internal_revenue_service p o box cincinnati oh department of the treasury director exempt_organizations contact person identification_number telephone number employer_identification_number uniform issue list number release number release date date legend b organization c organization d scholarship fund e college f university g university h university j university k person l organization x dollar_figureamounts dear this is in reference to your letter of date requesting advance approval of your grant procedures under sec_4945 of the internal_revenue_code the effective date of your scholarship program for the awarding of grants is date this date was chosen based on the facts that your scholarship program now complies with sec_4945 of the internal_revenue_code the information submitted indicates that grants funded by you private_foundation b will be administered supervised and paid out by c sec_501 of the internal_revenue_code and has been classified as a publicly_supported_organization c is exempt from federal_income_tax under the name of your scholarship program is d c provides corporation foundations trust funds and individual philanthropist’s scholarship foundation ein selection and administration management c will offer the following services in administering the scholarship program - c writes a set of guidelines for the administration of a scholarship program based on the desires of the donor c annually reviews those guidelines advising the donor with regard to updating any requirements - c distributes these guidelines to appropriate individuals per instructions from the donor - c designs a brochure if desired by the donor to be distributed to each facility to be given to potential applicants applications packets are updated annually printing is handled by c applications packets are available for online processing - c receives and processes the application packets - c handles all correspondence and any special circumstances and questions from applicants the family and or high school and college administrators - c has computer programs designed to assist in evaluating academic and financial materials received from applicants - c enlists the aid of a scholarship selection committee - c notifies the donor of the names and addresses of the current_year winners the donor then notifies these winners of their selection in whatever manner they choose - c follows up with additional forms and information for the winners - c requests information from prior scholarship winners and determines eligibility for renewal - c notifies renewal recipients of decisions - c notifies unsuccessful candidates - c notifies all colleges with recipient names social_security numbers award amounts and methods of payment - c maintains and reviews records on all recipients annually - c provides an annual report to donor on progress of students - c bills donor in june of each year d was established by k in memory of her husband in her will k requested the following foundation ein criteria to be used by the selection committee in the awarding of scholarships it was her desire that the committee shall give consideration to scholastic records and ability of applicants as well as to character and achievements and all around fitness and worthiness k desired that the committee give special consideration to students who desire to prepare themselves for the christian ministry the practice of law or the practice of medicine and who have displayed qualities which in the opinion of the committee fit them for successful careers in such professions any full time student of the below mentioned educational institutions are eligible who can meet the requirements as stated in the will as quoted herein - be studying in the field of law medicine or the ministry - have a minimum cumulative gpa of on a scale - demonstrate high personal character - demonstrate academic ability and achievement - demonstrate financial need participating educational institutions will be e f g h and j each year b will make scholarships funds available to selected students attending the colleges and universities of e f g h and j each year and that each scholarship will be between the amounts of x b expects to award approximately scholarships scholarships may be awarded for any stated period and for varying amounts as determined by the scholarship committee such awards may be adjusted annually in accordance with financial need of the students the scholarship selection committee consists of a representative of the trustee and two representatives each of the participating educational institutions of e f g h and j all contacts to the scholarship selection committee and application_for scholarship awards must be made through e’s financial aid office no scholarships will be awarded to any individual who is related by blood adoption or marriage to any member of the scholarship selection committee or any disqualified_person of b as a first cousin or nearer relative sec_4945 and b of the code impose certain excise_taxes on taxable_expenditures made by a private_foundation sec_4945 of the code provides that the term taxable_expenditure means any amount_paid or incurred by a private_foundation as a grant to an individual for travel study or foundation ein other similar purposes by such individual unless such grant satisfies the requirements of subsection g sec_4945 of the code provides that sec_4945 shall not apply to individual grants awarded on an objective and nondiscriminatory basis pursuant to a procedure approved in advance if it is demonstrated that the grant constitutes a scholarship or fellowship_grant which is subject_to the provisions of sec_117 and is to be used for study at an educational_organization described in sec_170 a ii the grant constitutes a prize or award which is subject_to the provisions of sec_74 if the recipient of such prize or award is selected from the general_public or the purpose of the grant is to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar capacity skill or talent of the grantee sec_53_4945-4 of the regulations provides that to secure approval a private_foundation must demonstrate that i its grant procedure includes an objective and nondiscriminatory selection process ii such procedure is reasonably calculated to result in performance by grantees of the activities that the grants are intended to finance and iii the foundation plans to obtain reports to determine whether the grantees performed activities that the grants are intended to finance based on the information submitted and assuming your award programs will be conducted as proposed with a view to provide objectivity and nondiscrimination in making the awards we have determined that your procedures for granting the awards comply with the requirements contained in sec_4945 of the code and that awards granted in accordance with such procedures will not constitute taxable_expenditures within the meaning of sec_4945 in addition we have determined that awards made under your procedures are excludable from the gross_income of the recipients subject_to the limitations provided by sec_117 of the code this determination is conditioned on the understanding that there will be no material_change in the facts upon which it is based it is further conditioned on the premise that no grants will be awarded to foundation managers or members of the selection committee or for a purpose that is inconsistent with the purpose described in sec_170 of the code the approval of your award program procedures herein constitutes a one-time approval of your system standards and procedures designed to result in awards which meet the requirements of sec_4945 of the code this determination only covers the grant programs described above thus approval shall apply to subsequent award programs only as long as the standards and procedures under which they are conducted do not differ materially foundation ein from those described in your request any funds you distribute to individuals must be made on a true charitable basis in furtherance of the purposes for which you are organized therefore you should maintain adequate_records and case histories so that any or all award distributions can be substantiated upon request by the internal_revenue_service this determination is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as a precedent you must report any future changes in your grant making procedures please keep a copy of this letter in your permanent records this ruling is conditioned on the understanding that there will be no material changes in the facts upon which it is based it is further conditioned on the understanding that no grants will be awarded to your organization's creators officers directors trustees or members of the selection committee or for a purpose inconsistent with the purposes described in sec_170 of the code the approval of your grant-making procedures is a one time approval of your system of standards and procedures for selecting recipients of grants that meet the requirements of sec_4945 of the code thus approval will apply to succeeding grant programs only as long as the standards and procedures under which they are conducted do not differ materially from those described in your request this ruling will be made available for public inspection under sec_6110 of the code after certain deletions of identifying information are made for details see enclosed notice notice of intention to disclose a copy of this ruling with deletions that we intend to make available for public inspection is attached to notice if you disagree with our proposed deletions you should follow the instructions in notice this ruling is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as precedent if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter sincerely robert choi director of exempt_organizations rulings and agreements enclosure notice


internal_revenue_service release number release date uil code date org address department of the treasury internal_revenue_service n rulon white blvd m s ogden ut taxpayer_identification_number form tax_year s ended person to contact id number contact numbers telephone fax certified mail - return receipt requested dear we have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the internal_revenue_code code is necessary if you accept our findings take no further action we will issue a final revocation letter if you do not agree with our proposed revocation you must submit to us a written request for appeals_office consideration within days from the date of this letter to protest our decision your protest should include a statement of the facts the applicable law and arguments in support of your position an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in publication if we issue a determination_letter to you based on technical_advice no further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice letter rev catalog number 34809f if we do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the code you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at if you have any questions please call the contact person at the telephone number shown in the heading of this letter if you write please provide a telephone number and the most convenient time to call if we need to contact you thank you for your cooperation sincerely marsha ramirez director eo examinations enclosures publication publication report of examination letter rev catalog number 34809f form_886 a department of the treasury - internal_revenue_service name of taxpayer org tax identification_number year period ended explanation of items schedule no or exhibit rin december 20xx and december 20xx legend org - organization name xx - date issue whether org qualifies for exemption under sec_501 c of the internal_revenue_code facts org failed to file the required form_990 for the tax periods ending december 20xx and december 20xx org failed to respond to the internal_revenue_service attempts to obtain this information in a timely manner law sec_1_61-1 of the regulations provides that gross_income means all income from whatever source derived unless excluded by law gross_income includes income realized in any form whether in money property or services income may be realized therefore in the form of services meals accommodations stock or other_property as well as cash sec_511 of the internal_revenue_code imposes a tax at corporate rates under sec_11 on the unrelated_business_taxable_income of certain tax-exempt organizations including those described in sec_501 c sec_6001 of the code provides that every person liable for any_tax imposed by the code or for the collection thereof shall keep adequate_records as the secretary_of_the_treasury or_his_delegate may from time to time prescribe sec_1_6001-1 of the regulations states that the books_or_records required by this section shall be kept at all time available for inspection by authorized internal revenue officers or employees and shall be retained as long as the contents thereof may be material in the administration of any internal revenue law sec_6033 of the code provides except as provided in section a every organization exempt from tax under sec_501 shall file an annual return stating specifically the items of gross_income receipts and disbursements and such other information for the purposes of carrying out the internal revenue laws as the secretary may by forms or regulations prescribe and keep such records render under oath such statements make such other returns and comply with such rules and regulations as the secretary may from time to time prescribe form 886-a cev department of the treasury - internal_revenue_service page -1- form_8 a department of the treasury - internal_revenue_service explanation of items tax identification_number schedule no or exhibit year period ended name of taxpayer org ein december 20xx and december 20xx sec_1 h of the regulations provides that every organization which has established its right to exemption from tax whether or not it is required to file an annual return of information shall submit such additional information as may be required by the district_director for the purpose of enabling him to inquire further into its exempt status and to administer the provisions of subchapter_f sec_501 and the following chapter of the code and sec_6033 sec_501 of the code provides that a civic organization not organized for profit but operated exclusively for the promotion of social welfare is exempt from federal_income_tax revrul_59_95 1959_1_cb_627 concerns an exempt_organization that was requested to produce a financial statement and statement of its operations for a certain year however its records were so incomplete that the organization was unable to furnish such statements the service held that the failure or inability to file the required information_return or otherwise to comply with the provisions of sec_6033 of the code and the regulations which implement it may result in the termination of the exempt status of an organization previously held exempt on the grounds that the organization has not established that it is observing the conditions required for the continuation of exempt status in accordance with the above-cited provisions of the code and regulations under sec_6001 and sec_6033 organizations recognized as exempt from federal_income_tax must meet certain reporting requirements these requirements relate to the filing of a complete and accurate annual information and other required federal tax forms and the retention of records sufficient to determine whether such entity is operated for the purposes for which it was granted tax-exempt status and to determine its liability for any unrelated_business_income_tax conclusion it is the irs’s position that the organization failed to meet the reporting requirements under sec_6001 and sec_6033 to be recognized as exempt from federal_income_tax under c of the internal_revenue_code accordingly the organization’s exempt status is revoked effective january 20xx form_1120 returns should be filed for the tax periods after january 20xx in accordance with irm e the effective date of the revocation will be the first day after the end of the 90-day period march 20xx form 886-a rev department of the treasury - internal_revenue_service page -2-


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 b06 plr-101794-19 date august legend ------------------------------------------------------------------------ company taxpayer ---------------------- ------------------------------------------------------------------- state a state b a b county date date date year year year commission commission ----------------------------------------------------- ------------ --------- ----- --- ----------------------------- ----------------------- -------------------------- ---------------------- ------ ------ ------ -------------------------------------------------- plr-101794-19 dear --- ---------- this is in response to your recent ruling_request concerning the federal_income_tax consequences with regard to the transaction described below background taxpayer a state a corporation is the parent company of a group of corporations the group that files a u s consolidated federal_income_tax return the group includes members that are regulated_natural_gas and electric utility companies operating in --------- states the group files a consolidated federal_income_tax return on a calendar_year basis using accrual methods_of_accounting company is a state b limited_liability_company wholly owned by taxpayer and treated as a disregarded_entity for u s federal_income_tax purposes company is regulated by commission and participates in a wholesale energy market regulated by commission as part of its plan to replace a substantial portion of its coal-fueled electric generating fleet company intends to invest in and purchase electricity from wind projects these wind projects are intended to qualify for the production_tax_credit ptc under sec_45 of the internal_revenue_code the facility is located in county it will have a nameplate_capacity of approximately a mw the facility is currently being developed by an independent third party developer developer the facility is owned by project llc a disregarded_entity of developer for u s federal_income_tax purposes on date company entered into a build transfer agreement with developer pursuant to which developer will continue to develop the facility and sell it to wind jv upon completion the facility is expected to be completed before date on or before date company and an independent investor tax equity investor will enter into a joint_venture by forming wind jv llc wind jv wind jv will purchase from developer all of the equity interests in project llc because project llc will be a disregarded_entity for u s federal_income_tax purposes this transaction will be treated as the sale and purchase of the facility assets wind jv will use the facility to generate electricity to sell to company under a wholesale power purchase agreement ppa under the ppa between company and wind jv company will purchase a of the electric output and capacity of the facility the ppa will have a term of at least b years and will constitute a wholesale ppa under the market-based rate authority of commission the structure of wind jv and related transactions as well as the ppa are also subject_to approval by commission prices under the ppa will be determined on a market basis using a competitive bidding process and will not be determined on a rate of return basis or cost_basis plr-101794-19 company will also include the electricity purchased from wind jv under the ppa as part of its system power to provide electric service to company’s retail customers company’s sale of electricity to its retail customers will be subject_to regulation by commission based on the expected completion date beginning in year and extending through year company will purchase a of the electrical power produced by the facility accordingly company will make ongoing payments to wind jv pursuant to the ppa profits losses cash and ptcs will all be allocated to company and tax equity investor in accordance with the llc agreement in year company will have an option to purchase all of tax equity investor’s interests in wind jv for fair_market_value in accordance with the terms of the llc agreement if the option is exercised company will then own a of wind jv in the hands of wind jv the electricity generated by the facility will not be subject_to rate of return or cost_basis regulation by commission rulings requested rulings have been requested that the facility is not public_utility_property or pup under sec_168 any losses of wind jv allocated to tax equity investor will not be disallowed under sec_707 law and analysis sec_168 of the internal_revenue_code code provides that the depreciation deduction determined under sec_168 shall not apply to any public_utility_property within the meaning of sec_168 if the taxpayer does not use a normalization method_of_accounting sec_168 of the code defines in part public_utility_property as property used predominantly in the trade_or_business of the furnishing or sale of electrical energy if the rates for such furnishing or sale as the case may be have been established or approved by a state or political_subdivision thereof prior to the revenue reconciliation act of the definition of public_utility_property was contained in sec_167 and sec_168 which defined public_utility_property by means of a cross reference to sec_167 the definition of public_utility_property is unchanged sec_1_167_l_-1 provides that under sec_167 property is public_utility_property during any period in which it is used predominantly in a sec_167 public_utility activity the term sec_167 public_utility activity means in part the trade_or_business of the furnishing or sale of electrical energy if the rates for such furnishing or plr-101794-19 sale as the case may be are regulated ie have been established or approved by a regulatory body described in sec_167 the term regulatory body described in sec_167 means a state including the district of columbia or political_subdivision thereof any agency_or_instrumentality of the united_states or a public service or public_utility commission or other body of any state or political_subdivision thereof similar to such a commission the term established or approved includes the filing of a schedule of rates with a regulatory body which has the power to approve such rates though such body has taken no action on the filed schedule or generally leaves undisturbed rates filed by the taxpayer the definitions of public_utility_property contained in sec_168 and former sec_46 are essentially identical sec_1_167_l_-1 restates the statutory definition providing that property will be considered public_utility_property if it is used predominantly in a public_utility activity and the rates are regulated sec_1_167_l_-1 provides that rates are regulated for such purposes if they are established or approved by a regulatory body the terms established or approved are further defined to include the filing of a schedule of rates with the regulatory body which has the power to approve such rates even though the body has taken no action on the filed schedule or generally leaves undisturbed rates filed pursuant to code sec_50 rules similar to the rules of former code sec_46 as in effect on date continue to determine whether or not an asset is pup for purposes of the investment_tax_credit normalization rules as in effect at that time former code sec_46 defined pup by reference to former code sec_46 the regulations under former sec_46 specifically sec_1_46-3 contain a definition of regulated rates that is expanded somewhat from that contained in sec_1_167_l_-1 this expanded definition embodies the notion of rates established or approved on a rate of return basis in addition there is an expressed reference to rate of return in sec_1_167_l_-1 the operative rules for normalizing timing differences relating to use of different methods and periods of depreciation are only logical in the context of rate of return regulation the normalization method which must be used for public_utility_property to be eligible for the depreciation allowance available under sec_168 is defined in terms of the method the taxpayer uses in computing its tax expense for purposes of establishing its cost of service for ratemaking purposes and reflecting operating results in its regulated books of account therefore for purposes of application of the normalization rules the definition of public_utility_property is the same for purposes of the investment_tax_credit and depreciation under both the depreciation and investment_tax_credit normalization rule definitions the property must be predominately used in one of a number of enumerated activities aside from the description of certain telecommunications services which has no relevance to taxpayer 's situation the list of activities in plr-101794-19 the two definitions are virtually identical one of these activities is the furnishing or sale of electric energy there are therefore three characteristics all of which a facility must possess in order to be characterized as pup it must be predominately used_in_the_trade_or_business of the furnishing or sale of electric energy the rates for such sale must be established or approved by one of the enumerated agencies or instrumentalities and the rates set by that agency_or_instrumentality must be established or approved on a rate-of-return basis the facility will be predominantly_used in the trade_or_business of the furnishing or sale of electric energy and therefore it will possess the first of the three characteristics moreover as a regulated company subject_to the jurisdiction of commission wind jv will possess the second of the three characteristics however wind jv will use the facility to generate electricity to sell to company under a wholesale ppa the wholesale ppa between company and wind jv will be regulated by commission but prices under the ppa will be set at arm’s length pursuant to an rfp provided to company by developer and under commission regulation will be determined on a market basis and will not be determined on a rate of return basis or cost_basis because rates on the sale of electricity from the facility will not be regulated by commission on a rate of return basis the facility will not be pup moreover commission will not have any jurisdiction over wind jv or the facility and as a result could not influence the rates company will pay for the electricity from the facility therefore while the facility will be used to produce electricity and will be subject_to the jurisdiction of commission and thus possesses the first two characteristics of pup the facility must possess all three characteristics to be considered pup for property to be pup the electricity generated must be sold at rates that are regulated by a government agency or public_utility commission on a rate of return basis rates for the sale by wind jv of electricity generated by the facility are determined on a market basis and not on a rate of return or cost_basis thus the facility is not pup under sec_168 with respect to the second issue section dollar_figure of revproc_2019_1 2019_1_irb_1 provides that generally the service will not issue a letter_ruling or a determination_letter if the request presents an issue that cannot be readily resolved before a regulation or any other published guidance is issued accordingly we conclude the facility is not public_utility_property under sec_168 plr-101794-19 the service will not rule on the second issue based on dollar_figure of revproc_2019_1 except as specifically determined above no opinion is expressed or implied concerning the federal_income_tax consequences of the matters described above under any other provisions of the code including other subsections of sec_168 specifically no opinion is expressed concerning whether the contract to sell electricity constitutes a service_contract under sec_7701 in addition no opinion is expressed concerning whether the taxpayer is the owner of the facility generating electricity for federal_income_tax purposes further no opinion is expressed or implied on the classification of the property under sec_168 except as provided in sec_168 section dollar_figure of revproc_87_56 1987_2_cb_674 provides however that asset classes in revproc_87_56 include property described in such asset classes without regard to whether a taxpayer is a regulated_public_utility or an unregulated company sincerely patrick s kirwan chief branch office of associate chief_counsel passthroughs special industries


t c summary opinion united_states tax_court douglas w and gail caple petitioners v commissioner of internal revenue respondent docket no 22697-04s filed date douglas w and gail caple pro sese mark d peterson and mark miller for respondent goldberg special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case unless otherwise indicated subsequent section references are to the internal_revenue_code this matter arises from a petition for judicial review filed in response to a notice_of_determination concerning collection action s under sec_6320 and or issued for unpaid federal_income_tax for taxable years and the issues for decision are whether petitioners may contest the liabilities respondent assessed for the taxable years and whether respondent properly abated interest and adjusted accuracy-related_penalties assessed against petitioners for and in accordance with an agreement between the parties and whether respondent’s appeals officer abused her discretion in rejecting petitioner’s offer-in- compromise background some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference petitioners resided in appleton wisconsin on the date the petition was filed until petitioner douglas w caple mr caple worked as a night-shift first-aid responder at ocean angle steel an industrial plant after leaving this position sometime the outstanding federal tax owed for taxable_year has been paid in full as a result of respondent’s applying petitioners’ overpayment refunds from subsequent years to the amount owed for taxable_year respondent also applied a portion of petitioners’ overpayment refunds to the amount owed for taxable_year as of date the outstanding liability owed for was dollar_figure in mr caple worked part time both as a school_bus driver and as a manager at best buy an electronics retailer most recently mr caple has worked as a day trader of stocks petitioner gail caple mrs caple is employed by affinity health systems as an insurance specialist before mr caple’s separation from ocean angle steel he underwent job-related medical testing that uncovered a condition known as primary sclerosing cholangitis a terminal disease the only known cure for which is a liver transplant at or near the time of mr caple’s diagnosis his father who was also suffering from an unspecified terminal illness gave petitioners the funds necessary for mr caple to pay for a liver transplant provided he were to receive a donor organ although petitioners attempted to shelter this gift they later used the funds for unspecified expenses petitioners have one child ashley caple ashley who is a student at the university of wisconsin at oshkosh in addition to paying ashley’s college expenses totaling dollar_figure per year tuition room and board petitioners maintain health_insurance_coverage for ashley petitioners incurred all medical costs for in petitioners reported sales in excess of dollar_figure million from mr caple’s day trading activity this description is petitioners’ not the court’s ashley’s care that were not otherwise covered by their insurance petitioners’ and taxable years in taxable years and petitioners sold wal-mart stock for dollar_figure and dollar_figure respectively petitioners failed to report the proceeds from either sale on their or federal_income_tax return respondent commenced an examination of petitioners’ and federal_income_tax returns following notice that these returns had been selected for examination petitioners promptly contacted respondent’s appeals_office they were unable to reach a mutually satisfactory resolution to the matter of petitioners’ unreported income on date respondent sent petitioners a notice_of_deficiency for taxable years and the notice_of_deficiency was sent to petitioners’ current address and it informed petitioners of their right to file a petition for redetermination with the court no later than days from the date of mailing petitioners filed a petition with the court on date citing a series of extra-ordinary sic circumstances that prevented them from filing before the aside from petitioners’ testimony regarding ashley’s various medical conditions and proof of their insurance the record is devoid of any evidence substantiating the costs petitioners actually incurred with respect to ashley’s medical_expenses day period for filing had elapsed petitioners cited a series of problems including mr caple’s terminal illness the death of mr caple’s father in date two stressful lawsuits of an unspecified nature and petitioners’ severe financial problems on date the court issued to petitioners a notice of filing by respondent of a motion to dismiss for lack of jurisdiction petitioners were required by the notice of filing to file an objection to respondent’s motion to dismiss within days they failed to do so on date the court granted respondent’s motion to dismiss respondent assessed petitioners’ federal_income_tax owed for taxable years and together with interest and penalties on date respondent’s statements of account show that from the date the assessment was made there occurred a series of payments credits additional assessments and adjustments with respect to both taxable years at issue as of date the date on which petitioners requested that a copy of respondent’s statements be mailed to them the transcripts showed a zero balance remaining for taxable_year and a balance remaining including interest and penalties of dollar_figure for taxable_year mr caple was told by his doctors in that he had only years to live collections action and petitioners’ offer-in-compromise on date respondent filed a notice_of_federal_tax_lien and your right to a hearing under sec_6320 showing dollar_figure owed for taxable_year and dollar_figure owed for taxable_year respondent sent to petitioners a final notice--intent to levy and notice of your right to a hearing on date on date petitioners mailed to respondent a form request for a collection_due_process_hearing cdp hearing respondent notified petitioners by letter on date that he had received petitioners’ request for a cdp hearing and in turn had forwarded that request to his appeals_office on date appeals officer beverly a roberts ms roberts responded in writing to petitioners’ request for a cdp hearing ms roberts informed petitioners that they could request either a face-to-face meeting or a telephone conference petitioners requested a telephone conference with ms roberts for their cdp hearing on date at trial respondent acknowledged that for reasons unbeknownst to him no action had occurred on petitioners’ file from date until date our examination of the record however indicates that respondent was notified on date that petitioners were parties in a bankruptcy suit during their cdp hearing petitioners requested that their liabilities for and be dropped because of mr caple’s health status and the inefficiency of the irs personnel petitioners admitted during the hearing that while they had sufficient assets to pay the amounts owed they had no current income and were living at the poverty_line during the hearing petitioners discussed the general nature of mr caple’s illness but they did not provide ms roberts with any specific documentation relating to his current medical_condition and or prognosis petitioners did not provide ms roberts with any documentation relating to mr caple’s medical_condition following the hearing petitioners did provide a written_statement detailing mr caple’s and ashley’s medical ailments however they did not provide any documentation in support of their statements ms roberts and mr caple exchanged telephone messages before and on date sometime in the morning of date mr caple left ms roberts a voicemail message asking her to call him back after he got back from his run pincite p m petitioners did not provide ms roberts either before or after the hearing with evidentiary support for their claim that they were living at the poverty_line petitioners did however provide a summary of assets to respondent’s appeals_office that showed their total general equity to be dollar_figure we note that in the federal poverty_line for a family of three was set at dollar_figure annual update of hhs poverty guidelines fed reg date petitioners’ only daughter ashley was years old at the time of the hearing when this matter was before the court continued mr caple also raised the issue of whether respondent had abated interest and adjusted accuracy-related_penalties with respect to their accounts for and respondent had previously agreed to abate interest and adjust the penalties assessed against petitioners pursuant to an agreement reached between petitioners and respondent’s milwaukee problem resolution office during the hearing petitioners questioned whether respondent had in fact properly abated the interest and adjusted these penalties per their agreement ms roberts reviewed petitioners’ account records during the hearing and explained to them that these transcripts showed that the sec_6662 penalties had been adjusted to zero and the interest had been abated per petitioners’ request ms roberts then sent a copy of these account statements transcripts to petitioners following the hearing on date petitioners submitted to respondent a form_656 offer_in_compromise oic petitioners offered to settle the outstanding amount of tax owed by them as follows a payment of dollar_figure to be obtained from checking accounts investment accounts and selling autos the application continued ashley was a college student and covered under their health insurance plan petitioners admitted both during the hearing and when this matter was heard by the court that in they purchased continued of dollar_figure in tax_credits and petitioners’ expected future tax benefits petitioners attached five typed pages to their form_656 explaining their oic in the attachment petitioners stated that their oic was reasonable in the light of their protracted dealings with respondent since and mr caple’s and ashley’s extensive medical ailments and the costs associated with their care on date respondent rejected petitioners’ oic on the grounds that petitioners had failed to substantiate their hardship and that they had sufficient assets to pay the amount owed on date respondent issued petitioners a notice_of_determination concerning collection action s under sec_6320 in which respondent determined the notice of federal tax levy for taxable years and to be proper and determined that collection of the tax_liabilities for those years should proceed on date respondent issued another notice_of_intent_to_levy petitioners filed a petition for redetermination of a continued for dollar_figure an antique porsche that in had a fair_market_value of dollar_figure and that in they sold for dollar_figure a motor boat that they had owned for several years petitioners maintain that they refunded the proceeds from the sale of the boat to ashley because they had previously borrowed dollar_figure from her college fund deficiency requesting the elimination of all taxes owed including penalties and interest discussion before a levy may be made on any property or right to property taxpayers are entitled to a notice_of_intent_to_levy and notice of their right to a fair hearing before an impartial officer of the commissioner’s appeals_office sec_6330 and b d if the taxpayers request a hearing they may raise in that hearing any relevant issue relating to the unpaid tax or the proposed levy including challenges to the appropriateness of the collection action and offers of collection alternatives which may include an offer-in-compromise sec_6330 a determination is then made that takes into consideration those issues the verification that the requirements of applicable law and administrative procedures have been met and whether any proposed collection action balances the need for the efficient collection_of_taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary sec_6330 petitioners have not argued that any portion of their outstanding tax_liability is uncollectible however they do argue that they were unfairly denied an opportunity to file a petition with the court for redetermination of the deficiencies and that a portion of their liability--the interest and the penalties applied under section 6662--was not properly abated and adjusted in accordance with the agreement they reached with respondent’s problem resolution office we will first consider the merits of these arguments petitioners’ right to contest the underlying liability the court’s jurisdiction to redetermine a deficiency depends upon the issuance of a valid notice_of_deficiency and the timely filing of a petition for redetermination 97_tc_437 assuming the commissioner has issued a valid deficiency_notice sec_6213 provides in pertinent part that the taxpayer must file a petition with the court within days of the mailing of the deficiency_notice respondent mailed a deficiency_notice to petitioners on date it is undisputed that petitioners received this notice in due course petitioners failed to file a petition for redetermination within days of the date the notice was mailed because petitioners’ reasons as to why they did not file a petition are irrelevant we hold that petitioners are not entitled to raise as an issue their underlying tax_liability petitioners admit their timely receipt of the notice they stated that the declining health of mr caple’s father and other factors left them unable to deal with the situation once respondent places the deficiency_notice within the taxpayer’s grasp in ample time to file a petition with the tax_court respondent satisfies the requirement of sec_6212 if the taxpayer turns a blind eye to that information she does so at her own peril patmon young profl corp tcmemo_1993_143 affd 55_f3d_216 6th cir abatement of interest and adjustment of penalties petitioners challenge respondent’s collection action on the grounds that respondent did not properly account for an agreement reached between petitioners and respondent’s milwaukee problem resolution office to abate all interest and adjust the sec_6662 penalty to zero for each of the taxable years at issue ms roberts testified that the agreement reached between the parties applied to the original assessment only and did not apply to the period after the assessment where petitioners’ outstanding liability went unpaid our review of the record12 indicates that respondent did in fact abate interest and adjust the sec_6662 penalty to zero with respect to the original assessment for each of the taxable years in issue we believe ms roberts’s testimony that the agreement between the parties applied to the original assessment only and not to the period after the assessment through the present accordingly we hold that respondent did properly abate and adjust the interest and the sec_6662 penalties with respect to the assessments made for petitioners’ and taxable years specifically respondent’s account statements for petitioners’ and taxable years these documents were provided to petitioners and petitioners offered no evidence to contradict their content rejection of petitioners’ oic because petitioners cannot dispute their underlying tax_liability we review respondent’s determination with respect to their oic under the abuse_of_discretion standard see sec_6330 114_tc_176 we find that respondent’s rejection of petitioners’ proposed oic was not an abuse_of_discretion respondent’s determination was based on all of the information petitioners provided reflecting their financial solvency to ms roberts respondent’s appeals officer see crisan v commissioner tcmemo_2003_ schulman v commissioner tcmemo_2002_129 the appeals officer reasonably determined on the basis of petitioners’ yearly income dollar_figure and asset value td waterhouse account dollar_figure vehicles--including boat dollar_figure and mrs caple’s profit sharing plan dollar_figure --totaling dollar_figure--that petitioners’ proposed oic to pay dollar_figure should be rejected in addition to the dollar_figure payment petitioners also offered dollar_figure in future_benefits as part of their oic unsure of exactly what petitioners meant by this offer the court attempted to ascertain petitioners’ intent the court’s query on this matter resulted in the following exchange the court ms caple the court these are for future credits not past credits future credits future credits mr caple the court ms caple mr caple future credits well suppose if god forbid both of you passed away there would be no credits right that’s right it’s not like you’re going to need them we would like to apply some of that on the basis of the foregoing exchange and ms roberts’s testimony explaining why she could not consider future credits as part of petitioners’ oic we consider this portion of petitioners’ oic to be no more than an irrelevant and misguided attempt on their part to satisfy their outstanding tax_liability ms roberts did not abuse her discretion in rejecting this portion of petitioners’ oic finally and with respect to petitioners’ argument that ms roberts refused to consider factors illustrating petitioners’ economic hardship and extraordinary medical_expenses we are unpersuaded on the basis of the foregoing discussion of petitioners’ assets that petitioners were unable to pay the dollar_figure owed at the time of the hearing second the record reflects only one letter dated date regarding mr caple’s medical_condition petitioners have provided no additional evidence aside from their statements which were neither substantive nor credible to indicate the impact of either mr caple’s or ashley’s medical_expenses although they admit that both father and daughter were at that time and still are covered under their medical insurance_policy despite ample evidence to the contrary petitioners have maintained that they are unable to make more than the dollar_figure proposed in their oic an amount that respondent’s appeals officer did not abuse her discretion in rejecting we therefore hold that respondent’s determination was not an abuse_of_discretion and that respondent may proceed with his collection of the tax_liability by levy upon petitioners’ property for respondent decision will be entered


internal_revenue_service department of the treasury significant index nos us'8b tdollar_figure contact person telephone number in heterence to pdatd p ra t a1 may re legend db plan dc plan state a dear this is in response to the request from your representative for rulings in connection with the establishment of the dc plan by state a and proposed elections and transfers between the dc plan and the db plan currently maintained by the department applications have been filed for determination letters on the dc plan and for the amendments to the db plan enabling the proposed elections and transfers between the db and dc plan state a has established and maintains the state a retirement_system sars the sars includes the db plan a defined benefit retirement_plan which is a government pian within the meaning of sec_414 of the internal_revenue_code_of_1986 as amended the code’ the db plan is a qualified_plan within the meaning of code sec_401 and received a determination_letter from the internal_revenue_service the irs dated date in state a adopted the dc plan an optional defined contribution retirement_plan for eligible members of sars the dc plan is a defined_contribution_plan designed to constitute a qualified_plan under code sec_401 a the dc plan provides that amounts attributable to employer contributions to that plan will become fully vested after one work year the db plan generally provides a six-year cliff_vesting schedule beginning date persons eligible to participate in the db plan who on that date or thereafter are employed in a regularly established position with a state a employer as defined by state a statute may elect within days after date to participate in the dc plan in lieu of participating in the db plan state a employees who were participants in the db plan who elect to participate in the dc plan will have their benefit accruals frozen at the time of such election these employees may also elect to transfer to the dc plan a sum representing the present_value of the employee’s accumulated benefit obligation under the db plan the amounts transferred from the db plan to the employee’s account under the dc plan vest upon the participant's meeting the service requirements for the participant's service class as set forth under the db pian because the vesting_schedules differ for the db and dc plans separate_accounts will be maintained for amounts contributed by the employer to the dc plan and for amounts transferred from the db plan to the dc plan at least until all amounts in the dc plan become fully vested state a employees eligible to participate in the db plan who commence employment after date are enrolled by default in the db plan but may within days after commencement of employment elect to participate in the dc plan in addition subject_to approval from the irs all employees will have an additional one-time opportunity at the employee's discretion to switch from the db plan to the dc plan and to transfer their accruals under the same transfer and vesting rules described above similarly subject_to approval from the irs all employees including employees who had previously been participants in the db plan and elected to participate in the dc plan will have an additional one-time opportunity at the employee’s discretion to switch from the dc plan to the db plan in this situation the employee must transfer from the dc plan to the db plan an amount equal to what would have been contributed on their behalf plus interest at the actual earned rate of the invested_assets of the db plan had the employee been a member of the db plan during the time the employee was a member of the dc plan any balance following such a transfer will remain invested in the dc plan in the event employee assets from the dc plan are insufficient the employee must make up the shortfall from other monies the benefits associated with the amounts transferred from the dc plan to the db plan will vest under the db plan’s vesting schedule thus if a participant were to elect to transfer from the dc plan to the db plan before completing six years_of_service the participant would lose their vested right to benefits to the extent of funds transferred from the dc plan to the db plan if the participant were thereafter to terminate employment before completing six years_of_service currently state a statutes provide that upon termination of employment prior to satisfying the vesting requirements the nonvested accumulation in the dc plan including both amounts attributable to employer contributions to the dc plan and amounts attributable to any accumulated benefit obligation transferred from the db plan shall be transferred from the participant's account to a suspense_account of the sba if the terminated employee is reemployed within years the amount transferred to the suspense_account of the sba is to be transferred back to the participant’s regular account under the dc plan plus interest pincite per annum on amounts attributable to employer contributions to the dc plan and per annum on amounts attributable to accumulated benefit obligations transferred from the db plan to the dc plan state a statutes are silent on what happens to amounts that are forfeited under the dc pian the sba proposes to limit the application of forfeitures to payment of plan administrative expenses and reduction of future employer contributions to the plan in accordance with the foregoing you request the following rulings the election of eligible employees to participate in the dc plan or the db plan and if participation in the dc plan is elected any transfer of amounts from the db pian to the dc plan upon such initial election of an eligible_employee to participate in the dc plan i will not cause the dc plan or the db plan to fail to be a qualified_plan within the meaning of sec_401 of the code ii will not result in currently taxable_income to the participant under sec_72 of the code sec_402 of the code or any other provision of the code and iii will not result in imposition of an early_distribution_tax under sec_72 of the code the one additional opportunity of an eligible_employee to elect to move from the db plan to the dc plan or from the dc plan to the db plan after the period during which the employee made the initial election between the plans and the transfer of amounts from the db plan to the dc plan or from the dc plan to the db plan upon such election i will not cause the dc pian or the db plan to fail to be a qualified_plan within the meaning of sec_401 of the code ii will not result in currently taxable_income to the participant under sec_72 of the code sec_402 of the code or any other provision of the code and iii will not result in imposition of an early_distribution_tax under sec_72 of the code amounts transferred directly from the db plan to the dc plan at the election of the participant are not annual_additions to the dc plan within the meaning of sec_415 of the code amounts transferred directly from the dc plan to the db plan upon the participant's election to transfer from the dc plan to the db plan are not annual_additions within the meaning of sec_415 of the code are not contributions subject_to the limitations of code sec_415 and the annual_benefit under the db plan attributable to the amounts transferred from the dc plan to the db plan will not be subject_to the limitations of code sec_415 neither the initial election to permit an eligible_employee to participate in the dc plan in lieu of the db plan nor the additional one-time election to transfer from the db plan to the dc plan or from the dc plan to the db plan while an employee will constitute a cash_or_deferred_arrangement within the meaning of code sec_401 the proposed use of forfeitures under the dc plan will not cause the dc plan to fail to be a qualified_plan within the meaning of sec_401 a of the code bay section dollar_figure of revproc_2001_4 2001_1_irb_131 provides that the employee_plans technical office ordinarily will not issue letter rulings on matters involving a plan’s qualified status under sec_401 through of the code and sec_4975 of the code and that matters involving a plan’s qualified status are generally handled by the employee_plans determination program as provided in revproc_2001_6 of 2001_1_irb_194 rev_proc and rev_proc accordingly because ruling_request sec_1 and i are covered under determination_letter procedures we will not rule on these requests sec_402 of the code provides in general that the amount actually distributed by any employees’ trust described in sec_401 which is exempt from tax under sec_501 shall be taxable to the distributee in the year in which so distributed under sec_72 relating to annuities sec_72 of the code provides for an additional tax on any amount received from a qualified_retirement_plan as defined in sec_4974 which includes plans described in sec_401 the additional tax for the taxable_year in which such amount is received is equal to percent of the portion of such amount which is includible in gross_income except where such income is distributed on or after an employee attains the age of or on account of one or more exceptions provided for under sec_72 of the code revrul_67_213 1967_2_cb_149 provides that if a participant’s interest in a qualified_plan is transferred from the trust forming part of that plan to the trust forming part of another qualified_plan without being made available to the participant no taxable_income will be recognized by reason of such transfer in the case of a transfer of amounts from the db plan to the dc plan either upon initial election or during the one-time additional opportunity for such transfers the amounts transferred to the dc plan will not be distributed to nor made available to the participant similarly in the case of a transfer of amounts from the dc plan to the db plan during the one-time opportunity for such transfers the amounts transferred to the db pian will not be distributed to nor made available to the participant the only choice a participant has is to transfer to the other plan the amount so transferred is then subject_to the distribution rules in the transferee_plan 33s accordingly with respect to ruling requests ii iii ii and iti the amounts transferred from the db plan to the dc plan and from the dc plan to the db plan whether at time of initial selection or during the one-time additional opportunity for transfer of such amounts are not distributions and the transfers will not result in currently taxable_income to the participant under sec_72 of the code sec_402 of the code or any other provision of the code and will not result in imposition of an early_distribution_tax under sec_72 of the code sec_415 of the code provides that a defined_benefit_plan is not a qualified_plan if the plan provides for the payment of benefits with respect to a participant which exceed the limitation of sec_415 sec_41 b limits the amount of annual benefits in a defined_benefit_plan sec_415 of the code provides that a defined_contribution_plan is not a qualified_plan if contributions and other additions made to the plan with respect to any participant in a taxable_year exceed the limitation of sec_415 sec_415 limits the amount of annual contributions and other additions to a participant's account in a defined contribution pian sec_415 of the code generally provides that if an employee makes contributions to purchase permissive_service_credit under a governmental pian the plan may satisfy the code sec_415 limits either by treating the accrued_benefit derived from all such contributions as an annual_benefit in applying the code sec_415 limit or by treating the contributions as annual_additions for purposes of code sec_415 sec_415 defines permissive_service_credit to mean service_credit i i recognized by the governmental_plan for purposes of calculating a participant's benefit under the plan which such participant has not received under such governmental_plan and iii which such participant may receive only by making a voluntary additional_contribution in an amount determined under such governmental_plan which does not exceed the amount necessary to fund the benefit attributable to such service_credit sec_1 b iv of the income_tax regulations the regulations provides that when there is a transfer of funds from one qualified_plan to another the annual_benefit attributable to the assets transferred does not have to be taken into account by the transferee_plan in applying the limitations of sec_415 3b sec_1 d of the regulations provides that mandatory_contributions to a defined_benefit_plan are considered a separate defined_contribution_plan that is subject_to the limitations on contributions and other additions described in sec_1 sec_1 b iv of the regulations provides that the transfer of funds from one qualified_plan to another will not be considered an annual_addition for the limitation_year in which the transfer occurs in the case of a transfer from the db plan to the dc plan the amounts being transferred are moving from one qualified_plan to another accordingly with respect to the third ruling_request the amounts directly transferred to the dc plan from the db plan are not annual_additions to that plan within the meaning of sec_415 of the code sec_415 provides special rules if an employee makes one or more contributions to a defined benefit governmental_plan to purchase permissive_service_credit employees who move from the dc plan to the db plan are required to provide to the db plan a sum representing all contributions with interest that would have been made to the db plan on the employee's behalf during the period the employee was a member of the dc pian had the employee never left the db plan the amounts to be provided to the db plan are first made from amounts transferred from the dc plan and then if the amounts transferred from the dc plan are insufficient from after-tax employee contributions to make up the difference the taxpayer's representative has represented that the term amounts transferred directly from the dc plan to the db plan in the fourth ruling_request specifically excludes after-tax monies if any contributed by the employee to complete the move therefore any amounts transferred directly from the dc plan to the db plan are transfers from one qualified_plan to another therefore as provided under sec_1 b iv of the regulations the amounts directly transferred to the db plan from the dc plan are not annual_additions to that plan within the meaning of sec_415 of the code because the term amounts transferred from the dc plan to the db plan excludes the employee contributions made to complete the move the amounts transferred from the dc plan to the db plan are not employee contributions to purchase permissive_service_credit and are thus not subject_to the limitations of code sec_415 jb the annual_benefit under the db plan attributable to the amounts transferred from the dc plan to the db plan may fall into two categories the annual_benefit attributable to service during participation in the dc plan and in the case of a participant who had previously made a db plan to dc pian transfer the annual_benefit attributable to service during prior participation in the db plan the sources of the amounts transferred if any from the dc plan to the db plan representing the annual_benefit attributable to service during prior participation in the db plan were amounts previously transferred from the db plan to the dc plan because the transfers of funds from the db plan to the dc plan was a transfer of funds from one qualified_plan to another these transfers were not annual_additions to the dc plan within the meaning of sec_415 of the code thus the annual_benefit associated with the amounts previously transferred from the db plan to the dc plan continued to be taken into account under the limitations of sec_415 accordingly with respect to the fourth ruling_request amounts transferred directly from the dc plan to the db plan upon a participant's election to transfer from the dc plan to the db plan are not annual_additions within the meaning of sec_415 of the code are not contributions subject_to the limitations of code sec_415 and any portion of the annual_benefit under the db plan representing service while participating in the dc plan attributable to the amounts transferred from the dc plan to the db pian will not be subject_to the limitations of code sec_41 b however the annual_benefit associated with the amounts previously transferred from the db plan to the dc plan are taken into account along with future accruals under the db plan for purposes of applying the limitations of b sec_1_401_k_-1 of the regulations provides that a cash or deferred election is any election or modification of an earlier election by an employee to have the employer either a provide an amount to the employee in the form of cash or some other taxable benefit that is not currently available or b contribute an amount to a_trust or provide an accrual or other benefit under a plan deferring the receipt of compensation sec_1_401_k_-1 of the regulations provides that an amount is currently available if it has been paid to the empioyee or if the employee is able currently to receive the cash or other taxable_amount at the employee’s discretion an amount is not currently available if there is a significant limitation or restriction on the employee's right to receive the amount currently similarly an amount is not currently available as of a date if the employee may under no circumstances receive the amount before a particular time in the future neither the initial election to permit an eligible_employee to participate in the dc plan in lieu of the db plan or the additional one-time election to transfer from the db plan to the dc plan or from the dc plan to the db plan while an employee provides an amount to the employee in the form of cash or other taxable benefit not currently available accordingly with respect to the fifth ruling_request neither the election to permit an eligible_employee to participate in the dc plan in lieu of the db plan or the additional one-time election to transfer from the db plan to the dc plan or from the dc plan to the db plan while an employee constitutes a cash_or_deferred_arrangement within the meaning of code sec_401 k initial sec_401 of the code provides that if_under_the_trust_instrument_it_is_impossible at any time prior to the satisfaction of all liabilities with respect to employees and their beneficiaries under the trust for any part of the corpus or income to be within the taxable_year or thereafter used for or diverted to purposes other than for the exclusive benefit of his employees or their beneficiaries neither the use of forfeitures from the dc plan for the payment of plan administrative expenses or for the reduction of future employer contributions to the plan constitutes a diversion of any part of the corpus or income for purposes other than for the exclusive benefit of the employees or their beneficiaries accordingly assuming that the dc plan otherwise satisfies the applicable_requirements of sec_401 the proposed use of forfeitures under the dc pian will not cause the dc plan to fail to be a qualified_plan within the meaning of sec_401 of the code a separate ruling was not requested with respect to the sec_415 treatment of supplemental after-tax employee contributions that may be required in the event of a shortfall in funds available for transfer from the dc plan to be contributed to the db plan upon an election to transfer to the db plan accordingly we are not ruling on that issue we note that if the total of such required after-tax employee contributions and all other annual_additions meets the requirements of sec_415 the requirements of sec_415 would be satisfied in addition if the required after-tax employee contributions to the db plan are ‘picked up’ under sec_414 of the code such contributions would be treated as employer contributions to the db plan and the requirements of sec_415 would not apply this ruling is directed only to the taxpayer that requested it section k of the internal_revenue_code provides that it may not be used or cited by others as precedent a copy of this letter is being furnished to your authorized representative pursuant to a power_of_attorney form on file sincerely viame t ulla james e holland jr manager employee_plans actuarial group tax_exempt_and_government_entities_division


_ tax_exempt_and_government_entities_division number release date uil department of the treasury internal_revenue_service te_ge eo examination fulton street room brooklyn wy date date taxpayer_identification_number person to contact identification_number contact telephone number last date for filing a pleading with the tax_court the claims_court or the united_states district_court for the district of columbia dear this is a final_determination regarding your exempt status under sec_501 of the internal_revenue_code irc recognition of your exemption from federal_income_tax as an organization described in internal_revenue_code sec_501 is retroactively revoked to be eeeeceaeeeeaeeeees because it is determined that you are not operated exclusively for an exempt_purpose sec_501 exempts from taxation organizations which are organized and operated exclusively for charitable or educational_purposes no part of the net_earnings of which inure to the benefit of any private_shareholder_or_individual no substantial part of the activities of which is carrying on propaganda or otherwise attempting to influence legislation and which do not participate in or intervene in any political campaign on behalf of or in opposition to any candidate for public_office we have determined that you are not operating exclusively for charitable or educational_purposes our examination reveals that you are not conducting charitable or educational activities pursuant sec_501 and that you failed to meet the operational_test under sec_1_501_c_3_-1 we are revoking your exemption from federal_income_tax as an organization described in sec_501 of the internal_revenue_code effective dollar_figure contributions to your organization are no longer deductible under sec_170 of the internal_revenue_code you are required to file federal_income_tax returns on form_1120 these returns should be filed with the appropriate service_center for all years beginning 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 file a pleading seeking a declaratory_judgment in the united_states tax_court the united_states court of federal claims or the united_states district_court for the district of columbia before the day after the date this final_determination was mailed to you please contact the clerk of the appropriate court for rules regarding filing pleadings for declaratory judgments and refer to the enclosed publication you may write to these courts at the following addresses united_states tax_court second street nw washington d c united_states court of federal claims madison place nw washington d c united_states district_court for the district of columbia constitution avenue nw washington d c you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call too-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at internal_revenue_service cceeeeece eee terete ee ne eee ne tener rien es telephone number 0seee 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 marsha a ramirez director eo examinations enclosure publication tax_exempt_and_government_entities_division org department of the treasury internal_revenue_service taxpayer_identification_number form tax_year s ended person to contact id number contact numbers telephone fax certified mail - return receipt requested dear we have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the internal_revenue_code code is necessary if you accept our findings take no further action we will issue a final revocation letter if you do not agree with our proposed revocation you must submit to us a written request for appeals_office consideration within days from the date of this letter to protest our decision your protest should include a statement of the facts the applicable law and arguments in support of your position an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in publication if we issue a determination_letter to you based on technical_advice no further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice letter catalog number 34809f if we do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the code you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at if you have any questions please call the contact person at the telephone number shown in the heading of this letter the most convenient time to call if we need to contact you if you write please provide a telephone number and thank you for your cooperation sincerely r c johnson enclosures publication publication report of examination letter catalog number 34809f form_8 a name of taxpayer org explanation of items schedule no or exhibit of year period ended department of the treasury - internal_revenue_service legend org name of organization date1 date of incorporation date2 end of the fiscal_year president name of president issue sec_1 should the org tax exempt status under c of the code be revoked because the organization has no operations and does not meet the operational_test organization under internal_revenue_code irc c as a charitable facts articles of incorporation org’s articles were filed with the california secretary of state on date1 the articles provide that the corporation is a religions corporation it is organized and operated exclusively for religious purposes within the meaning of sec_501 the specific purpose of this corporation is to propagate the gospel of jesus christ in accordance with the holy bible in customs and traditions of evangelical christianity as an evangelistic association and missionary outreach the articles include all the legal clauses that are required under sec_501 application_for exemption on september org filed its form_1023 application_for recognition of exemption under sec_501 with the irs form_1023 page question asked that the applicant provide a detailed narrative description of all the activities of the organization -past present and planned it asked to not merely refer to or repeat the language in the organizational document rather it asked to list each activity separately in the order of importance based on the relative time and other resources devoted to the activity also to indicate the percentage of time for each activity each description should include as a minimum the following a a detailed description of the activity including its purpose and how each activity furthers your exempt_purpose b when the activity was or will be initiated and c where and by whom the activity will be conducted the applicant stated that the activities are we teach the word of god and preach the gospel to every creature as disciples of the lord jesus christ we provide guidance and counseling and prayer in all spiritual matters as is required by mandate of the holy scriptures we preach and teach wherever and whenever opportunity arises directing our message to whosoever will hear irs’ determination_letter irs’ letter gave the organization advance_ruling as a public charity it was granted exempt status under sec_501 and public charity status under sec_509 and form avrev department of the treasury - internal_revenue_service page form_8 a name of taxpayer org explanation of items schedule no or exhibit of year period ended department of the treasury - internal_revenue_service b a vi the organization did not file an annual information_return for the year ending date2 the organization was contacted in writing by irs’ letter form_8734 was included which asked for the organization’s gross receipts’ information in order to determine if it meets form_990 filing_requirements the organization’s president president replied to irs’ inquiry his reply stated that the organization was started with the hope of doing what they said in the initial application however due to changes in his schedule and time the organization never started operating to the point of never opening a bank account he did not anticipate using the organization’s ministry in the foreseeable future law requirements for exemption under sec_501 final-reg tax-regs sec_1_501_c_3_-1 organizational and operational tests in order to be exempt as an organization described in sec_501 an organization must be both organized and operated exclusively for one or more of the purposes specified in such section if an organization fails to meet either the organizational_test or the operational_test it is not exempt the term exempt_purpose or purposes as used in this section means any purpose or purposes specified in sec_501 as defined and elaborated in paragraph d of this section d exempt purposes-- in general i an organization may be exempt as an organization described in sec_501 if it is organized and operated exclusively for one or more of the following purposes a religious b charitable c scientific d testing for public safety e literary f educational or g prevention of cruelty to children or animals final-reg tax-regs sec_1 c - c operational_test -- primary activities an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 form acrrev department of the treasury - internal_revenue_service page department of the treasury - internal_revenue_service explanation of items form_8 a name of taxpayer org schedule no or exhibit of year period ended governme nt position the government contends that org failed to meet the operational_test under regulations sec_1_501_c_3_-1 it failed to establish that it is operated exclusively for public and charitable purposes per its president’s admission the organization never started its operations although it has been properly organized and its articles of incorporation satisfy the requirements of sec_501 it is not an organization that is described in sec_501 because it is not both organized and operated exclusively for one or more of the purposes specified in such section based on the audit of the activities conducted during the year ending date2 it was determined that the organization does not meet the operational_test under sec_501 because it conducts no charitable activities therefore revocation of its exempt statu sec_1s proposed pp taxpayer's position the taxpayer has not submitted a written protest to the examining agent yet form acrev department of the treasury - internal_revenue_service page


department of the treasury employer_identification_number contact person - id number contact telephone number uil internal_revenue_service p o box cincinnati oh release number release date date date legend b culture x grant program y grant program z country x dollars amount y dollars amount z age dear you asked for advance approval of your educational grant procedures under internal_revenue_code sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax our determination we approved your procedures for awarding educational grants based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding educational grants meet the requirements of code sec_4945 as a result expenditures you make under these procedures won't be taxable description of your request your letter indicates that you will operate two educational grant programs one called x and one called y your overall purpose is to provide financial assistance to students to study in z x program the purpose of x is to support qualified graduate students for research or study in z so future educators will teach more effectively about z american ph d graduate students enrolled in b studies graduate programs in accredited universities are eligible to apply the fellowship will support research in z for up to one year you will not limit potential candidates to their discipline the topic or the location of the research you will offer x ‘ dollars for one full year of residency and research in z you will publicize x through national online academic sites a central academic publication for jobs and fellowships and email announcements to major universities with b studies graduate programs you will also publicize it on your website you will require that x applicants be at the dissertation stage of their graduate work be registered at an accredited university in the united_states have research level language competency write a proposal for the anticipated research and outcomes submit letters of recommendation and write a budget of how funds will be used in z a complete application_for x includes an application form a statement of study or research transcripts a resume an autobiographical statement three letters of recommendation an institutional certification form and a language competency evaluation form for x a committee of your board members will review the qualifications of applicants for a record of excellent academic performance a clearly thought out well developed and feasible research proposal and a reasonable budget for the research year relatives of the selection committee officers directors or substantial contributors are not eligible you will award one x annually it is not renewable the recipient of x will be required to submit progress reports at regular intervals during the year with a full report at the end of the year documenting research accomplished publications resulting from the research and the progress toward completion of the graduation program x will be paid in two installments if it appears the terms of the grant are not being met you will terminate future payments you represent that you will investigate diversions of funds from their intended purposes and take all reasonable steps to recover diverted funds and ensure other grant funds held are used for intended purposes y program the purpose of y is to provide funding for a high school student to travel to z for a month- long intensive language study it will be national contest for students to write an essay on a topic you determine the scholarship will be valued at y dollars you will publicize it in various places online utilized by language students and teachers and you will send promotional materials to high schools where the language is taught the requirements are that the student has studied that language for at least one year formally by the time the scholarship begins be at least z years of age by the time the scholarship begins have parental permission to travel to z alone receive a certification of medical examination prior to departing to z and sign an agreement to the standards of conduct in z letter catalog number 58222y students will submit an application form and an essay of words or less on a topic selected by you a committee of your board members and other individuals familiar with z and language study such as former board members former essay contest winners and other experts will judge essays and will select recipients essays will be judged on content writing style creativity and grammar relatives of the selection committee officers directors or substantial contributors are not eligible y will be awarded once annually it is not renewable the recipient of y will sign a standards of conduct agreement prior to departure the recipient must attend language classes during the scholarship period if the rules are violated the student will receive disciplinary action and possible termination from the program you represent that you will investigate diversions of funds from their intended purposes and take all reasonable steps to recover diverted funds and ensure other grant funds held are used for intended purposes basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure e e e the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant the grant is - - - ascholarship or fellowship subject_to sec_117 and is to be used for study at an educational_organization described in sec_170 or a prize or award subject_to the provisions of sec_74 if the recipient of the prize or award is selected from the general_public or to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar skill or talent of the recipient to receive approval of its educational grant procedures sec_53_4945-4 requires that a private_foundation show e e e the grant procedure includes an objective and nondiscriminatory selection process the grant procedure results in the recipients performing the activities the grants were intended to finance the foundation plans to obtain reports to determine whether the recipients have performed the activities that the grants were intended to finance letter catalog number 58222y other conditions that apply to this determination this determination covers only the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don't differ significantly from those described in your original request this determination applies only to you it may not be cited as precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes in your program to the cincinnati office of exempt_organizations at internal_revenue_service exempt_organizations determinations p o box cincinnati oh you cannot make grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives all funds distributed to individuals must be made on a charitable basis and must further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 you should keep adequate_records and case histories so that you can substantiate your grant distributions with the irs if necessary please keep a copy of this letter in your records if you have any questions please contact the person listed at the top of this letter sincerely director exempt_organizations letter catalog number 58222y


internal_revenue_service cor-115867-00 number info release date uil the honorable david phelps u s house of representatives washington d c dear mr phelps date thank you for your letter of date signed by you and a number of your colleagues encouraging the internal_revenue_service to immediately readjust the business standard mileage rate to reflect the recent increase in gasoline prices you note that the increased cost has particularly burdened self-employed taxpayers who use automobiles for business purposes gasoline prices we realize increased gasoline prices are an economic burden however the cost of gasoline is only one part of the business standard mileage rate which includes fixed and operating automobile costs these costs include depreciation or lease payments maintenance and repairs insurance and license and registration fees in addition to gasoline and oil less than one-third of the cents per mile rate comes from the cost of gasoline and oil thus an immediate adjustment in the rate taking into account the recent increase in gasoline prices might not be significant setting the business standard mileage rate the rate is a national average amount determined by an annual study performed by an independent_contractor who is an expert in the cost analysis of business use of automobiles the contractor uses recent data from each state on the component costs of operating the most popular automobiles the contractor then combines this data to achieve a national composite cents-per-mile rate advantages of using the business standard mileage rate reducing a taxpayer’s record-keeping burden is the principal advantage of using the rate gasoline prices rise and fall during the year but taxpayers may continue to use the same rate without having to keep records of actual expenses although rising gasoline prices can be a disadvantage for taxpayers who use the rate falling prices can work to their advantage for example although gasoline prices fell in for all of and through date taxpayers were able to use the rate that reflected the earlier higher prices taxpayer’s options to deduct the ordinary and necessary expenses of using an automobile for business purposes a taxpayer must substantiate the cost date place and business_purpose of each use of the automobile by adequate_records for the cost the taxpayer has two options cid substantiate actual cost by keeping records or by other_sufficient_evidence cid use the business standard mileage rate using the rate gives approximate not actual costs taxpayers can deduct the actual business_expenses of using a personally-owned automobile and this may be advantageous when automobile costs are rising publication travel entertainment gift and car expenses contains further information on how taxpayers should substantiate expenses i have enclosed the relevant pages from that publication i am sending a similar letter to your colleagues i hope this information is helpful please call me at or robert a berkovsky at if you have any questions sincerely charles o rossotti enclosure