department of the treasury internal_revenue_service te_ge eo examinations commerce street mc dal dallas tx date may tax_exempt_and_government_entities_division number release date person to contact identification_number telephone number in reply refer to last date for filing a petition with the tax_court uil certified mail - return receipt requested dear this is a final adverse determination regarding your exempt status under sec_501 of the internal_revenue_code irc our favorable determination_letter to you dated june 20xx is hereby revoked and you are no longer exempt under sec_50l a as an organization described in sec_501 of the irc effective janualy 20xx our adverse determination was made for the following reasons you have not established that you are organized and operated exclusively for an exempt_purpose or that you have been engaged primarily in activities that accomplish one or more exempt purposes within the meaning of irc section s0l c you have not established that no part of your net_earnings inure to the benefit of any private_shareholder_or_individual contributions to your organization arc no longer deductible under sec_170 of the code you are required to file federal_income_tax returns on form_1120 these returns should be filed with the appropriate service_center for the year ending december 20xx and for all years thereafter processing of income_tax returns and assessment of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the internal_revenue_code if you decide to contest this determination in court you must initiate a suit for declaratory_judgment in the united_states tax_court the united_states court of federal claims or the district_court of the united_states for the district of columbia before the day after the ' date this determination was mailed to you contact the clerk of the appropriate court for the rules for initiating suits for declaratory_judgment you 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 the taxpayer_advocate_service tas is an independent organization within the irs that can help protect your taxpayer rights we can offer you help if your tax problem is causing a hardship or you've tried but haven't been able to resolve your problem with the irs if you qualify for our assistance which is always free we will do everything possible to help you visit taxpayeradvocate irs gov or call we will notify the appropriate state officials of this action as required by sec_6104 of the internal_revenue_code if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely yours umamue oeoke maria hooke director exempt_organizations examinations enclosures publication i department of the treasury internal_revenue_service irs tax exempt and government entities exempt_organizations examinations van dentification taxpayer_identification_number number form tax_year s ended person to contact employee id telephone fax manager's contact information employee id telephone response due_date certified mail - return receipt requested dear why you’re receiving this letter we enclosed a copy of our audit report form 886-a explanation of items explaining that we propose to revoke your tax-exempt status as an organization described in internal_revenue_code irc sec_501 if you agree if you haven't already please sign the enclosed form_6018 consent to proposed action and return it to the contact person shown at the top of this letter we'll issue a final adverse letter determining that you aren't an organization described in sec_501 for the periods above after we issue the final adverse determination_letter we'll announce that your organization is no longer eligible to receive tax deductible contributions under sec_170 if you disagree request a meeting or telephone conference with the manager shown at the top of this letter send any information you want us to consider file a protest with the irs appeals_office if you request a meeting with the manager or send additional information as stated in and above you'll still be able to file a protest with irs appeals_office after the meeting or after we consider the information the irs appeals_office is independent of the exempt_organizations division and resolves most disputes informally if you file a protest the auditing agent may ask you to letter rev catalog number 34809f sign a consent to extend the period of limitations for assessing tax this is to allow the irs appeals_office enough time to consider your case for your protest to be valid it must contain certain specific information including a statement of the facts applicable law and arguments in support of your position for specific information needed for a valid protest refer to publication how to appeal an irs determination on tax- exempt status fast track mediation ftm referred to in publication the examination process generally doesn’t apply now that we've issued this letter request technical_advice from the office of associate chief_counsel tax exempt government entities if you feel the issue hasn’t been addressed in published precedent or has been treated inconsistently by the irs if you’re considering requesting technical_advice contact the person shown at the top of if you disagree with the technical_advice decision you will be able to appeal this letter to the irs appeals_office as explained above a decision made in a technical_advice_memorandum however generally is final and binding on appeals lf we don't hear from you if you don't respond to this proposal within calendar days from the date of this letter we'll issue a final adverse determination_letter contacting the taxpayer_advocate office is a taxpayer right the taxpayer_advocate_service tas is an independent organization within the irs that can help protect your taxpayer rights tas can offer you help if your tax problem is causing a hardship or you've tried but haven't been able to resolve your problem with the irs if you qualify for tas assistance which is always free tas will do everything possible to help you visit www taxpayeradvocate irs qov or call for additional information you can get any of the forms and publications mentioned in this letter by visiting our website at www irs gov forms-pubs or by calling 800-tax-form if you have questions you can contact the person shown at the top of this letter sincerely for maria hooke director exempt_organizations examinations enclosures form 4621-a exempt_organizations - report of examination proposed status changes form 886-a explanation of items and exhibits through xi form_6018 consent to proposed action publication publication letter rev catalog number 34809f schedule number or exhibit form 886-a rev date explanations of items name of taxpayer year period ended 20xx 20kx tax identification_number issues is more than an insubstantial part of commercial services activities providing do the activities of businesses that operate within the tourism industry more than incidentally benefit tour and travel does operational_test under sec_501 of the internal_revenue_code conduct exclusively exempt_activities and thus meet the should code be revoked because it fails the operational_test by conducting substantial commercial activities that promote the tourism industry and privately benefit tour and travel businesses that operate within the tourism industry exemption under sec_501 of the internal revenue facts state incorporation and organizational information _ incorporated on march 20xx as a not-for-profit corporation under state law the articles of incorporation provide that will have no voting members in an attached statement with the filed articles of incorporation describes its purposes as exclusively charitable religious literary scientific and educational_purposes including the making of distributions to organizations that qualify as exempt_organizations under sec_501 of the internal_revenue_code code upon the dissolution of the corporation after payment of liabilities the board_of directors shall dispose_of all assets exclusively for the purposes of the corporation or to such organizations organized exclusively for charitable religious literary scientific or educational_purposes that qualify as an exempt_organization under sec_501 of the code registered as a foreign out-of-state corporation in the state of on june 20xx although this registration was administratively dissolved for failure_to_file annual reports in 20xx and 20xx the organization filed for reinstatement of its foreign corporate registration with the state of time and is currently shown in good standing each by-laws describe the same purposes as stated in the articles of incorporation and include acquiring gifts and donations to be donated to other charitable entities the bylaws state managed by a board_of directors the number of directors shall be annually each director shall hold office until his successor is duly elected and qualified or until his death or resignation a director may be removed for cause by a unanimous vote of all directors then in office vacancies occurring on the board_of directors shall be filled by the board_of directors in the event the entire board_of directors is vacant and there are no directors available to fill the vacancies by appointment the vacancies shall be filled by appointments made by the closest heirs of the person who last served as a director of the corporation officers of the corporation are elected annually by the board_of directors and include president one or more vice-presidents secretary treasurer and any other offices the board affairs shall be and they shall be elected form 886-a department of the treasury-internal revenue service catalog number 20810w publish no irs gov page_1 schedule number or exhibit form 886-a rev date explanations of items name of taxpayer determines are necessary the president is the principal executive officer and subject_to the direction and control of the board_of directors year period ended 20xx 20xx tax identification_number exemption application filed a form_1023 application_for recognition of exemption under sec_501 of the internal_revenue_code on april 20xx the application and its attachments described its purposes and activities as follows develop market and adopt standards for environmental business practices advocate for the implementation of said practices across the travel and tourism industry so that resource managers and travelers can easily identify authentic environmental travel and eco-tourism operators provide eco-certification for tourism operators who incorporate financially viable environmentally and socially responsible practices into their operations so consumers can buy and book with confidence increase and develop consumer demand and awareness of environmental business practices across the travel and tourism industry so that tourism operators move towards more environmental business practices commit to the conservation and enhancement of quality travel experiences and actively contribute to community-based and grass-root conservation projects so the travel and tourism industry advances as a whole and available_resources are reinvested in our natural_resources of the bylaws states the corporation shall have no members marked on its exemption while article i application that it did have members and described its members as tourism operators who are committed to incorporating financially viable environmentally and socially responsible practices into their operations described the benefits members receive in exchange for membership dues as follows e e e e e e consulting services hours annually designed to increase your company’s profitability through integrating sustainable travel practices into your organization’s operations and helping to streamline your operating systems public relations efforts times annually focused on helping to influence consumers current and future travel and tourism industry employees and opinion leaders about companies that make sustainability their responsibility monthly electronic inclusion of member's company logo and newsletter listing in rating premium partner members are listing in allowed a 0-word profile supporting business members a word profile and contributing individual members a word profile voting rights - vote per member web-based members database with your company’s -directory 0-word profile plus on image rating and a link to your website in newsletter initially the irs was not certain that sec_501 of the code irs correspondence with during the application process stated that developing adopting and marketing standards for environmental business practices for the travel and purposes and activities met the requirements for exemption under 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 tax identification_number name of taxpayer tourism industry appeared to be a purpose designed to promote and increase business opportunities for the travel and tourism industry additionally providing certification for operators in the eco-tourism business is a further indication that the organization’s purpose is to promote the eco-tourism and travel industry combine the above with the promotion and awareness campaign for consumers it appeared that the purposes and the activities designed to carry out those purposes were not charitable or educational within the meaning of sec_501 of the code any protection afforded the environment from the organization's activities would be indirect and not the organization’s primary purpose year period ended 20xx 20xx in response __ stated it had misspoke in its exemption application as to actively marketing sustainable travel and tourism operators to consumers __ then stated it did not intend to promote any individual tour operators nor seek to improve the travel industry but rather it is focused exclusively on building awareness appreciation and respect for local people and the environment in its last statement _ clarified that its purposes and activities are exclusively charitable and educational it will educate us travelers about traveling in a responsible sustainable manner and educate us tourism providers about how to integrate financially viable environmentally and socially responsible practices into their operations to help achieve this develop a voluntary negative environmental economic and social-cultural impacts that will help travelers identify tourism providers committed to best practices for consulting will not be part of offered was removed from will provide related educational and training materials for travelers and tourism providers it will certification program to measure tourism provider's positive and all references to sustainable business consulting and the services stated sustainable business website finally based upon the above clarifications the irs issued on june 20xx a favorable determination for exemption under sec_501 c of the code annual filing and examination filed annual returns form_990 return of organization exempt from income_tax for tax years 20xx to the current tax_year the irs selected for examination the form_990 returns for tax years ending december 20xx and december 20xx public information during the examination the irs obtained information about the organization from public sources such as the this website shows _ as established 20xx and initially registered 20xx _- shows its charitable purposes on this secretary of state website for the charitable organizations registered with them exhibit charities website as follows is organized to develop market and adopt standards for sustainable environmental business practices advocate for the implementation of said practices across the travel and tourism industry and consumer marketplace and to provide eco-certification for tourism operators and promote organizations that demonstrate support for environmental conservation socio-cultural responsibility and economic profitability within the travel and tourism industry was founded to build awareness appreciation and respect for local people and our environment through education and outreach the organization has been providing consumers and travel related businesses and organizations with the tools and resources necessary to achieve sustainability since september 20xx _ has provided printed copies of its guide to sustainable travel and tourism to over business owners interested in integrating responsible practices into their business operations distributed the document electronically from its web site and has sold more than copies of its reader on sustainable travel 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 tax identification_number name of taxpayer management team is invited to speak at dozens of and tourism to college students in addition major international and domestic conferences and events annually affording the opportunity to management team is also reach thousands of leaders within the travel and tourism industry invited to speak to college students on a regular basis with more than unique e-newsletter recipients from over countries and media contacts eco- and an industry specific globally respected independent c non-profit gaining public exposure and media traction for industry leader partners information and resources in the travel and tourism industry and as _is regarded as one of the best sources for is very effective at year period ended 20xx 20xx organization’s website also during the examination irs reviewed www org and at that time it showed an extensive selection of services for tour operators website starting in november 20xx website is developed tools and standards to allow destinations and businesses to assess their progress developed the program a self-assessment tool and eco-certification the environmentally socially and economically and to ensure that the tourism industry was driving conservation and alleviating poverty process assists travel providers in mitigating their negative environmental economic and socio-cultural impacts and maximizing the benefits they provide to the environment local and indigenous people and their communities businesses travel providers can sign up annually and complete an online self- assessment which identifies and measures key impacts of sustainability and provides ways to implement industry best practices benefits from this annual membership include exclusive webinars marketing opportunities and a consultation with an _ eco-certification specialist certification is accomplished by submitting to process includes an on-site assessment performed by alocal -accredited assessor annual fees for the self-assessment tool range from dollar_figure to dollar_figure and the certification is a one-time fee ranging from dollar_figure to dollar_figure the fees for the on-site assessment depend on many factors and were not shown on the website all fee ranges depend on the gross revenues of the businesses and whether the business is amember of - or not _ the business’ required policies and documentation for review and approval the final website also offered two certification programs for travel professionals working on tourism-related projects in developing countries including staff from donor and government agencies non-governmental organizations consulting firms universities businesses and other entities the certifications center around completion of course material and testing using the online tool kit and resource series’ first course entitled website provided a link for the training program to the website maintained by describes the program as follows specialist and professionals programs are designed to give you the skills and knowledge necessary to facilitate professional growth and maximize your career opportunities in this diverse exciting and expanding industry designed with travel and tourism professionals of all experience levels in mind from entry-level to specialist and professionals programs provide successful executive the applicants with a formal credential and a dynamic professional development opportunity the cutting-edge self-paced courses utilized in the program feature developed content the first certification program participant must demonstrate one year of experience within the tourism industry complete the units in the specialist required a fee of dollar_figure for the certification the 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 name of taxpayer first course entitled examination the units covered the following topics and complete the timed course content year period ended 20xx 20xx tax identification_number introduction to tourism policies practice and international cooperation tools and strategies the green economy and tourism tourism trade and development biodiversity conservation and protected areas collaborative mechanisms and social networks standards and quality assurance systems the second certification program certification the participate for this certification must demonstrate years of experience within the tourism industry complete the same course and examination describe above for the dollar_figure certification plus complete out of additional courses within the online tool kit and resource series along with the timed examination for each of the three additional courses professional required a fee of dollar_figure for the the additional courses the online tool kit and resource series of course material are as follows professional participant can choose from within the o project development for o tourism destination management achieving sustainable and competitive results o tourism investment and finance accessing sustainable funding and social impact capital o tourism workforce development a guide to accessing and designing programs o scientific academic volunteer and educational travel connecting responsible travelers with enterprise development a business planning approach approach la by sustainable destinations o tourism and conservation sustainable models and strategies o powering tourism electrification and efficiency options for rural tourism facilities website at the time stated industry leaders are taking advantage of the benefits and opportunities sustainable business practices offer the website stated the website continued saying and described its eco-certification as a program to help travelers identify responsible tourism also businesses and to help tourism business manage their environmental impact while helping to offset the co2 emissions resulting from travel finally the website stated since 20xx -_ has helped communities hotels airlines cruise lines and governments to plan responsibly - to chart their road maps for responsible growth so that they can contribute to the economic and social well-being of the one in eleven people around the globe whose lives and livelihoods depend on the world’s wanderlust at that time helped more than destinations to protect their natural and cultural assets enhanced the experience of had form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items name of taxpayer tax identification_number millions of visitors and increased the livelihoods of millions of people living in travel and tourism destinations globally year period ended 20xx 20xx form_990 return_information - revenues for the tax years ending december 20xx and december 20xx the organization's form_990 reported the following revenues chart deleted the categories and description of the revenue are explained below member dues for tax years 20xx and 20xx annual membership dues were dollar_figure for premium partner members dollar_figure for supporting business members and dollar_figure for contributing individuals members also pay an annual membership fee an application fee for eco-certification and other program fees the fees and annual membership fees are based on the member's gross revenues the examination reviewed the quickbooks accounting_records and found that the revenue reported as membership dues on the form_990 is program membership and invoiced travel reimbursements for the assessments the program is explained in a brochure provided during the examination exhibit ill program certifications planning and grants contributions donations grant revenues received in the tax 20xx tax_year were included with the total for contributions and donations a grant from ___ in the amount of dollar_figure see exhibit xi was reclassified at the end of the 20xx tax_year to the contributions and donations category from the program service revenue category a sponsorship payment of dollar_figure from category the remaining contributions and donations for the 20xx tax_year were primarily from sales receipts of b2c business-to-consumer purchases these are portions of payments individual consumers pay to percentage of the fee or additional_amount is donated back’ to either the organization or for designated environmental projects or carbon offset projects in the 20xx tax_year however many of the amounts shown in the contributions category reported on the form_990 return are also invoiced amounts for services like carbon management program project retainers or work performed with travel companies such as finally agreement with the program on behalf of with the exception of the percent administrative fee due -_ for the administration of the the majority of the funds collected in this program are reported back over to a for-profit travel documents service provider for products and services where a receives in this category funds for the was included in this per a contract educational and advisory services records show this revenue includes payment for speaker fees webhosting for carbon calculators sales technical assistance contracts and marketing workshops the services were retainers for management systems and on-going support retainers for industry training on-site assessments purchased by a cruise line tour companies hotels airlines overseas tourism development agencies and counsels university and other tourism industry entities this revenue includes amounts released over time for contracts in progress from from for contracted services and development plan and in form 886-a department of the treasury-internal revenue service catalog number 20810w - page_ publish no irs gov schedule number or exhibit form 886-a rev date explanations of items name of taxpayer tax identification_number the form_990 reporting for tax_year 20xx also included in this category revenues under the quickbooks account for assessments planning sustainable marketing which included amounts from quarterly reports and roll out provided during the examination that provides additional information on what business solutions _ offers to travel industry businesses exhibit ii year period ended 20xx 20xx see brochure of the for standards monitor training this revenue was paid_by hotels universities tourism ministries and travel businesses received retainers and fees for businesses sustainability management systems and sustainability standards managing promoting and producing webinar series for industry and assessor training standards development and monitoring and management material for strategic planning to grow a business in sustainable travel and tourism it presents the financial opportunities and advantages challenges planning history and accepted criteria of growing a business in sustainable travel and tourism the training material contains business invoiced and assessment planning marketing this revenue includes contract labor managing promoting and producing webinar series and media marketing campaigns submissions and reporting for contracts in progress and installments for programs such as the early adopters program many of this work is also described in the business solutions brochure provided during the examination exhibit ill education networks the revenue reported on the form_990 return for this category included revenues from carbon offset credits carbon credit calculator terra pass and algorithm project payments for a and annual participation fees in the were paid_by airlines hotels cruise lines and other travel and tour businesses the quickbooks accounting showed revenues reported in this category under partnerships and marketing this network is explained in a brochure provided during the examination exhibit iv and fees calculators united booking path and united static path calculator the carbon sales carbon sales and the trading of carbon offsets on the public market including foreign markets is revenue is from b2c sales of organization accepts contributions from individuals and businesses to offset their carbon use the amounts are invested in projects that reduce greenhouse emissions and stimulate demand for renewable energy the organization has contacts with several carbon offset providers a liability is recorded based on contractual terms with those providers for metric tons of carbon sold by paid based on terms with each provider for the 20xx tax_year these carbon sales are reported in with the grants contributions and donations reporting on the form_990 _ the carbon offset liability is all other program service revenue this revenue is primarily from excursion operators for eco-certifications and assessments to meet challenges of managing multiple operations and resources multiple users roles access and shared resources to meet the challenge of data collection provides data collection aggregation of sustainability indicators and monitoring results for individual operations certification program offered by a non-profit also see exhibit il as the world’s first comprehensive global sustainable standard sales paid_by hotels and tour shore framework provides online tools that allows developed and markets regularly markets sales and - form 886-a catalog number 20810w page_7 publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items name of taxpayer tax identification_number samples of contracted work exhibit v - agreement with this contract is for a grant project originally executed in 20xx and this is a fourth_amendment to the original contract __ will receive a total of dollar_figure as a fee for outlines below responsibilities and deliverables condensed responsibilities and deliverables are shown activities and travel reimbursements the contract_year period ended 20xx 20xx dollar_figure il continue working with shore excursion providers 20xx action plan - streamline a multi- design and implement hands-on training workshops for tour operators design and deliver an online offline tour verification system continue to implement an outreach and awareness campaign design an incentive program to ensure approach for certification process excursion team achieves its goals continue working with telephone support - up to meetings via telephone and its select partners providing technical_advice onsite consultation including awareness training technical advising creating an action plan ili continue providing assistance and support to staff as they complete professionals training and certification program iv help to position as a leader in develop an online destination management system about management performance facilitate one on-site meeting to review progress enlist support and solicit feedback destination sustainable v project management of all deliverables and communications n o r technical advisory and feedback to quarterly meetings via teleconference with monthly progress reports two on-site meetings of days and _ project managers exhibit vi - contract with this contract is for consulting services on the in than dollar_figure which is broken down as dollar_figure remuneration for staff of based upon a number of days and daily fee and dollar_figure in reimbursed expenses that includes airfare hotels meals and transportation costs payment of fees are upon attaining deliverables beginning april 20xx and ending march 20xx the contract fee is no greater development for inclusive green growth dollar_figure o o o o signing of contract and submission of work plan submission of final submission of final action and investment plan submission of monitoring database and guidelines submission of final recommendations report exhibit vil - project agreement with this project agreement for contracted services is effective august 20xx and continues to june 20xx _ will be paid a fee of dollar_figure for a tourism development plan this plan includes brand development dollar_figure 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 year period ended 20kx 20xx tax identification_number establishing destination marketing company s establishing a tourism dashboard and maintaining implementation support travel_expenses will be billed separately from the contract fee deliverables include e market demand assessment tourism product and attraction inventory mapping of destination product development recommendations risk and security assessment plans work plans vision and goal plans zoning recommendations economic modeling results draft and final development plans with presentations forums for feedback market analysis develop criteria and guidelines for implementation develop indicators for community tourism impact monitoring train the trainer programs pilot testing data collectors odays technical support averaging days per month over the course of months training sessions e e e exhibit vii - contract with this contract is effective june 20xx for the contracted work for phase of the will provide the following dba dollar_figure a manage and administer operations on an ongoing basis maintaining operational systems marketing collateral support marketing strategy support roll-out of on new and existing projects review lodging partners to introduce them to the fund conduct quarterly meetings to assess accounting procedures and internal controls providing participating businesses with administrative and technical support awarding funds to projects provide technical support to provide feedback on implementation plan determine how to expand the fund to include other philanthropic causes contact performance draft a two-year implementation plan to improve funding partner participation to generate more project funding refine orientation and training program train management and frontline staff of new participating businesses and improve overall staff buy-in and support review and set up procedures to align donation mechanisms into booking transactions review and set up accounting procedures and internal controls develop train the trainer programs for participating businesses to train their staff on the train potential new participating businesses at the 20xx booth and meet with existing and potential new participating businesses governor's conference staff the funding process b c d e the deliverables of this contract include operations management up to hours per month ongoing page implementation plan training up to participating businesses training guide train the trainer program participating in the 20xx governor's conference on tourism exhibit ix - sub-grant agreement with this sub-grant agreement covered august 20xx to november 20xx the purposes of the grant were to provide specific activities and deliverables for the project in for dollar_figure form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items name of taxpayer tax identification_number partnership with other stakeholders the following activities and deliverable were to be conducted and provided year period ended 20xx 20xx o o o o o preliminary assessment finding for compile a listing of participants compile listing of citations of accepted publications papers on research subsidized by compile report on cash match in-kind match and other funds secured_by _ for mowus and agreements work and __ training exhibit x - early adopter program agreement with global this agreement was made on october 20xx to continue until february 20xx consultant in this agreement will conduct on-site evaluations of global _ early adopter tourism destination participants sustainability in economic environmental and socio-cultural issues and report findings back to on how each destination met current tourism sustainability standards dollar_figure will be paid for each destination up to selected destinations council will determine each early adopter participant's named council dollar_figure sample of grant award exhibit xi - grant award from this grant from the international project describing how it created a monitoring tool called performance two destinations participated in a pilot program to receive destination assessment customized indicators and a database system for recording their results system provides a plug-and-play means to collect manage and monitor data on _for its proposal for the toolkit and pilot in was awarded to the dollar_figure prepared a year-end report on this and and the the grants funds were also used for three destinations’ implementation projects the three destinations included professionals online training program for government officials in session for officials on sustainable destination management in cruise destinations and marine conservation the for project were used to bring together destination stakeholders in a workshop setting to develop an action agenda for destination sustainability sustainability destination standards program for tour operators and hotels project received a finally the funds designated for the provided technical assistance to assess the feasibility of establishing quality and destination received and _ and one in-person and action plan form_990 return_information - expenses for the tax years ending december 20xx and december 20xx the organization's form n reported the following expenses form 886-a of the treasury-internal revenue service catalog number 20810w department _publish no irs gov page_10 schedule number or exhibit rev date form 886-a explanations of items name of taxpayer tax identification_number year period ended 20xx 20xx chart deleted to explain the claims on its initial exemption application information that examination - interview with chief executive director during the examination interview the revenue_agent asked the then-current chief_executive_officer ceo and founder would remove the business consulting services from substantial part of difference in semantics when _ provides advisory services and technical assistance often that is called a consultation or consulting services however rather programmatic offerings to companies and destinations materials yet consulting appears to be a explained that the term consulting is simply a offers tools and advisory services to innovate and involve the clients in the process doesn’t offer consulting services current activities explained has the examiner asked its website different parts of the world they had established charitable organizations inthe organizations have stopped functioning prior to the examination regional offices in to explain and as described on and but those clarified that the offices may have been overstated but they have representatives in states on its website that its program is a cost-effective way to illustrate a destination’s commitment to including access to a service of sustainable solutions and marketing benefits irs asked -_ to explain marketing benefits of destination partner's programs said the concept is to benefit all and in an inclusive way irs asked __ to explain what it describes on its website for a solution activity as marketing and communications the website states __ will help businesses integrate sustainability into their marketing and product development strategy leading to increased visitor numbers and stronger brand loyalty explained that _ tried to help increase sustainability in travel by communicating the impacts and benefits and integrate producers irs asked if any type of verification is done on the data that tour businesses input to rate themselves on impact counter since the data is used to demonstrate tangible improvements to the lives of at least million people said no verification is done explained the eco-certification program was originally for individual companies but -_ could benefit more members by their package program additionally individuals can voluntarily donate a dollar when they purchase services from companies explained that their training courses differ from training given to travel agents to promote sales of eco- training is not geared towards offering travel service rather it’s toward how to friendly travel because support sustainable travel and how to link to supply chains irs asked if donors receive anything in exchange for their donation outcomes for other grants services are provided said some grants are tied to 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 law year period ended 20xx 20kx tax identification_number explanations of items sec_501 of the internal_revenue_code code provides in part exemption from federal_income_tax for organizations that are organized and operated exclusively for religious charitable scientific literary or educational_purposes provided that no part of the organization’s net_earnings inures to the benefit of any private_shareholder_or_individual federal tax regulations regulations sec_1_501_c_3_-1 provides that in order to be exempt as an organization described in sec_501 of the code the organization must be 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 or operational_test it is not exempt regulations sec_1_501_c_3_-1 provides that an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities that accomplish one or more of such exempt purposes further an organization will not be regarded as operated exclusively for exempt purposes if more than an insubstantial part of its activities is not in furtherance of exempt purposes regulation sec_1_501_c_3_-1 specifies 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 regulations sec_1_501_a_-1 defines private_shareholder_or_individual within this sec_501 as persons having a personal and private interest in the activities of the organization regulations sec_1_501_c_3_-1 provides that 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 an organization must establish that it is not operated for the benefit of designated individuals or the persons who created it regulations sec_1_501_c_3_-1 defines education as a the instruction or training of the individual for the purpose of improving or developing his capabilities or b the instruction of the public on subjects useful to the individual and beneficial to the community regulations sec_1_513-1 defines the term trade_or_business to include any activity carried on for the production_of_income from the sale_of_goods or performance of services and which otherwise possesses the characteristics required by sec_162 of the code relating to the deductibility of business_expenses the phrase for profit was intended to describe the commercial nature of the activities and not to refer to whether an actual profit is made rulings and case law commercial purpose performance of services revrul_72_369 describes an organization that was formed to provide managerial and consulting service at cost to unrelated exempt_organizations does not qualify for exemption providing managerial and consulting services on a regular basis for a fee is a trade_or_business ordinarily carried on for-profit 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 services provided at cost and solely for exempt_organizations is not sufficient to characterize the activity as charitable within the meaning of sec_501 of the code year period ended 20xx 20xx tax identification_number in 70_tc_352 the court found that a corporation formed to provide consulting services did not satisfy the operational_test under sec_501 of the code because its activities constituted the conduct_of_a_trade_or_business that is ordinarily carried on by commercial ventures organized for profit its primary purpose was not charitable educational or scientific but rather commercial in addition the court found that the organization’s financials did not resemble that of the typical organization exempt under sec_501 of the code it had not solicited nor received voluntary contributions from the public it's only source_of_income was from fees from services and those fees were set high enough to recoup all project costs and produce a profit finally the corporation did not limit its clientele to organizations that were exempt under sec_501 of the code in 302_f2d_934 ct_cl the court considered the status of an organization that provided analyses of securities industries and of the economic climate in general the organization sold subscriptions to various periodicals and services providing advice for the purchase of individual securities although the court noted that education is a broad concept and assumed for the sake of argument that the organization had an educational purpose it held the organization had a significant non-exempt commercial purpose that was not incidental to the educational purpose it was therefore not entitled to exemption under sec_501 of the code educational revrul_71_504 ruled that a medical society currently exempt under sec_501 of the code may not be reclassified as an educational or charitable_organization under sec_501 of the code the ruling listed all the activities of the society and identified those that made up a substantial portion of the society's total activities while some of the society's activities were charitable and or educational a substantial part of its activities was directed primarily at the promotion of the medical profession and thus furthered the common business purposes of its members activities that are not considered educational or charitable therefore the society may not be reclassified since it had substantial non-charitable and non- educational_purposes and activities an educational program must be conducted for exclusively educational_purposes with only incidental nonexempt purposes in revrul_59_6 a professional association was held not exempt under sec_501 of the code where its educational program was only an incidental part of activities that had as a principal purpose the professional advancement of the members as a group economic development in revrul_77_111 exemption was denied to two organizations and their described activities one organization sought to increase business patronage in an economically deteriorated area by promoting the area through media advertising and other means the other organization sought to revive lagging retail sales and combat economic decline of an urban_area by constructing a shopping mall to make the area more competitive with outlying shopping areas although the first organization’s activities may further charitable purposes their overall thrust was to promote all businesses in the area regardless of whether they were experiencing a hardship or considered part of a charitable_class the second organization failed to further charitable purposes because its activity primarily benefited the businesses located in the newly constructed shopping center form 886-a department of the treasury-internal revenue service catalog number 20810w _publish no irs gov page _13 schedule number or exhibit form 886-a rev date explanations of items name of taxpayer tax identification_number year period ended 20xx 20xx environmental ecological significant land in revrul_78_384 an organization preserving ecologically significant land for farming or other uses the organization deemed ecologically suitable was not found to be operated for a charitable purpose under sec_501 of the code its activities were not found to be preserving land that had any di nective ecological significance and any benefit to the public from the organization's self-imposed use restriction was too indirect and insignificant to establish that the organization served a charitable purpose cited the following two revenue rulings in its form_1023 application_for exemption revrul_76_204 describes an environmental conservancy formed by scientists educators conservationists and representatives of the community at large to acquire and preserve natural environments of ecological significant undeveloped land the ruling determined the conservancy qualifies for exemption under sec_501 of the code since it maintains the land and limits public access for protection of delicate eco-systems revrul_80_278 holds that an organization that institutes litigation as a party plaintiff to maintain environmental protections afforded in state and federal legislation operates exclusively for charitable purposes within the meaning of sec_501 of the code the organization does not bring suits in instances where a substantial purpose is to benefit a private party or interest the litigation program is financed by membership dues and public donations the ruling states in determining whether an organization meets the operational_test the issue is whether the particular activity undertaken by the organization is appropriately in furtherance of the organization’s exempt_purpose not whether that particular activity in and of itself would be considered charitable the organization described in the ruling accomplishes the exempt_purpose of preserving and protecting the natural environment for the benefit of the public by instituting litigation to force agencies to enforce the legislation already in place that protects the environment the activity of entering into law suits is not in and of itself charitable however in this instance it does further an exempt_purpose and is reasonably related to accomplishing that purpose establishing and maintaining standards of quality revenue rulings and found organizations formed by members of the medical profession to establish and maintain standards for quality and excellence in service qualified for exemption under sec_501 but not under sec_501 of the code the principal activity of both organizations in both rulings was directed to establishing and maintaining standards for the quality and costs of medical services although this activity may result in a measurable public benefit the primary objective in both cases was to maintain the professional standards prestige and independence of the organized medical profession and thereby furthers the common business_interest of the organization’s members frivate versus public interests in the case 70_tc_1037 the organization failed to establish that it served a public interest rather than a private interest the organization was formed to assist charitable organizations in their fundraising activities with individual contributors the organization provided financial planning and tax_advice to individual contributors on charitable giving so that they could maximize their charitable donations and tax benefits the organization said their financial planning advice ultimately benefits charities through the contributors donations the court ruled that the financial and tax 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 name of taxpayer tax identification_number planning services were a nonexempt activity and the tax benefits inuring to the contributors are more than insubstantial in nature exemption under sec_501 of the code was not allowed year period ended 20xx 20xx in another case 92_tc_1053 an organization that operates a school to train individuals to fill positions in political campaigns was found to serve the private interests of entities and candidates of a particular political_party and did not therefore have broad public benefit this was true even when no portion of the net_earnings inured to the benefit of private shareholders or individuals the court clarified that the proscribed private benefit under sec_501 of the code includes benefits to unrelated third parties and that size alone will not per se transform a benefited class into a charitable_class other in 326_us_279 the court held that the presence of a single non-exempt purpose if substantial in nature will preclude exemption regardless of the number or importance of truly educational or charitable purposes government’s position commercial purpose performance of services the examination of the books_and_records for commercial services activities include selling administrative and marketing services to the travel and tour industry business owners _ provides business consultations marketing administrative computer and technical assistance certification and employee training services to its members tourism businesses and professionals and other tourism-related entities many of these services are per contracted agreements the examination found that a substantial portion of the revenue _ reported is revenue from the sale of or provision of services including the revenue reported as grants and member dues found that a substantial part of activities are providing revenue is compensation_for business support services many of the services are often -_ reported dollar_figure as member the majority of sold as a packaged deal as in their membership package in the 20xx tax_year dues yet the examination of the records shows that most dollar_figure of this is payment for contracted services provided as part of the membership such as certifications document assessments monitoring and on-site assessments this demonstrates that membership revenue is not considered supportive membership dues but rather fees for services for the 20xx tax_year _ reports dollar_figure of income from educational and advisory services and dollar_figure from standards and monitoring training in both of these categories businesses can select services such as research_and_development computer_program and website development contracted certification and monitoring consultation marketing business support and business development education in the 20xx tax revenues all of the above categories were shown in program service revenues many of the advisory and consulting services __ provides to its members and clients are explained in the business solutions brochure exhibit ill marketing plan development that enhance brand identify and loyalty the fees collected in these revenue categories all relate to providing the advisory consulting assessment monitoring and business development services to travel and tourism industry businesses helps businesses with action plans for sustainability marketing assessment and form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items name of taxpayer tax identification_number other revenue sources of services to members and tourism businesses or customers is shown in the category for assessment planning and marketing in the 20xx tax_year category the examination of the books_and_records showed that revenue in this category was for management services promotion producing media marketing submissions reporting and installment payments for programs such as the early adopters program the invoices contracts and receipts viewed during the examination showed these activities as advisory and consulting services provided on a fee basis in the 20xx tax_year almost half of revenue was reported in program service revenue for these activities and services many of these services are also included in the brochure provided during the examination exhibit ill year period ended 20xx 20xx -_ reported revenue of dollar_figure in this ___ in the amount of dollar_figure exhibit xi was reclassified at the the grant from end of the 20xx tax_year to the contributions and donations category however during the year the quickbooks accounting showed the income for this project being reclassified monthly from contracts in progress and in the following categories assessments standards and monitoring and planning the same reporting for contracts in progress with was found in the 20xx tax_year quickbooks accounting as well thus considered this funding as program service revenues for services because of the work performed for this grant proposal and client another revenue category reported in the 20xx tax_year was for educational networks _ reports dollar_figure revenue in this category however the examination found the accounting_records show that many of these payments are for carbon offsets carbon credit calculator and marketing campaigns for the 20xx tax were included with program service revenues as year the educational networks revenues from well as in the partnerships and marketing category the purposes of these networks are more to assist the businesses within the industry network to trade ideas solutions and share lessons learned see exhibit iv this activity and its membership serves the interests of the member businesses and is not considered an educational or charitable activity within the meaning of sec_501 of the code and reports for the 20xx tax_year its carbon sales as dollar_figure this revenue is received from computer programs to track carbon sales from customers of travel and tourism companies who designate a portion also receives revenues in the donations category that customers can designate as setup by of their purchases from these travel and tourism companies to go to environmental and conservation programs however a donation for a carbon offset has contracts with several carbon offset providers and re-directs donations and sales received by these computer programs to the carbon offset providers for credit retirement from designated conservation projects carbon sales revenues are actually higher than the above amount for the tax_year 20xx when the portions of the donations category that are for carbon sales are considered therefore true donation revenues for 20xx are lower than reported and the carbon sales should be higher for the 20xx tax_year all of the carbon sales are reported in the contributions category and reported as such on the fm return thus the carbon sales activity appears to be an understated revenue source finally donations for carbon offsets are not true donations and are not tax-deductible donations under sec_170 of the code as such the carbon sales are non-exempt commercial sources of revenue reported dollar_figure of other revenue in the tax_year 20xx that is from sales of its framework this on-line computer programing provides hotels and tour operators a tool for data collection data indicator aggregation monitoring and results that are designed to fit each business the majority of these income sources are from business support services that _ provides to for-profit companies or other tourism-related industry entities such as hotels tours cruise and airline companies form 886-a catalog number 20810w page _ publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items name of taxpayer tax identification_number __is only a part of the revenue is not from activities that are solely educational the education provided by its package of commercial services while some of the activities can be considered educational further and provides support services to its members and clients these support services help the businesses and clients to implement the programs the services are not just advisory they provide administrative and technical support as well as on-going monitoring that members and clients pay for with their annual membership and or contract fees these services are priced at or near commercial rates and meant to cover the costs of _ providing those services including fees meant to cover the travel costs associated with on-site consultations assessments and training year period ended 20xx 20xx goes a general internet search finds several for-profit businesses that offer similar services to travel and tour businesses teaching and offering certification for a fee these businesses also offer strategy development consulting environmental management research business planning marketing and communications for the tourism industry operations are in direct competition with these for-profit businesses that offer the travel and tourism industry similar services of training certification and benchmarking for businesses to achieve a high level of sustainability the sampling of the contracts and agreements - signed during the 20xx tax_year describe the numerous services and deliverables _ provides its members and clients some of the contracts and agreements even define the services _ provides as consulting services and define deliverables are more than just educational trainings and workshops they are deliverables that are meant to improve a client’s sustainability practices and ultimately the environment but also in turn improve the economic standing of the business many of the contracts state _ will design marketing and awareness campaigns meant to showcase businesses to consumers to entice them to conduct business with them because they have eco-friendly practices the eco-certifications are specifically marketed to members so that eco-friendly consumers will be able to recognize the eco-friendly businesses to which they'll want to transact business the other commercial services described in the contracts include technical support and monitoring these services are beyond educational classes and workshops -_as the consultant the clients and operates similarly in a commercial manner is similar to the entities described in revrul_72_369 and the court cases b s w group inc v commissioner and american institute for economic research v united_states the organizations in these cases provided management and consulting services on a regular basis for a fee the services were provided in a commercial manner similar to for-profit entities through competitive advertising that consistently includes emphasis of the profit to be made from the lucrative and growing market of eco-tourism or green products -_ provides technical and consulting services and support to clients who seek its services for a fee similar to for-profit entities that provide these services to the travel and tourism industry as the one court case noted education is a broad concept but if an organization has a significant non-exempt commercial purpose that is not incidental to the educational purpose exemption cannot be allowed _ is similar to the entity in this ruling where education and trainings however the full range of additional services management assessments analysis marketing and technical assistance offered to tourism businesses and industry clients is more than an insubstantial part of offerings to its members and clients the additional services help their clients incorporate sustainable business practices that will also improve their economic profitability these activities further commercial non-exempt purposes more than incidentally does provide educational form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit name of taxpayer form 886-a rev date year period ended 20xx 20xx is similar to the entities described in revenue rulings and where the organizations had explanations of items tax identification_number some charitable and educational activities but a substantial part of their activities were directed primarily at the promotion of the business profession and thus furthered the common business purposes of its members as noted above the services provided by _ help improve their member and client businesses through the implementation of sustainability business practices the educational activities have the ultimate objective of increasing sales of the travel and tourism entities promotes the use of its services and eco- certification programs to its clients and members because eco-tourism and green products are a growing market the on-line certification training and course material is substantially about how to run a travel business and increase profits by tapping into the growing market of eco-travelers the sections for marketing clearly prove this point and helping them present themselves to the eco-friendly customers as eco-friendly and a better choice than non-eco-friendly businesses this demonstrates that knows its programs will more than incidentally improve their member and client businesses and this business improvement is more than an incidental by- product of the eco-sustainability purposes of are a substantial part of activities and they further the business purposes of its members and clients is marketing to tourism businesses educating them advising them the educational and commercial services provided by educational efforts are not educational as defined by the regulations to finally the purposes of improve an individual or develop his capabilities their educational programs primarily serve to improve the businesses entities and groups in the tourism industry while the educational programs may ultimately benefit the environment and indigenous communities it is only through the improvement of the tourism businesses that operate in that environment and in those communities the education is to the professionals and businesses in the tourism industry on how to improve their business practices their educational programs only indirectly benefit the communities as a whole economic development is similar to the organizations described in revrul_77_111 because its purposes and activities are not limited to a charitable_class of businesses - those that are in an economically declining area or operating in an economically declining industry _ will work with and assist any tourism related_entity or business regardless of the economic profitability or size of the business two of well-known travel industry giants incidentally improve the tourism businesses they work with and even promote the fact that the business will improve because consumers are looking more and more for eco-friendly businesses largest clients are programs more than and it is possible that some individuals who may be described as a charitable_class under sec_501 of the code may benefit incidentally from website promote improvements to indigenous poor or disadvantaged people it is only through the improvements to the tourism industry businesses and groups that conduct their activities by following guidance in those areas training services and tools are directed to improve the businesses that operate in those areas with the overall but indirect or incidental goal of improving those indigenous communities an incidental benefit to a charitable_class is insufficient to meet the requirements for exemption under sec_501 of the code training materials and their activities while some of environmental ecological significant land is similar to the organization described in revrul_78_384 where the ecological preservation is too indirect for the organization to exclusively further charitable purposes environment is an indirect result of operations members and clients must utilize purpose of protecting the trainings 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 programs and proposals and operate within those guidelines before the environmental preservation and protection purposes are achieved the needs of those members and clients with only an indirect and incidental public benefit programs and assistance to their members and clients directly serve year period ended 20xx 20xx tax identification_number activities do not directly conserve protect or restrict the use of sensitive land to protect the natural environment __ provides information on the benefits of environmentally friendly travel and offers technology tools trainings and consulting services to businesses and the travel and tour industry that will assist those entities to preserve the environment the trainings and services themselves do not preserve or protect the environment in a manner that exclusively furthers a charitable or educational purpose within the meaning of sec_501 of the code any charitable benefit is incidental to the direct benefit to travel and tour businesses that can increase tour and travel sales by self-identifying with s endorsement and marketing themselves as green cited both revenue rulings and stating its in its initial application_for exemption activities furthered charitable purposes similarly to the organizations in those rulings however activities are not directly or reasonably related to the accomplishment of a charitable purpose in those rulings the organizations either acquired land for preservation or filed lawsuits against entities to enforce environmental protections already in place by legislation does not do either of these activities rather encourages and assists travel and tour industry businesses to become eco-friendly marketing this concept to them not only because of the environmental protection aspect but because it will give them a competitive marketing edge with the eco-certification eco-conscience consumers will choose those companies over non-certified companies to transact business because the consumer has the perception because of the -endorsed certification that those businesses operate in ways that are not detrimental to the environment those businesses without certification will lose that segment of consumers and thus lose profits the eco-certification brings in more eco-conscience consumers which in turn increases profits to members’ businesses this is a direct benefit to travel and tour industry businesses resulting from programs and activities encouraging businesses to operate in environmentally friendly ways and enticing consumers to transact with these businesses is not a direct means for accomplishing the charitable purpose of preserving or protecting the environment travel and tour industry significantly with the environmental protections only accomplished as an incidental consequence additionally unlike the organization described in membership dues or public donations the majority of programs finally unlike the organization described in revenue rulings scientists educators conservationists and representatives of the community at large up of representatives involved in for-profit travel and tourism businesses programs benefit the member businesses and revenue is from sale of their services and _’s funding is not primarily from is not controlled by board is made _‘s establishing and maintaining standards of quality eco-certification program is similar to the program to maintain standards for quality and excellence in service in the medical profession described in revenue rulings and the organizations in these rulings were requesting an exemption change from sec_501 to c of the code however the ruling determined the standards and monitoring benefited the medical profession and furthered the common business interests of its members rather than resulting in any measurable public benefit eco-certification program similarly benefits the certified businesses as described above by making them more attractive to eco-friendly consumers this activity does not provide a measurable public benefit or further a charitable purpose within the meaning of sec_501 of the code private versus public interests form 886-a of the treasury-internal revenue service _publish no irs gov department catalog number 20810w page _19 schedule number or exhibit form 886-a rev date name of taxpayer year period ended 20xx 20xx tax identification_number explanations of items members and clients are for-profit travel and tourism businesses and professionals and the majority of assists them to increase their business and their profits even though and conducts some research_and_development projects for specific conservation groups and communities the examination found that -_ provides a substantial amount of non-exempt commercial activities and services to for-profit travel and tourism businesses these services benefit the for-profit businesses by helping them meet sustainability standards that are attractive to eco-friendly consumers with the two-fold goal of eco-sustainability and increased sales and profitability thus a substantial part of operations result in conferring private benefits to the travel industry businesses non-charitable private interests any public benefit resulting from the help practices is indirect and incidental to the benefits realized by the industry businesses from the increased consumer patronage -_ provides the businesses to increase their eco-sustainability has some educational activities is similar to the organization discussed in the court case christian stewardship assistance inc v commissioner where the court found that the activity conducted to further charitable purposes more benefited the private interests of the clients receiving the financial planning the court ruled that financial and tax planning services were nonexempt activities and the benefits of such activities to the recipients were more than insubstantial the situation is the same with management monitoring assessing technical assistance administrative marketing and design consultations these services and assistance benefit the travel and tourism industry and businesses substantially through increased eco-friendly consumer patronage provision of commercial services - as determined in the ruling in the case american campaign academy v commissioner the size of a benefited group does not transform them into a charitable_class private for-profit companies such as hotels tour companies cruise lines and airlines as well as tourism- related commercial operators travel destination groups and other tourism-industry entities assistance to these mostly commercial operators does not further a broad public benefit the commercial operators’ businesses improve from commercial businesses more than incidentally it overrides the public and charitable benefit of environmental and eco-system preservation services and programs that serves the private interests of those activities and services primarily assist other activities primarily help private commercial operators travel corporations and travel destination groups to develop and sell their products services or promote and encourage tourism in particular areas the services __ provides to for-profit tourism industry businesses more than incidentally benefits those non-charitable interests as noted above and as such further non-exempt purposes while some of on-line training courses and activities are considered educational and some of development work with other conservation groups may further a charitable purpose of preserving the environment the examination found that a significant part of _’s activities are the provision of non-exempt commercial services as shown in the case better business bureau of washington d c v united_states the presence of a single non-exempt purpose if substantial in nature will eliminate an organization's exemption regardless of the number or importance of truly exempt purposes research and stated in its exemption application that member benefits included consulting services designed to increase your company’s profitability and public relations efforts’ meant to influence consumers while later clarified that it misspoke about the consulting services these in fact are what _ provides to its members and clients for fees and or per contractual agreements the examination found that the majority 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 tax identification_number name of taxpayer activities are providing various services including marketing tracking systems technical assistance of and monitoring assessments and consultation services directly to travel and tourism industry entities additionally several projects worked during the 20xx and 20xx tax years assisted tourism industry committees or groups to identify ways and means to improve tourism such that the environment is preserved and or protected it appears that the irs’ initial response during process remains true - consumer awareness campaigns indicate the primary purposes are to promote the eco-tourism and travel industry any protection afforded the environment from the organization’s activities is indirect and not the organization’s primary purpose ’s exemption determination certification of tourism business operators combined with the promotion and yearperiod ended 20xx 20xx the carbon offset sales activity is the trading of carbon offsets on the public and foreign markets the revenue received from this source including the amounts reported as donations are not true donations only acts as a conduit to collect carbon credits for offsets the trading of carbon offsets is not an exempt activity under sec_501 of the code therefore the revenue reported on the form_990 return for this activity is non-exempt revenue the examination found that a significant amount of the activities conducted by are commercial services provided to members and tourism industry clients these are considered non-exempt activities the carbon offset sales activity is also considered a non-exempt activity the activities appear to more benefit the travel and tourism industry with any protection afforded the environment an indirect benefit these factors show that a substantial part of educational_purposes within the meaning of sec_501 of the code thus meet the operational_test under sec_501 of the code activities are non-exempt activities that do not further charitable or operations do not taxpayer’s position the organization has preliminarily agreed to the revocation of exempt status as outlined in the initial report conclusion does not meet the operational_test under sec_501 of the code more than a substantial part of activities are the provision of non-exempt commercial services and carbon offset sales the advisory and consulting services and assistance provided to their for-profit business members and clients in the travel and tourism industry privately benefit these non-charitable interests more than incidentally exempt status under sec_501 of the code should be revoked as of january therefore 20xx the first day of the tax_year for the year under examination contributions donations and grants to will not be not deductible under sec_170 of the code starting in the 20xx tax_year will be required to report its income for the 20xx tax_year and thereafter on form_1120 u s_corporation income_tax return form 886-a of the treasury-internal revenue service catalog number 20810w department _publish no irs gov page _21


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date number release date conex-104601-15 uil the honorable alejandro j garcia-padilla governor commonwealth of puerto rico p o box la fortaleza san juan pr dear governor garcia-padilla thank you for having your representatives meet with us on date we also thank you for your letter dated date in your letter you requested we reconsider the application of sec_4371 of the internal_revenue_code to policies issued by puerto rican insurance_companies as set forth in revrul_79_193 1979_1_cb_359 this ruling holds that l ife insurance policies issued by a puerto rican insurance_company to any resident person in any state or territory of the united_states or the district of columbia are subject_to the tax imposed by sec_4371 of the code in so holding it reiterates the holding of revrul_59_148 1959_1_cb_446 you have asked us to reconsider this well-established holding because of puerto rico’s desire to position itself as an insurance center in support of this request we also received a memorandum dated date from kirkland ellis the primary argument for why we should reconsider our opinion as outlined in the kirkland ellis memorandum centers on the use of the word territory in sec_46_4371-2 issued by t d date and revrul_79_193 territory as used in the regulation does not include the commonwealth of puerto rico in the internal_revenue_code of territory referred to alaska and hawaii which were incorporated into the united_states for income_tax purposes before united_states was defined in sec_7701 to include the territories of alaska and hawaii even after hawaii’s statehood sec_7701 provided that the term domestic when applied to a corporation or partnership meant created or organized in the united_states or under the law of the united_states or any state or territory the sec_7701 reference to territory continued to be to the former incorporated territories alaska and hawaii and territory as used in treasury regulation section conex-104601-15 has the same meaning the code and regulations generally referred to puerto rico and other unincorporated territories as possessions see sec_936 and sec_301 a t d date territory was subsequently deleted from several provisions in the code including sec_7701 by section c of the tax reform act of pub l because there are no longer any united_states territories s rep pincite in recent years the term territory as applied to puerto rico and other unincorporated territories has become common beginning with a date executive_order issued by president george h w bush regarding the treatment of puerto rico as if it were a state for administrative purposes consistent with this change tax guidance has sometimes used u_s_territory or possession to describe puerto rico and other unincorporated territories compare definition of u_s_territory or possession in sec_1_1471-1 to definition of possession in sec_1_937-1 this recent change in usage does not justify a change in interpretation of territory as used in older guidance such as sec_46_4371-2 issued in and revrul_79_193 we believe revrul_79_183 provides the correct interpretation of foreign_insurer_or_reinsurer in sec_4371 based upon the definitions of foreign domestic and united_states in sec_7701 sec_7701 defines the term domestic as pertaining to a corporation or partnership created or organized in the united_states or under laws of the united_states or any state sec_7701 defines the term foreign when applied to a corporation or partnership as being not domestic sec_7701 states that the term united_states when used in a geographical sense includes only the states and the district of columbia the holding of revrul_79_183 consistently treats both puerto rico insurers and puerto rico insureds as foreign because it is not within the united_states in a geographic sense then applies sec_4371 accordingly for the above reasons we affirm our view that the holding of revrul_79_183 correctly interprets sec_4371 and the regulation thereunder i hope this information is helpful if you have any questions please contact me at ----- ------------ ----------------- ----- ------------ or a member of your staff can contact ----------------- at or sincerely marjorie rollinson deputy associate chief_counsel international cc


internal_revenue_service number release date index number ------------------------------------------------------- ---------------------------------------- -------------------------------------- --------------------------------------- ----------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------- id no ------------- telephone number --------------------- refer reply to cc psi b01 plr-104693-08 date june legend x --------------------------------------------------------- ----------------------- parent -------------------------------------------------- ----------------------------------- country d1 ----------- ------------------------ holding -------------------------------------------------- ----------------------------------------- d2 d3 d4 ------------------ ----------------------- -------------------------- dear ------------------ this letter responds to the letter dated date and related correspondence written on behalf of x requesting an extension of time under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to file an entity classification election plr-104693-08 facts the information submitted states that parent a u s_corporation acquired x an eligible_entity formed under the laws of country on d1 parent transferred all of the stock of x to holding a wholly owned subsidiary of parent on d2 parent intended that x be treated as an association_taxable_as_a_corporation for u s tax purposes effective d3 the election by form_8832 entity classification election was not timely made law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes elections are necessary only when an eligible_entity does not want to be classified under the default classification or when an eligible_entity chooses to change its classification sec_301_7701-3 provides that except for certain existing entities described in sec_301_7701-3 unless a foreign eligible_entity elects otherwise the entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single member that does not have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 by filing form_8832 with the appropriate service_center under sec_301_7701-3 this election will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified the date specified on form_8832 cannot be more than days prior to the date on which the election is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose deadline is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an plr-104693-08 election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion based solely on the facts submitted and representations made we conclude that x has satisfied the requirements of sec_301_9100-1 and sec_301_9100-3 and therefore it is granted an extension of time of sixty days from the date of this letter to file a form_8832 to elect to be treated as an association_taxable_as_a_corporation for federal tax purposes effective d3 to replace the protective_election effective d4 a copy of this letter should be attached to the election a copy is enclosed for that purpose except as specifically set forth above we express no opinion concerning the federal tax consequences of the facts described above under any other provision of the internal_revenue_code this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being mailed to your authorized representatives sincerely s william p o’shea associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for ' purposes cc


department of the treasury internal_revenue_service washington d c yas uniform issue list dec - se tep cts tax_exempt_and_government_entities_division ome taxpayer a ira x amount c amount d financial_institution m individual b custodian f account m ira e year date date date financial_institution e dear this is in response to your letters dated date and date submitted on your behalf by your authorized representative in which you request page a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code’ the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a asserts that on date taxpayer a authorized a direct transfer of amount c from ira x to account m taxpayer a asserts that his failure to accomplish a rollover of amount c within the day period prescribed by sec_408 of the code was due to financial_institution m’s error in failing to establish a rollover ira account as directed by taxpayer a taxpayer a further represents that he has not used amount c for any other purpose during year taxpayer a discussed with financial_institution m representatives the rollover of ira x held by custodian f to an account to be set up by financial_institution m individual b a financial_institution m representative assured taxpayer a that financial_institution m could accommodate ira accounts relying on individual b’s expertise on date taxpayer a arranged for the wire transfer of amount c from ira x to account m on date which was more than days past the date wire taxpayer a received a phone call from a representative of financial_institution m in which an admission was made that account m was not properly established and owned by an ira custodian taxpayer a immediately contacted financial_institution e on date taxpayer a following the advice of financial_institution e withdrew amount d amount c minus a decline in asset value from account m and deposited amount d into ira e maintained by financial_institution e as custodian for taxpayer a taxpayer a received a year form 1099-r from custodian f which reported amount c as a distribution to taxpayer a based on the facts and representations you request a ruling that the internal_revenue_service waive the 60-day rollover requirement with respect to the distribution of amount c contained in sec_408 of the code the code’ sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 _ sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 d sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the page use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer a is consistent with his assertion that his failure to accomplish a rollover of amount d was due to financial_institution m's error in failing to establish a rollover ira account as directed by taxpayer a therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution to taxpayer a of amount d provided all other requirements of code sec_408 except the 60-day requirement are met with respect to such ira contribution the service will treat taxpayer a's date contribution of amount d to ira e as a rollover_contribution within the meaning of code sec_408 please note that pursuant to code sec_408 this ruling letter does not authorize the rollover of the code sec_401 minimum required distributions no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto pursuant to a power_of_attorney on file with this office a copy of this letter_ruling is being sent to your authorized representative this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent page if you have any questions please contact sincerely yours v frances v sloan employee_plans technical group manager enclosures deleted copy of ruling letter notice of intention to disclose