers stated - of funds from as he had stated before - he introduced left the room and let them work out the details and how the transactions all came about and then to to e s stated his prior understanding was that made a charitable andthen made the investment into contribution to stated that on wednesday 20xx he spoke at lengths to understands the money to money since put money into through 20xx that did not have a bank account at the time had an ownership in was given to however so he could serve as the facilitator to get hold and now was trying to stated he believed from 20xx or 20xx stated he did not ask for annual_statement from and was not actively after a certain point in time stated for the first six-months he was out there daily making sure they were doing involved in after the money was given to things’ stated he is now acknowledging that dollar_figure retained from the dollar_figure received from considered unrelated_business_income to was for compensation_for his services since itis not income but was payment for stated this would not be personal services discussed the current understanding as to the purpose of the payment - ie for making the connection between the parties finder’s fee helping locate department of the treasury-internal revenue service form 886-a catalog number 20810w publish no irs gov page schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended explanations of items page of business location and taking care of miscellaneous things - to which that appears to be the correct information and true facts stated summary of is now stating he understands he and __ bank account was only involved as facilitator to make this a clean transaction since withheld prior to transferring the bulk of the fund dollar_figure compensation and was not a donation or payment to was newly formed and did not have bank accounts the was his personal involvement in to funds he excel spreadsheet of income disbursement as mentioned earlier the income expenses and miscellaneous transactions prepared and provided for the audit a spreadsheet itemizing the following was observed by the agent in the review of the spreadsheet provided by e e the spreadsheet included columns for the four identified business bank accounts as well as the personal bank accounts of mentioned previously in the report these accounts were and the spreadsheet included various columns for the expenses dollar_figure endowment investments and grants dollar_figure dollar_figure expenses travel_expenses dollar_figure which is represented to be the total amount the business expenditures including auto office expenses dollar_figure and there was also a column for personal spent on their personal using the spreadsheet following information concerning their personal income and expenses prepared and provided a summary statement which provided the department of the treasury-internal revenue service form 886a catalog number 20810w _publish no irs gov page schedule number or exhibit form 886-a fev january explanations of items page of name of taxpayer tax identification_number year period ended 20xx funds’ availabte from loans gifts sale of assets etc dollar_figure determined the amount received from the dollar_figure included under personal was not a complete and correct accounting for the personal expenses some of the expenses listed as business_expenses were not verified to be for business included under the personal column of the spreadsheet problem is the amount based on the total amount spent for example - in reviewing a sample of the expenses listed on the spreadsheet - there were many expenses that were allocated to receipts were for meals for two in some of the expenses paid out of such as airfare on southwest airlines to visit her family in in expenses were listed under travel_expenses which per review of the actual reside personal account was for her personal_use travel_expenses all gasoline and other vehicle travel_expenses even though the but were allocated to and other meal expenses which is where the auto expense or only had one vehicle used for personal and business none of the receipts reviewed had an annotation of any business_purpose for the expense stated everything he does is related to a business_expense of verbally so almost everything should be could be considered one of the identified expenses for auto expense was dollar_figure stated this was for the purchase of a new used vehicle 19xx lincoln town car which is used personal for business this vehicle was purchased in and remained in on 20xx name the vehicle owned prior to the 19xx lincoln town car also in name was given as a gift to one of friends personal stated only owned and used one vehicle at a time this one vehicle was used activities as well as for for shopping eating out going to the movies etc and personal_use such as form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number page of year period ended explanations of items e included on the spreadsheet was a column for donations donations that a church should have the amount reported as donations was reviewed and agent’s findings were as follows did not have the typical a - donations received and deposited into the from january through may 20xx totaled dollar_figure as discussed earlier under activities sponsored by however even though being raised for a specific purpose compensate agreed to sponsor was represented to be a program project fiscally gift to them pro bono as was set up for a specific purpose and the funds were decided to withdraw funds to for the time she spent on activities and the needed the funds to pay for their personal living_expenses b - three payments were received from this included dollar_figure and were deposited into received by wire transfer on june 20xx dollar_figure on november 20xx the two dollar_figure donation or loan but was posted under the column as a donation received by wire transfer on july 20xx and dollar_figure were described on spreadsheet as received even though donation or loan as discussed earlier in the report under activities initially claimed the two large payments from were either a these payments were determined to be an investment by into the for- profit business dollar_figure payment on november 20xx was supposed to be used for a specific fundraising event to be held at a local documents provided for the audit indicated part of the fundraising would have included products vehicles available and having pictures taken with the having some of movie stars and the vehicles there would be a charge for these pictures but all the funds raised would go to the started too late program the event did not occur since the planning casino to benefit although this event was presented as a possibly charity fundraiser information secured for the audit included a series of e-mails that discussed the event and one of the persons involved promote recognized charities and it although it appears this was represented as an event to raise funds for their products but may also have been planned to promote for-profit business and stated in his e-mail this is charity to then president of these are not and i c - on august 20xx a dollar_figure on the spreadsheet provided by deposit was made into this was recorded as donation - account i the bank statements indicated the received the form 886-a catalog number 20810w page _publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items name of taxpayer 20xx tax identification_number page of year period ended amount by wire transfer from donated funds were wire transferred on august 20xx to the bank statements reflected dollar_figure of the more information was needed on the purpose of the distribution to may not be an exempt_purpose from scholarship fund when it was pointed out the bank statement shows individual who wired the funds any money so funds came from his father additional information on transaction was requested to give dollar_figure initially stated the dollar_figure stated and to did not have idr was issued to obtain as this was received fora as the received a written response from _and also verbally discussed the transaction stated were forwarded to was a forwarding agent in this situation the funds received from was which is where located in originally from knowledge or records to confirm what the money was spent on stated they forwarded the money but did not have any the written response received stated was a friend of and had known for many years the dollar_figure received from was is a television marketing to be used for scholarships the hope is that at some point some creative mind will or what happened as over the years on a number of other charity projects the subject and was used for exactly really don’t know much more about have continued to work with never comes up my guess the funds went to what it was intended given to company they look for promising inventors by offering scholarships most of which never amount to anything for come up with a pet rock and everyone makes millions of dollars conducted some internet research and located an article dated august 20xx that provided more information on specifically the article stated in part a social network that within the next several weeks solicits creative ideas from individuals who lack resources to take their idea to market the inventor submits an idea and then it's reviewed if chosen the idea is patented developed produced and marketed if successful the inventor then gets a portion of the proceeds form 886-a of the treasury-internal revenue service the their ideas free of charge u s residents pay dollar_figure__ will allow residents of to submit an idea _publish no irs gov _department and provide information on catalog number 20810w created by will launch to submit page_52 schedule number or exhibit form 886-a ieeialruany ie explanations of items page of name of taxpayer tax identification_number year period ended 20xx the program is coming to collaborator on the project said he's working with some of the top law firms and real_estate developers in only with a great deal of work to promote it a donation received from the dollar_figure is not a clear transaction the disbursement has been represented as payment to an overseas company and the company appears to be a for-profit organization fiscal sponsor since show what the funds were actually spent on funds and there is no evidence the funds were used for any exempt_purpose does not have discretion and control of the stated they are the forwarding agent and subsequently dollar_figure may be serving as a has nothing to paid to third party contact to therefore could not be contacted was considered but died in april 20xx and the above three mentioned sources were the only donors to provided financials in 20xx per review of the tithes paid to personal accounts in reviewing the disbursements on the spreadsheet provided by paid out of changed to spreadsheet labeled these amounts as tithe given the reoccurring payments and the label for these payments it appears this may be a church attends and she may be a member of this church internet research identified a church by this name located at there were a total of payments totaling regular payments were to an entity called and later the dollar_figure payments reimbursements to in the 19xxs an agreement was reached between to compensate by giving him dollar_figure and a month and his father was to pay all expenses related to per month since the money was not there when stated this was the model and he never received the dollar_figure stated the agreement was in writing but got divorced from his ex-wife in 19xx the ex-wife destroyed the documents the written_agreement with according to reimbursement of certain expenses relating to operation including auto related expenses such as gas repairs insurance etc travel_expenses such as airfare lodging meals etc normal business_expenses such as office supplies telephone postage etc health care expenses for stated that he was entitled to the and his family department of the treasury-internal revenue service form 886-a catalog number 20810w _ publish no irs gov page schedule number or exhibit form 886-a rev date name of taxpayer 20xx page of tax identification_number year period ended explanations of items below is a listing of these expenses along with the agent’s findings regarding payments to for these expenses during the audit year auto related expenses - the spreadsheet reflected dollar_figure allocated to auto expenses stated he did not keep a log of the business trips the business mileage and purpose and therefore he did not think this of the travel since everything he does is for the benefit of was something that needed to be kept in reviewing the expenses allocated to this category there were several expenses for gas but some was purchased at locations which sell more than gasoline for example there were debits to this category was the purchase of a 19xx lincoln town car dollar_figure that was purchased in ranging froomdollar_figure each totaling dollar_figure also in todollar_figure ss repairs for the vehicles personal name other expenses in this category included insurance and some of the expenses in this category appear to be personal travel_expenses - the spreadsheet reflected dollar_figure allocated to travel_expenses stated he traveled out of town to various locations for business he did not keep a log of where he traveled and purpose of trips and just about everything he does is done on behalf of with friends or slept in the car so there would not be many hotel lodging receipts pays all of the expenses stated he often stayed so reviewed the available receipts and noted none of them included a business_purpose for the expense none of the meals receipts reflected who attended the meal and the majority of the meal receipts were for local expenses for two meals in reviewing the expenses allocated to this category every single meal charged to the debit card for the business or personal accounts were listed as _ travel expense as stated above the majority of the meals were for local addition to the meal expenses there were three airline tickets on southwest airlines paid out of expenses for two meals in personal bank account that were listed as travel expense but were for trips took to visit her family in some of the expenses in this category appear to be personal business related items -the spreadsheet reflected dollar_figure allocated to office expenses’ the expenses in this category were not substantiated to be for example dollar_figure debits totaling dollar_figure to and web hosting company was an on-line transfer to debits paid from an business_purpose for on july 20xx there were -accredited domain registrar personal account for department of the treasury-internal revenue service form 886-a catalog number 20810w _publish no irs gov page schedule number or exhibit form 886-a rev date name of taxpayer 20xx page of tax identification_number year period ended explanations of items wire transfer fees for wires not related to personal account dollar_figure for business monthly service fees for on 20xxx dollar_figure fee for several fees paid to wireless in the name of son some of the expenses in this category appear to be personal health care - no health care expenses paid_by on behalf of or his family miscellaneous information meeting held april 20xx a final meeting was held with during the audit and to allow any other information wanted considered for the audit on april 20xx to review information obtained to clarify information answer questions and to provide discussed contributions received from contact for an investment and various loans and __ provided receipts for charitable_contributions so that - information was received from third party that he has provided funds to multiple times including dollar_figure so he could claim a deduction on his form_1040 provided to were copies of some of receipts for 20xx and 20xx and e-mails which showed repayment of some funds and purpose of the payments from to e inquired why donations and why receipts were provided when these do not appear to be charitable_contributions was wrong stated he could not explain why receipts were given and he stated it considered the payments from to be charitable to discussed with information obtained from third party contacts could not verify that did anything specific to being a church no one could verify himself was a minister conducted services preached to them or prayed with them in addition review of the records provided for the audit did not verify that during the church_tax_inquiry phase of the examination by compliance with the irs characteristics of a church was operating as a church reminded stated if they had a one-year grace period they could be in full- response submitted on 20xx on behalf of e inquired what actions had been taken to change the activities not doing anything no changes had been made stated they are provide copy of documents secured from concerning setting up personal private charities having a charitable investment_trust cit and group_exemption_letter for trusts and all of this was done under the guise of personal websites and or from third party contacts form 886-a of the treasury-internal revenue service __publish no irs gov department catalog number 20810w page _55 schedule number or exhibit explanations of items page of tax identification_number year period ended form 886-a rev date name of taxpayer 20xx charity model explained there are private_foundations and public_charities but no such entity as a personal charity and or private charity stated he could not explain why he took the position he took in regards to setting up these types of organizations but he pointed out the information the agent provided was very old - before 20xx - and this is not happening now this statement was contradicted by for passed away and could not be contacted stating the last charitable investment_trust that he recalls setting up was possibly 20xx given bank_deposits from recently another topic discussed with numerous times during the audit that of his time and effort related to handling and or other tax-exempt activities and the information provided obtained during the audit indicated this may not be true for example specific information was available that have been involved in a for-profit organization called was the statements made church may was formed as a consulting company many years ago and is no longer around they did not have any funding never had a bank account it was just some ideas they thought about stated and was presented a document with 20xx this was a letter sent in may 20xx to officer of have sent the letter but he never received any income from it soliciting business letterhead dated chief development stated he may employment_taxes review of the records confirmed did not pay any employment_taxes for the compensation to and nor did they issue any form 1099s for payments to individuals in discussing the employment_tax issue with has never filed any employment_tax returns and they the stated do not make provided a summary of their expenses and this document showed an allocation of from _ to the personal expenses of the enough income to file a personal income_tax return form_1040 as discussed under the financial dollar_figure on the summary should have been subject_to employment_taxes in addition the dollar_figure represented as personal paid_by paid_by as well as several transfers into the personal accounts of the was not correct since there were other personal expenses ata minimum the amount reported current website info current website and some new documents were posted which do not indicate review operating as a church nor are they operating for any purpose stated in sec_501 the pages reviewed were shared with and are included in the administrative record is form 886-a catalog number 20810w page_56 __publish no irs gov department of the treasury-internal revenue service schedule number or exhibit explanations of items page of form 886-a paav january 60m name of taxpayer 20xx tax identification_number year period ended law sec_501 exempts organizations described in sec_501 of the code from federal income_taxation sec_501 of the code exempts from federal_income_tax organizations organized and operated exclusively for charitable educational and other exempt purposes provided that no part of the organization's net_earnings inures to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 of the regulations organizational and operations tests provides that in order to be exempt as an organization described in sec_501 of the code the organization must be one that is both organized and operated exclusively for one or more of the purposes specified in that section if an organization fails to meet either the organizational_test or the operational_test it is not exempt sec_1_501_c_3_-1 of the regulations provides that an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 of the code an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose sec_1_501_c_3_-1 of the regulations provides that an organization is not operated exclusively for one or more exempt purposes if its net_earnings inure in whole or in part inure to the benefit of private shareholders of individuals sec_1_501_c_3_-1 of the regulations 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 it is necessary for an organization to establish that it is not organized or operated 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 sec_1_501_c_3_-1 of the regulations defines the term charitable for c purposes as including relief of the poor and distressed or of the underprivileged advancement of religion advancement of education or science erection or maintenance of public buildings monuments or works lessening of the burdens of government and promotion of social welfare by organizations designed to accomplish any of the above purposes or i to lessen neighborhood tensions ii to eliminate prejudice and discrimination iii to defend human and civil rights secured_by law or iv to combat community deterioration and juvenile delinquency the term charitable also includes the advancement of education sec_1_501_c_3_-1 of the regulations provides in part that the term educational as used in sec_501 of the form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit explanations of items page of form 886-a rev date tax identification_number year period ended name of taxpayer 20xx code relates to the instruction of the public on subjects useful to the individual and beneficial to the community the term charitable as used in sec_501 is used in its generally accepted legal sense and therefore is not to be construed as limited by the separate enumerations in sec_501 see redland surgical services v commissioner 113_tc_47 aff'd cir per curiam f 3d to be an organization described in sec_501 the entity must be organized and operated exclusively for charitable educational or other exempt purposes and may not permit any of its net_earnings to inure to the benefit of any private_shareholder_or_individual the requirements are stated in the conjunctive and failure to satisfy any one requirement results in the organization failing to meet the requirements of sec_501 92_tc_1053 the existence of a single nonexempt purpose if substantial in nature will cause failure of the operational_test regardless of the number or importance of truly exempt purposes 326_us_279 see also 324_f2d_633 cir cert_denied 376_us_969 if there is present in an organization’s operations a single noncharitable purpose substantial in nature though it may have other truly and important charitable purposes it is not entitled to be exempt in 485_us_351 108_sct_1179 99_led_368 the supreme court held that an organization must prove unambiguously that it qualifies for a tax exemption in 505_f2d_1068 the court held that an organization seeking a ruling as to recognition of its tax exempt status has the burden of proving that it satisfies the requirements of the particular exemption statute whether an organization has satisfied the operational_test is a question of fact an organization’s purposes may be inferred from the manner in which it conducts its activities see 950_f2d_365 7th cir affg tcmemo_1990_484 70_tc_352 an organization is not organized or operated exclusively for an exempt_purpose unless it serves a public rather than a private interest to meet this requirement an organization must establish that it is not organized or operated 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 tr c -1 d ii prohibited private interests include those of unrelated third parties as well as insiders 70_tc_1037 form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit explanations of items page of form 886-a ae dewey idee tax identification_number year period ended name of taxpayer 20xx 92_tc_1053 private benefits include an advantage profit fruit privilege gain or interest 78_tc_280 in international postgraduate medical foundation v commissioner tcmemo_1989_36 one individual controlled both a nonprofit that ran tours aimed at doctors and their families and a for- profit travel agency that handled all the nonprofit’s tour arrangements the non-profit spent percent of its revenue on travel brochures prepared to solicit customers for tours arranged by the travel agency the tours were standard sightseeing trips with little of the alleged medical education that was the basis for exemption the tax_court held the petitioner was not tax exempt it was operated for the benefit of private interests namely the founder's travel agency the court found that a substantial purpose of the nonprofit was to increase the income of the travel agency see also 71_tc_1067 sec_6001 of the code states that notice or regulations requiring records statements and special returns provides that every person liable for any_tax imposed by this title title_26 of the united_states_code which is the internal_revenue_code or for the collection thereof shall keep such records render such statements make such returns and comply with such rules and regulations as the secretary may from time to time prescribe whenever in the judgment of the secretary it is necessary he may require any person by notice served upon such person or by regulations to make such returns render such statements or keep such records as the secretary deems sufficient to show whether or not such person is liable for tax under this title sec_1_6001-1 of the procedure and administration regulations provides in general that any person subject_to tax under subtitle a of the code or any person required to file an information_return with respect to income shall keep such permanent books of account or records including inventories as are sufficient to establish the amount of gross_income deductions credits or other matters required to be shown by such person in any return of such tax or information sec_1_6001-1 of the regulations provides that for exempt_organizations in addition to such permanent books_and_records required by sec_1_6001-1 with respect to the tax imposed by sec_511 on the unrelated_business_income of certain exempt_organizations every organization exempt from tax under sec_501 shall keep such permanent books of account or records including inventories as are sufficient to show specifically the items of gross_income receipts and disbursements sec_1_6001-1 of the regulations retention of records provides that the books_or_records required by this section shall be kept at all times available for inspection by authorized internal revenue officers or employees and shall be retained as long as the contents thereof may be material in the administration of any internal revenue law form 886-a of the treasury-internal revenue service catalog number 20810w department _publish no irs gov page schedule number or exhibit form 886-a peni jariuarg- 0b4 explanations of items page of name of taxpayer tax identification_number year period ended 20xx 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 ii 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 iii relevant facts and circumstances show that it is so affiliated 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 v vi or a convention or association of churches 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 in the 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 form 886-a catalog number 20810w page _ publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items page of name of taxpayer 20xx tax identification_number year period ended on the sources of an organization’s financial support in addition to the nature of the organization’s activities operational_test sec_1_501_c_3_-1 of the regulations states that an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified 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 exclusively in the statutory context is a term of art and does not mean solely or without exception but the nonexempt activities must be incidental and insubstantial universal life church inc v united_states cl_ct an organization is operated exclusively for exempt purposes if it engages in primarily exempt_activities an organization must not engage in substantial activities that fail to further an exempt_purpose the operational_test of sec_1_501_c_3_-1 of the regulations is designed to insure that the organization’s resources and activities are devoted to furthering exempt purposes the operational_test examines the actual purpose for the organization’s activities and not the nature of the activities or the organization’s statement of purpose what an organization’s purposes are and what purposes its activities support are questions of fact to pass the operational_test the organization must be primarily engaged in activities which accomplish one or more of the exempt purposes specified in sec_501 and the net_earnings must not be distributed in whole or in part for the benefit of private shareholders or individuals 92_tc_1053 the courts have developed various factors to consider in determining whether an organization promotes a forbidden nonexempt purpose under sec_501 the factors are as follows a the manner in which an organization conducts its activities b the commercial hue or nature of the activities c the competitive nature of the activities d the existence of accumulated monies which have not been distributed and e the provision of free or below cost services 743_f2d_148 cir assuming that an organization qualifies for exemption under sec_501 contributions to individuals non-charitable organizations and to non-charitable activities in furtherance of the organization’s exempt_purpose does not result in loss of exempt status assuming there is no inurement or private benefit especially when the contributions are insubstantial see 368_fsupp_863 d d c in which the court stated form 886-a catalog number 20810w page _ publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items page of tax identification_number year period ended name of taxpayer 20xx the defendants’ revenue rulings as well as case law clearly permit charitable organizations to contribute their proceeds both to individuals revrul_56_304 1956_2_cb_306 revrul_72_559 1972_2_cb_247 and to non-charitable activities in the furtherance if its charitable purposes revrul_73_313 1973_30_irb_15 revrul_71_29 1971_1_cb_150 revrul_62_78 1962_1_cb_86 edward orton jr ceramic foundation 65_tc_147 revrul_56_304 1956_2_cb_306 states that an organization which otherwise meets the requirements for exemption from federal_income_tax are not precluded from making distributions of their funds to individuals provided such distributions are made on a true charitable basis in furtherance of the purposes for which they are organized however organizations of this character which make such distributions should maintain adequate_records and case histories to show the name and address of each recipient of aid the amount distributed to each the purpose for which the aid was given the manner in which the recipient was selected and the relationship if any between the recipient and members officers or trustees of the organization a grantor or substantial_contributor to the organization or a member_of_the_family of either and a corporation controlled by a grantor or substantial_contributor in order that any or all distributions made to individuals can be substantiated upon request by the internal_revenue_service revrul_68_489 1998_2_cb_210 held that an organization will not jeopardize its exemption under sec_501 of the code even though it distributes funds to nonexempt organizations provided it retains control and discretion over use of the funds and maintains records establishing that the funds were used for sec_501 purposes the distributions must be to specific projects that are in furtherance of the organization’s own exempt purposes and the organization must maintain records establishing that the funds were used for sec_501 purposes when contributions are restricted by the donor to a class of beneficiaries the class of beneficiaries may be too narrow to qualify as a deductible charitable_contribution in 203_fsupp_126 e d s c a corporation was denied a deduction for amounts given to a foundation established to provide education opportunities for employees and their children the narrow class of persons who might benefit the restricted_group that did actually benefit and the preference given to the son of the director stockholder and trustee indicated that the foundation was not operated exclusively for charitable persons the term educational as used in sec_501 relates to the instruction or training of an individual for the purpose of improving or developing his capabilities or the instruction of the public on subjects useful to the individual and beneficial to the community educational organizations are classified as charitable see sec_1_501_c_3_-1 of the regulations revrul_67_4 1967_1_cb_121 provides the following criteria to determine whether the publishing and distribution of materials are directed to attaining the purposes specified in sec_501 form 886-a of the treasury-internal revenue service _publish no irs gov department page_62 catalog number 20810w schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended explanations of items page of the content of the publication is educational the preparation of the material is necessary or valuable in achieving the organization's educational and scientific purpose the distribution of the material is necessary or valuable in achieving the organization’s educational and scientific purpose and the manner in which the distribution is accomplished is distinguishable from ordinary commercial publishing practices part of the educational analysis determines whether the education benefits the private interest of the individuals receiving the information and whether the individuals who receive the education are in a charitable_class 78_tc_280 organization which issued newsletter to new york city teacher retirees advising them of status of litigation held not be exempt the information was only useful for the retirees’ private interests---to ensure the financial stability of pension_plan moreover most of the retirees were not members of a charitable_class the provision of free services to persons who are not poor is not an exempt_purpose and aid to pensioners without regard to need is not a charitable purpose church status an organization qualifies as a church only if its principal purpose or function is that of a church see revrul_56_262 1956_1_cb_131 in the absence of congressional guidance and without any guidance from within the regulations themselves courts have developed at least three different approaches to determine whether a taxpayer qualifies as a church for purposes of sec_170 88_fedclaims_203 ct_cl these approaches include the de la salle approach the fourteen criteria the associational test the de la salle approach from the case of 195_fsupp_891 n d cal defines the term church by the common meaning and usage of the word in decisions subsequent to de la salle courts have declined to adopt the approach taken by the de la salle court the irs first introduced the fourteen criteria in a speech in these criteria were first adopted in 490_fsupp_304 d d c and by subsequent courts these criteria are form 886-a of the treasury-internal revenue service _publish no irs gov department page catalog number 20810w _63 schedule number or exhibit form 886-a rev jarwary explanations of items page of name of taxpayer tax identification_number year period ended 20xx a distinct legal existence a recognized creed and form of worship a definite and distinct ecclesiastical government a formal code of doctrine and discipline a distinct religious history a membership not associated with any church or denomination an organization of ordained ministers ordained ministers selected after completing prescribed studies a literature of its own established places of worship regular congregation sec_12 regular religious services sunday schools_for the religious instruction of the young schools_for the preparation of its ministers no single factor is controlling although all fourteen may not be relevant to a given determination the court in american guidance supra set forth an associational test in reference to the fourteen criteria while some of these are relatively minor others e g the existence of an established congregation served by an organized ministry the provision of regular religious services and religious education for the young and the dissemination of a doctrinal code are of central importance the means by which an avowedly religious purpose is accomplished separates a church from other forms of religious enterprise at a minimum a church includes a body of believers or communicants that assembles regularly in order to worship unless the organization is reasonably available to the public in its conduct of worship its educational instruction and its promulgation of doctrine it cannot fulfill this associational role the court_of_appeals_for_the_federal_circuit further discusses the associational test in foundation of human understanding v united_states f 3d c a fed we agree that the associational test is an appropriate test for determining church status under sec_170 although we recognize that the associational test and the '14 criteria test' substantially overlap as courts have pointed out among the most important of the criteria are the requirements of 'regular congregations’ and ‘regular religious services’ see spiritual outreach f 2d pincite am guidance f_supp pincite thus whether applying the associational test or the criteria test courts have held that in order to be considered a church under sec_170 a religious_organization must create as part of its religious activities the opportunity for members to develop a fellowship by worshipping together see church of eternal life t c pincite 'a church is a coherent group of individuals and families that join together to accomplish the religious purposes of mutually held beliefs in other words a church's principal means of accomplishing its religious purposes must be to assemble regularly a group of individuals related by common worship and faith ' the supreme court denied certiorari 131_sct_1676 u s form 886-a of the treasury-internal revenue service _publish no irs gov _ department page_64 catalog number 20810w schedule number or exhibit form 886-a fo nce explanations of items page of tax identification_number year period ended name of taxpayer 20xx in 74_tc_531 an action for declaratory_judgment pursuant to sec_7428 the tax_court considered an adverse_ruling by the irs on an application_for exempt status as a church the applicant had declined to furnish some information and made answers to other inquiries that were vague and uninformative based on the record the court held that the applicant had not shown that no part of its net_earnings inures to the benefit of the family or that petitioner was not operated for the private benefit in chapman v commissioner dollar_figure t c an interdenominational organization sent out evangelical teams to preach throughout the world and to establish small indigenous churches these teams used dental services as the initial means by which they contacted prospective converts to christianity the court held that the organization was not a church for federal tax purposes in part because a sizable segment of its efforts to propagate the faith was performed on an individual basis judge tannenwald explained that the word ‘church’ implies that an otherwise qualified_organization bring people together as the principal means of accomplishing its purpose the permissible purpose may be accomplished individually and privately but it may not be accomplished in physical solitude the organization’s religious services and preaching though functions normally associated with a church were not its primary activities and therefore were not determinative of church status inurement sec_1_501_c_3_-1 of the regulations provides that 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 inurement and or private benefit of the sec_501 organizations’ assets in any form or amount is prohibited sec_1_501_c_3_-1 of the regulations provides that an organization is not organized or operated exclusively for exempt purposes unless it serves a public rather than a private interest to be eligible for tax-exempt status no part of an organization’s net_earnings may inure to the benefit of any private_shareholder_or_individual 826_fsupp_537 d d c aff'd 55_f3d_684 d c cir inurement is any transfer of charitable assets to the organization’s insiders for which the organization does not receive adequate_consideration inurement can take many forms unaccounted for diversions of a charitable organization's resources by one who has complete and unfettered control can constitute inurement the provision of inurement can be direct or indirect control of the organization by an individual or for-profit entity gives rise to a presumption that the entity is operated for the benefit or the controlling individual or entity even a relatively small benefit to officers or directors is sufficient to defeat tax-exempt status for a purportedly nonprofit page publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended page of explanations of items entity 412_f2d_1197 ct_cl cert_denied 397_us_1009 the service has the authority to revoke an organization’s exempt status for inurement regardless of the amount of inurement see the founding church of scientology f 2d pincite in 75_tc_127 the tax_court denied tax exempt status to an organization whose controlling member received compensation based upon a percentage of the organization’s gross_receipts private benefit the prohibition against private benefit shares common elements with but is distinct from the proscription against inurement of organizational earnings to private shareholders and individuals private benefit encompasses not only benefits conferred on insiders having a personal and private interest in the organization but also benefits conferred on unrelated or disinterested persons when an organization operates 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 the organization by definition does not operate exclusively for exempt purposes prohibited private benefits may include an advantage profit fruit privilege gain or interest occasional economic benefits flowing to persons as an incidental consequence of an organization pursuing exempt charitable purposes will not generally constitute private benefits see redland surgical services v commissioner 113_tc_47 92_tc_1053 activities substantially benefited the private interests of the republican party an organization’s property may be impermissibly devoted to a private use where private interests have control directly or indirectly over its assets and thereby secure nonincidental private benefits private benefit means conferring a benefit upon an individual or entity but is distinguished from inurement in that it may or may not involve diversion of charitable assets also differs from inurement in that it can be conferred on both insiders and outsiders sometimes a private benefit is not solely financial it lf an organization provides benefits to charitable_class this factor is considered in determining whether the exemption should be denied see 71_tc_202 acg 1981_2_cb_1 in the 71_tc_102 the court found the church’s documentation inadequate where the records of its grants to individuals were a list of grants made to individuals which included the name of the recipient the amount of the grant and the reason for the grant which was specified as either unemployment moving_expenses school scholarship or medical expense the court concluded that this stated documentation failed to establish whether exempt charitable purposes were served in fact form 886-a catalog number 20810w page _publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a faba denansigies explanations of items page of name of taxpayer tax identification_number year period ended 20xx earmarking and foreign conduit the organizational and operational requirements of both sec_501 and sec_170 have similarities to the extent that the provisions of section’ c parallel those of sec_501 the service gives them the same meaning refer to gcm gcm lexi sec_246 date sec_170 of the code provides in material part as follows assuming that an organization otherwise meets the requirements set forth in sec_170 c of the code a further problem arises where that organization is required to turn all or part of its funds over to a foreign charitable_organization as noted above contributions directly to the foreign organization would not be deductible the question presented here is whether the result should differ when funds are contributed to a domestic charity which then transmits those funds to a foreign charitable_organization prior to the passage of the revenue act of there were no restrictions as to the place of creation of charitable organizations to which individuals might make deductible contributions sec_102 c of the revenue act of which first permitted a deduction for corporate charitable_contributions limited that deduction to contributions to domestic organizations which used such contributions within the united_states the rule as to individual contributions was changed with the passage of the revenue act of sec_23 of that act provided that contributions by individuals were deductible only if the recipient was a domestic organization see discussion of that section in ways_and_means_committee report h_r report no seventy-fifth congress third session c b part pincite sec_224 of the revenue act of substituted for the requirement that a qualifying_organization be domestic the requirement that it have been created or organized in the united_states or in any possession thereof etc in substantially the same form this requirement was re-enacted as sec_170 c a of the code at the outset it should be noted that sec_170 c a of the code relates only to the place of creation of the charitable_organization to which deductible contributions may be made and does not restrict the area in which deductible contributions may be used compare the last sentence in sec_170 c of the code which requires that certain corporate contributions be used within the united_states accordingly the following discussion should not be construed as limiting in any way the geographical areas in which deductible contributions by individuals may be used the deductibility of the contributions here at issue will be discussed in connection with five illustrative examples set out below the foreign organization referred to in each of the examples is an organization which is chartered in a foreign_country and is so organized and operated that it meets all the requirements of sec_170 c of the code excepting the requirement set forth in sec_170 c a of the code the domestic organization in each example is assumed to __publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page_67 schedule number or exhibit form 886-a rev date explanations of items page of name of taxpayer tax identification_number year period ended 20xx meet all the requirements in sec_170 c of the code in each case the question to be decided is whether the amounts paid to the domestic organization are deductible under sec_170 a of the code in pursuance of a plan to solicit funds in this country a foreign organization caused a domestic organization to be formed at the time of formation it was proposed that the domestic organization would conduct a fund-raising campaign pay the administrative expenses from the collected fund and remit any balance to the foreign organization certain persons in this country desirous of furthering a foreign organization's work formed a charitable_organization within the united_states the charter of the domestic organization provides that it will receive contributions and send them at convenient intervals to the foreign organization a foreign organization entered into an agreement with a domestic organization which provides that the domestic organization will conduct a fund-raising campaign on behalf of the foreign organization the domestic organization has previously received a ruling that contributions to it are deductible under sec_170 of the code in conducting the campaign the domestic organization represents to prospective contributors that the raised funds will go to the foreign organization a domestic organization conducts a variety of charitable activities in a foreign_country where its purposes can be furthered by granting funds to charitable groups organized in the foreign_country the domestic organization makes such grants for purposes which it has reviewed and approved the grants are paid from its general funds and although the organization solicits from the public no special fund is raised by a solicitation on behalf of particular foreign organizations a domestic organization which does charitable work in a foreign_country formed a subsidiary in that country to facilitate its operations there the foreign organization was formed for purposes of administrative convenience and the domestic organization controls every facet of its operations in the past the domestic organization solicited contributions for the specific purpose of carrying out its charitable activities in the foreign_country and it will continue to do so in the future however following the formation of the foreign_subsidiary the domestic organization will transmit funds it receives for its foreign charitable activities directly to that organization it is recognized that special earmarking of the use or destination of funds paid to a qualifying charitable_organization may deprive the donor of a deduction in s e 2_tc_441 the court held that amounts paid to a charitable_organization were not deductible where the contributions were earmarked for the benefit of a particular ward of the organization similarly see revrul_54_580 c b these cases indicate that an inquiry as to the deductibility of a contribution need not stop once it is determined that an amount has been paid to a qualifying_organization if the amount is earmarked then it is appropriate to look beyond the fact that the immediate recipient is a qualifying_organization to determine whether the payment constitutes a deductible contribution _publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a rev date explanations of items name of taxpayer year period ended page of tax identification_number similarly if an organization is required for other reasons such as a specific provision in its charter to turn contributions or any particular contribution it receives over to another organization then in determining whether such contributions are deductible it is appropriate to determine whether the ultimate recipient of the contribution is a qualifying_organization it is well established in the law of taxation that a given result at the end of a straight path is not made a different result because reached by following a devious path 302_us_609 pincite ct_d c b george w 308_us_355 pincite ct_d c b moreover it seems clear that the requirements of sec_170 c a of the code would be nullified if contributions inevitably committed to go to a foreign organization were held to be deductible solely because in the course of transmittal to the foreign organization they came to rest momentarily in a qualifying domestic organization in such cases the domestic organization is only nominally the donee the real donee is the ultimate foreign recipient 20xx accordingly the service holds that contributions to the domestic organizations described in the first and second examples set forth above are not deductible similarly those contributions to the domestic organization described in the third example which are given for the specific purpose of being turned over to the foreign organization are held to be nondeductible on the other hand contributions received by the domestic organization described in the fourth example will not be earmarked in any manner and use of such contributions will be subject_to control by the domestic organization consequently the domestic organization is considered to be the recipient of such contributions for purposes of applying sec_170 c of the code similarly the domestic organization described in the fifth example is considered to be the real beneficiary of contributions it receives for transmission to the foreign organization since the foreign organization is merely an administrative arm of the domestic organization the fact that contributions are ultimately paid over to the foreign organization does not require a conclusion that the domestic organization is not the real recipient of those contributions accordingly contributions by individuals to the domestic organizations described in the fourth and fifth examples are considered to be deductible pursuant to the authority contained in sec_7805 b of the code the principles stated herein will not be applied to disallow deductions for contributions made to a charitable_organization prior to date the date of publication of this revenue_ruling if those contributions otherwise would have been deductible under an outstanding ruling or determination_letter in revrul_79_81 1979_1_cb_107 students at a religious educational_institution had their tuition paid_by sponsors in many cases the sponsor was the student’s parent the sponsors signed a commitment form that set the contribution amount the payment schedule and indicated the names of the sponsor and the student there was also a space provided on the payment envelopes for the student’s name the commitment form provided that contributions were nonrefundable and that the use of the money was solely at the discretion of the organization the ruling held that a charitable_contribution_deduction was not allowable because deductibility required both full control by the organization and the intent by the donor to benefit the charity and _publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a sre jhrtary explanations of items page of tax identification_number year period ended name of taxpayer not a particular recipient the commitment form and the envelopes indicated that the payments were designated for the benefit of particular students the ruling stated that the control the organization had over the funds was comparable to the control any school would have over tuition payments received 20xx in revrul_68_484 1968_2_cb_105 the corporation established a scholarship program the corporation selected universities from which the corporation drew a substantial number of its employees the universities selected the recipients of the scholarships in their own discretion and there was no employment commitment between the corporation and the scholarship recipients the ruling held that for purposes of determining that a contribution is made to or for_the_use_of an organization described in sec_170 rather than to a particular individual who ultimately benefits from the contribution the organization must have full control of the use of the donated funds and the contributors’ intent in making the payment must have been to benefit the organization itself and not the individual recipient in revrul_62_113 1962_2_cb_10 the donor made a cash contribution to a missionary fund that was intended to reimburse missionaries for approved expenses not covered by amounts received from the missionaries’ parents friends relatives or by personal savings the donor's son was a missionary and was eligible to receive reimbursements from the fund most of the son’s support was provided by the donor directly to his son and the donor had previously contributed to the fund the ruling held that if the contributions to the missionary fund are earmarked by the donor for a particular individual they are treated in effect as gifts to the designated individual and are not deductible in the ruling a charitable_contribution_deduction was allowed because it was established that the donor intended the gift_for the organization and not as a gift to an individual in revrul_61_66 1961_1_cb_19 an individual gave money to a university requiring that it use the money to fund the research project of a particular professor the university had no discretion over the use of the funds the ruling held in part that the university was a conduit only and that the real donee was the professor as a payment to an individual the gift was not deductible under sec_170 in revrul_60_367 1960_2_cb_73 the issue was whether contributions made to a college for the purpose of acquiring or constructing a housing facility for use by a designated fraternity would be allowed as a charitable_contribution_deduction the college accepted the designated funds but only with the understanding that the designation would not restrict or limit the full ownership rights of the college in the property acquired based on the facts presented the ruling held that the contributions were deductible under sec_170 revrul_63_252 1963_2_cb_101 dealt with the deductibility of contributions by individuals to a charity organized in the united_states which thereafter transmits some or all of its funds to a foreign charitable_organization charitable_contributions may be allowed as deductions if the domestic charity does not merely act as a conduit for the foreign charity the ruling stated that if an organization is required to turn contributions or any particular contributions it receives to _publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit form 886-a rev date explanations of items page of name of taxpayer tax identification_number year period ended 20xx another organization in determining whether such contributions are deductible it is appropriate to determine whether the ultimate recipient of the contribution is a qualifying_organization under the law of taxation a given result at the end of a straight path is not made a different result because reached by following a devious path moreover the requirement that the organization be a domestic organization would be nullified if in the course of transmittal to the foreign organization the funds came to rest momentarily in a qualifying domestic organization in such case the domestic organization is only nominally the donee and the real donee is the ultimate foreign recipient organization is considered the recipient for the purpose of sec_170 if the contributions are subject_to the control of the domestic organization the domestic revrul_66_79 1966_1_cb_48 amplifies revrul_63_252 to provide that contributions to a domestic charity that are solicited for a specific project of a foreign charitable_organization are deductible under sec_170 of the code if the domestic charity has reviewed and approved the project as being in furtherance of its own exempt purposes and has control and discretion as to the use of the contributions this conclusion is reached because the contributions received by the domestic charity are regarded as for_the_use_of the domestic organization and not the foreign organization receiving the grant from the domestic organization revrul_66_70 1966_1_cb_5 amplified revrul_63_252 the bylaws of the u s charitable_organization provided that the board_of directors would review all requests for funds from other organizations and require that such requests specify the use to which the funds would be put and if the board_of directors approve the request it also required the grantees to furnish a periodic accounting to ensure that the funds were expended for the purposes which were approved by the board the board_of directors had absolute discretion to refuse to make any grants or contributions or otherwise render financial assistance to or for any of the purposes for which the funds are requested the bylaws and charters of the organization stated that it may make grants to any organization organized and operated exclusively for charitable purposes within the meaning of sec_501 and that the organization can be either domestic or foreign the organization refused to accept contributions so earmarked that they must go the foreign organization the ruling held that the_domestic_corporation may solicit for specific grants which will go the foreign organization when it has reviewed and approved them in furtherance of its purposes the domestic organization retained control and discretion over the use of the funds so that contributions received by the domestic organization from such solicitations are regarded as for_the_use_of the_domestic_corporation and not for the organization receiving the grant from the domestic organization revrul_75_65 c b held that when a domestic organization makes grants to foreign charities following review and approval of the specific grant the foreign organization is an administrative arm of the domestic organization and contributions to the domestic organization are deductible in 495_us_472 the supreme court had to determine whether the funds transferred by the taxpayers to their two sons in their individual checking accounts while form 886-a of the treasury-internal revenue service_department __publish no irs gov page catalog number 20810w schedule number or exhibit form 886-a fren mande explanations of items page of tax identification_number year period ended name of taxpayer they performed services as full-time unpaid missionaries for the church of jesus christ of latter- day saints were deductible as charitable_contributions to for_the_use_of the church pursuant to sec_170 the court held that there was no evidence that congress intended the phrase for_the_use_of to be interpreted as referring to fiduciary relationships in general or as referring to a type of relationship that gives a qualified_organization a reasonable ability to supervise the use of contributed funds the court concluded that a gift or contribution is to or for_the_use_of a qualified_organization when it is held in a legally enforceable trust for the qualified_organization or ina similar legal arrangement 20xx in 337_f2d_432 cir the taxpayer claimed a charitable_contribution_deduction for payments to a college it is taxpayer stated i am aware that a donation to a scholarship fund is only deductible if unspecified however if in your opinion and that of the authorities it could be applied to the advantage of mr robert f roble think it would be constructive the court held that the contribution was earmarked and that the taxpayer intended to benefit the individual and not the institution therefore the charitable_contribution_deduction was denied in the letter accompanying a payment the in 43_tc_1 acg 1965_2_cb_6 a case involving contributions to the church for specified missionaries the court held that the mission had exclusive control under its own policy of both the administration and distribution of the funds donated by the taxpayers the fact that the taxpayers designated three or four missionaries to be supported by the donations was no more than a manifestation of their desire the money went into a common pool to be distributed only as the mission determined the test in each case is whether the organization has full control of the donated funds and discretion as to their use to insure that the funds will be used to carry out the organization’s functions and purposes in s e 2_tc_441 the taxpayer made payments to a boys’ school on behalf of a ward of the illinois children’s home and aid society the court held under the predecessor of sec_170 that the payments were not contributions to or for_the_use_of the charitable_organization but were gifts for the benefit of a particular individual section dollar_figure of revproc_2014_9 i r b 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 taxpayer’s position has not provided a written formal position however position can be determined from written responses provided by in reviewing all the available information and stated its emphasis is to achieve a life-changing experience where being more charitable is the hallmark of one who loves their lord and is obedient to his commands here on earth at times referred to itself as a bible based church 2epartment of the treasury-internal revenue service form 886-a catalog number 20810w publish no irs gov page schedule number or exhibit form 886-a rev date explanations of items page of tax identification_number year period ended name of taxpayer 20xx does not believe it needs to have the traditional brick and mortar auditorium to be a church and believes the posting on various websites to get out its word to the virtual community is sufficient the purpose of charitable and share their wealth is to encourage people specifically high-dollar taxpayers to be more has also claimed that even if it is not a church it still may be tax-exempt under sec_501 of the internal_revenue_code as a religious charitable educational_organization etc operates several programs that it believes could be seen as furthering exempt purposes and uses its website to convey helpful information does not agree that its officers misused organization funds stating that those individuals checking account are trusted to not who are authorized to have access to any abuse their responsibility to handle a checking account exactly the same as any organization also believes that the disbursements and transfers made to and were for legitimate business or charitable purposes or for reimbursements of expenses relating to project being worked on does not agree that its activities improperly served the private interests of its officer or the individuals making contributions to the organization and businesses become more charitable purpose is instead to help individuals e e simply are required to share much it is a biblical truth which becomes the mantra believes and preaches that those who have been given much success being defined as those who have much significance being those who share response to idr l have largely chosen web sites as an inexpensive way to get the message out it is a very biblical centered message that would be life changing if it were to be spread far and wide it is a message the has been around for centuries and feel called to share that message any way can response to idr government’s position e is not operating as a church within the meaning of section sec_501 and sec_170 of the internal_revenue_code received a determination_letter in 19xx that it was a church although time ago to function as a church and does not meet the common meaning and usage of the word as defined in the 195_fsupp_891 n d cal ceased some the original founder president of ceo resigned in the late 19xxs and since then and his spouse director has not been operating as a church form 886-a department of the treasury-internal revenue service catalog number 20810w publish no irs gov page schedule number or exhibit form 886-a rev date explanations of items page of name of taxpayer tax identification_number year period ended 20xx provided a written response to the notice of church inquiry which included information did not have a place of worship did not have an established congregation did not that offer regular religious services and did not have religious education for the young all of these factors are of central importance per the associational test referenced in 490_fsupp_304 d d c in addition as shown in the response to the notice of church inquiry and in the information provided for the audit did not meet most of the fourteen criteria the courts addressed in american guidance supra for those minor criteria which appeared to be met there is doubt as to the credibility of provided in response to the notice of church inquiry statements given the inaccurate written statements for example claimed two individuals who resided in utah were performing services for and claimed one of the two in utah was an ordained minister performing sacerdotal duties the truth was one person was disabled and had not performed services for and the other person has not been actively involved with for years and could not have performed the services listed since he was not a minister priest and was a member of another church in other information showing non-church status included statements that and and the financial records which could isa church listed on both attended another church in resume posted on the professional experience is resume state offered by held himself out to be a minister paid tithes to a different church in website but that resume does not mention own websites continually make the statement indicated indicate she is a member of that other church in addition no one was able to state that in the written response to the notice of church inquiry you will notice is that the name attempt to call it a church and it has no location associated with it ordination as a minister and serving as a minister of nor does the is achurch finally no one was aware of any religious church services and -year-old c faith-based public charity and does not state in response to the ncti to more closely resemble a church in the traditional sense even though more than a year has passed these written statements were provided meaning of sec_501 of the internal_revenue_code is not operated exclusively for exempt purposes within the stated if they had one year they could change their operations _publish no irs gov department is precisely correct in that there is no of the treasury-internal revenue service has not changed anything stated the first thing catalog number 20810w form 886-a page_74 isa schedule number or exhibit form 886-a rev date name of taxpayer 20xx tax identification_number year period ended explanations of items page of at one point in the examination be a church but he believed revenue code as a religious charitable educational_organization stated was tax-exempt under sec_501 of the internal would most probably not qualify to as discussed under the facts section of this report activities were exclusively in furtherance of the purpose stated in sec_501 of the internal_revenue_code has failed to establish that it sec_1 inurement first an organization will not be regarded as operating exclusively for exempt purposes where any part of the organization’s earnings inure to the benefit of private shareholders or individuals see sec_1_501_c_3_-1 personal or private interest in the activities of the organization sec_501 a -1 c this refers to individuals having a in this case there are numerous examples of cash funds from some examples without being able to justify or explain the purpose of the payments and receiving or removing a cash was withdrawn from one of business accounts and re-deposited into to date date dollar_figure dollar_figure dollar_figure dollar_figure account such as personal account acct amount amount personal account account account such as withdrawn from account 20xx 20xx 20xx 20xx b on-line transfers from account information or documentation provided to establish the purpose for the cash withdrawals for example on june 20xx _ cash withdrawals dollar_figure were made from 20xx 20xx 20xx 20xx business accounts that were not re-deposited and no department of the treasury-internal revenue service c cash withdrawals from catalog number 20810w form 886-a publish no irs gov anddollar_figure dollar_figure dollar_figure dollar_figure dollar_figure page d dollar_figure schedule number or exhibit form 886-a rev date name of taxpayer tax identification_number year period ended explanations of items page of 20xx d on 20xx dollar_figure was withdrawn from account and part of this was traced to the purchase of a new used vehicle 19xx lincoln town car for dollar_figure purchased in and remained in personal name this vehicle was e was attributed to dollar_figure airline tickets on southwest airlines for several meals in during the period the meal receipts were for local travel_expenses but review of the expenses revealed three to visit her family in was visiting her family and the majority of expenses for two meals which appeared to be and dining out at various times various expenses but despite several requests from the irs about the expenses the precise nature of the transfers of money remains largely unexplained or confusing attempted to justify the payments as reimbursements for and were the dominant figures with respect to in addition the years under examination both appear to have been in complete control of operations and finances although cited several other individuals as being involved communications with these people indicated that were not highly involved or had ceased working with forms w-2 or to returns despite both receiving various forms of compensation from some time ago also telling is the fact that or failed to issue any during this period or to file any employment_tax assuch during and they removed from during this period have largely avoided the payment of any income taxes on any of the money and given any other individuals to temper their complete control_over and its officers board members consistently changing stories document the numerous payments and other withdrawals and transfers made to the various roles as officers and board members the lack of _ the lack of records maintained inability to justify and is evidence of inurement not only should these payments be treated as income but the logical inference is that these payments were disguised and to the unjustified distributions of what emerges from these facts is the inference that the hubbard family was entitled to make ready personal_use of the corporate earnings earnings see founding church of scientology f 2d at accordingly to the benefit of and is not operated exclusively for exempt purposes because its earnings inured private benefit an organization is not operated exclusively for exempt_purpose unless it serves a public rather than a private interest an organization must therefore establish that it is not operated for the benefit of private interests such as designated individuals or shareholders of the organization form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit tax identification_number explanations of items page of form 886-a rev date name of taxpayer year period ended 20xx in this case interests appears to be primarily operated for the benefit of private rather than public a charitable investment trusts personal private charities these were established to allow high-dollar taxpayers to donate to a_trust which they the high-dollar taxpayer controlled since they were named the trustee as trustees the donors were told they could pay themselves a fee dollar_figure plus expense to manage the trust these were established as integrated_auxiliaries of website included the advantage of no requirement to file form_1023 application_for recognition of exemption under sec_501 of the internal_revenue_code for its own tax-exempt status and there were no private_foundation chapter compliance’ restrictions no public charity accountability issues and as stated on the -_- an hour allowed an investor into a for-profit business bank account to give the investor a dollar_figure retained tax-deductible donation of the invested funds to pay for the personal expenses of to flow funds through i for her to compensate for use of its name deductible donations funds deposited into one of this appeared to be a conduit serving as a forwarding agent although represented as a project sponsored by by claiming this project was a fiscally sponsored by bank account for the benefit of this project entitled the payer of the funds tax- situation based on received funds were never shown to be used for a tax-exempt purpose but some of the funds were taken by services and to compensate funds raised as tax-deductible donations contributed for the were moved to another bank account rather than used for an exempt_purpose a tax-deductible donation of dollar_figure profit llc no explanation was provided for the payment nor was an exempt_purpose established for the payment as an individual made personal loans to the tax-deductible acknowledgement receipts for the loans retained dollar_figure -_ of the donation to pay for the personal expenses of was made to _ for the purpose of funding a for- although this event was presented received a tax-deduction receipt for a potential charity event benefiting department of the treasury-internal revenue service as adonationto form 886-a catalog number 20810w publish no irs gov issued project gave dollar_figure and_ page schedule number or exhibit form 886-a rev date explanations of items page of tax identification_number year period ended name of taxpayer 20xx as a possibly charity fundraiser one of the e-mails from a for-profit business stated this is charity to promote and these are not recognized charities and the event would have promoted for-profit business and their products f i and even if they may have been entitled to payments from seem to have treated status essentially as a spring board for any idea commercial or otherwise that would come to him businesses used it to communicate with interested parties and made use of the bank accounts etc as he saw fit posted information about his other for their services they like their alter egos used exempt ii there were no tax-exempt activities identified even though claimed first they were a church and later stated they may not be operating as a church in the traditional sense but claimed they had other sec_501 activities iii openly discusses on website how exempt status as a church referred to as a faith-based public charity allows anyone who is one of integrated auxiliary to have access to the typical sources of charity funding _ makes an excellent asset holding tax-exempt_organization the licensing of the technology is a tax-exempt form of funding and makes an excellent endowment investment_company investment earnings are a tax-exempt form of funding during the pre-examination conference were departments of deposited in unidentified bank account not under the control of facts bank account s if this was true there would not have been an and all income from the integrated_auxiliaries were as discussed under stated integrated_auxiliaries made several contradictory statements such as claiming the for-profit business website included hyperlinks to no longer existed and yet documents current iv v commercial purposes an organization must serve a tax-exempt purpose not a for-profit commercial purpose documents secured for the audit indicated promote commercial activities including used tax-exempt status to a selling promoting various tax and business strategies i charitable investment trusts personal private charities - there is no provision in the internal_revenue_code for a personal or private charity and this structure appears to be have been established to avoid the chapter compliance requirements as well as other public charity transparency requirements form 886-a department of the treasury-internal revenue service catalog number 20810w _publish no irs gov page_78 schedule number or exhibit inna eis form 886-a name of taxpayer 20xx tax identification_number year period ended explanations of items page of ii - this was previously for-profit corporation providing tax and wealth management strategies and it was not performing any tax-exempt activities the this as permanently revoked and yet recent website includes links to the secretary of state reflects b grant application advice documents i in an e-mail dated february 20xx of on how to commercialize a grant and use it to make money’ provides instructions to specifically instructs to get a grant designed for tax- exempt purposes and use it to conduct potentially taxable activities and use it to benefit himself ds c pursuit of for-profit activities i ii ili iv - this was one of integrated asa auxiliaries departments or divisions but in september 20xx incorporated documents reviewed for the audit concerned an e-mail to june 20xx concerning for-profit activities and the need to qualify public charity as quickly as possible supporting many other charities doing the things we have dreamed of doing for decades could be a very significant player in is clearly our platform and our focus for nonprofit corporation one of the dated asa - stated was formed as a consulting company many years ago and is no longer around but when presented with a letter sent may 20xx to officer of investment any income from it chief development soliciting for-profit business involving visa immigration stated he may have sent the letter but he never received and - these were both for-profit businesses that proposed be used for some tax-exempt activities gold mining projects - this was mentioned in a 20xx e-mail message as a possible activity d acting as a forwarding agent or finder’s fees which has no tax-exempt purposes i ii iii - stated original role was to serve as the forwarding agent for this foreign project along the proceeds to the person conducting the overseas activities collected the funds and passed -dollar_figure was received and dollar_figure and forwarded the balance to was the forwarding agent and in writing much about finder fee for services performed for for his personal services in putting together the parties for the nor did he know what happened to the dollar_figure was paid to -dollar_figure stated stated he did not know investment retained verbally _ publish no irs gov department of the treasury-internal revenue service form 886-a catalog number 20810w page schedule number or exhibit explanations of items page of form 886-a rew larvae name of taxpayer 20xx tax identification_number year period ended part of this fee was for conduct the for-profit business services in locating an acceptable facility to lack of records substantiation a bank records prepared spreadsheet i ii iii had to go to the bank to obtain the bank to prepare for the audit statements but did not request or receive the supporting substantiation transit documents using the secured bank statements and listed transactions spreadsheet itemizing the income expenses and miscellaneous transactions for some of the items identified on the spreadsheet for a specific purpose review of the bank statements reflected disbursements in cash and the majority of the time prepared a did not have anything to support the use of the cash b receipts invoices i some actual receipts were available for meals but recordkeeping requirement of ii sec_274 was not met concerning substantiation requirements receipts for personal items - such as airfare for to visit family in business_expense iii when asked to provide the supporting documents for the expenses identified in the - was included in the reconstructed records as bank account for one of the program project of was unable to provide any documentation and stated supporting documentation for_the_use_of funds don't have a clue what that means have never heard of such a thing in years of pretty active work in many different churches those individuals who are authorized to have access to any checking account are trusted to not abuse their responsibility to handle a checking account exactly the same as any organization i i reviewed - website over multi-year period with the most recent review reflecting the website was updated in 20xx the website did not reflect any church activities claims they conducted other tax-exempt activities none was observed ii although on the websites reviewed inconsistent statements - there were several as mentioned throughout the facts a couple of the key ones include provided a written_statement submitted on 20xx that during the ncti given one-year grace period they could be in full-compliance with the irs characteristics of a church at the 20xx meeting with information was provided that had not changed any of its operations form 886-a catalog number 20810w page publish no irs gov epartment of the treasury-internal revenue service d c website i schedule number or exhibit form 886-a rey daa 0g explanations of items page of name of taxpayer tax identification_number year period ended 20xx ii integrated auxiliary - just happens to be the irs version of a structure for a sub-set of a church activity and it was a department of one of the integrated_auxiliaries discussed stated the integrated_auxiliary_of_a_church was discussed in-depth and in response to idr stated makes this claim they did not disclose information on the bank than a project program etc that fit into the overall mission of although account for income expenses and activities of hand knowledge about this program project during the audit and when questioned about the had no first- was not its own entity it was nothing more iii church status - for the audit represented itself as a church there were no church activities conducted and charity even the resume for indicate was a church stated on its website it was a faith-based public posted on the website did not conclusions sec_501 and sec_170 of the internal_revenue_code is no longer operating as a church within the meaning of section in addition the meaning of sec_501 of the internal_revenue_code is not operated exclusively for exempt purposes within is no longer eligible for exemption from federal_income_tax under section as such c of the internal_revenue_code the favorable determination_letter dated march 19xx is hereby revoked effective january 20xx contributions to the organization are no longer deductible under sec_170 of the internal_revenue_code is required to file forms for all tax years on or after january 20xx _ publish no irs gov 2epartment of the treasury-internal revenue service form 886-a catalog number 20810w page