department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division release number release date date january uniform issue list sent eoira lt contact person identification_number contact number fax number employer_identification_number e m i w l o l s i o b e n o t o t n o w _ dear we have considered your application_for recognition of exemption from federal_income_tax under sec_501 of the internal_revenue_code as an organization described in sec_501 based on the information submitted we have concluded that you do not qualify for exemption under that section the basis for our conclusion is set forth below this letter supersedes our letter of date facts you n are a state non-profit corporation formed on date your articles of incorporation state that your specific purpose is to act and operate as a charitable_organization in lessening the burdens of government and to provide donations and assistance in marketing program management and fund raising for other c organizations ety subsequently you amended and restated your articles to state your purposes as ‘to act and operate exclusively for charitable purposes within the meaning of sec_501 of the internal_revenue_code including but not limited to the relief of poverty lessening the burdens of government community beautification and maintenance providing donations and assistance in marketing program management and fund raising for other c organizations set your application form_1023 and subsequent correspondence indicates that your primary activity will be operating a downpayment assistance program in conjunction with n for persons regardless of income level to purchase real_property anywhere in the united_states your information indicates that you are the primary source of financial support for m you were specifically established to raise funds to be used by m for downpayment assistance in your application form_1023 you state that you act s as a flow through company to provide funds you further state that you will utilize a marketing company r to administer your downpayment assistance program profit entity that provides various services to m and n you state that r acts as a central clearinghouse for overhead expenses of both m and n as well as providing management administration and marketing services for both in your letter of date you describe r as a for- in your letter of date you state that to qualify applicants simply do not have the downpayment funds to purchase real_estate you state that you do not limit your downpayment - assistance program to low-income persons in addition you state that properties are not limited to a particular geographic area but generally the properties are priced at the lower end of the market in your letter of date you state that the seller’s service fee and donation is often paid out of the equity in the home you state that in some cases the fee has been added to the sale price in your letter of date you state that t he primary source of funds for n is contributions made by sellers of homes in transactions in which m provides a gift of funds to the homebuyer to use as a down payment for the purchase of the subject home you further describe the transaction as follows hjomebuyer locates a home they wish to purchase and otherwise qualify for a loan but do not have all the necessary funds to make a down payment on the purchase of the home m will make a gift to the homebuyer typically three to five percent of the total purchase_price out of current funds held by m no funds for such gift are provided by the seller of the home in the same transaction that the homebuyer uses for down payment for the purchase of the home after the sale the seller then contributes an agreed upon amount out of proceeds from the sale of the home directly to n the information packet provided with your letter of indicates that a buyer must purchase a participating property from a participating home seller the information packet describes a participating property as a home being sold by a seller who has entered into agreement with you and m located in any community in the united_states you state that your program provides home sellers with a greater pool of qualified buyers and helps the seller get the highest value for the home and may be instrumental in a quicker sale of the home sellers enter into an agreement with you and m to provide a donation to a pre-determined charity designated by r upon sale of the seller's property the seller agrees to donate a percentage of me the purchase_price which is withheld from the seller’s proceeds and delivered to the designated charity the business_day following the closing of the transaction for example if the gift provided to the homebuyer by you is five percent or less of the selling_price then the seller makes a contribution to you n as the designated charity in an amount equal to the gift provided by m plus an additional_amount as a service fee you further state that the seller is not obligated to give a donation if the closing escrow is terminated the donation is a fixed percentage of the purchase_price of the property is not negotiable copies of your seller participation letter indicate that the pre-determined charity is you n the seller participation letter indicates that the seller’s fee and corresponding contribution is only refundable if the buyer does not close on the property in addition the fee and contribution is only made if the seller has signed the agreement and the buyer receives funds from m in your letter of date you describe a typical transaction in your downpayment assistance program as follows n o r a o -9 areal estate agent writes a contract for the buyer with an addendum stating t he contract is contingent upon the buyer receiving gift funds from a non-profit charitable_organization the seller agrees to the terms and conditions of the seller participation letter and the terms and conditions are incorporated into the real_estate purchase contract the buyer then applies for a loan with a mortgage company the loan officer sends m and n a gift funds request form upon receiving the gift funds request form m and n send a gift letter to the loan officer stating that they will provide gift funds to the buyer for the downpayment at the close of escrow or the day before the title company will send m and n a copy of the settlement statement stating the amount of gift funds needed for the buyer from m and the amount of funds that are to be sent to n after the close of escrow mand n agree to the amount reflected on the gift letter upon verification the gift funds are wired from m to the title company's trust account after the title company receives the gift funds and the funds from the lender the transaction is closed and recorded at that time the title company wires funds from the seller's proceeds to n will verify that the gift funds are noted on the settlement statement and you further state that neither you n m or r has actual contact with either the buyer or the seller indicates that you drafted an in your letter of date you state that indicate that you pay your trustees and that r provides the staff needed to operate your program the staff members are a b and c your board_of director meeting minutes of agreement between yourself n and r regarding services to be provided in your meeting minutes of you indicate that the service agreement between n and r was approved by board members and signed however you never provided us with a copy of this agreement as requested in our letter of date your information indicates that your trustees a b and c are also trustees of m in addition a b and c are all owners and employees of r stated that you expanded your board_of directors to seven so that a b and c would be the minority board members however the day-to-day operations are run by a b and cas employees of r in your letter of date you in your letter of date you state that you have initiated a homebuyer education program you further described your education program in your letter of date you state that you offer a homebuyer education program in conjunction with m you state that the course covers a variety of topics ranging from the home buying process grant programs to money management you state that the programs are open to the general_public and you are creating study materials in your letter of date you state that the course materials used in your homebuyer education program as those published by fha you did not provide any other information as to how you operate your homeownership program in addition you state that the only services you provide to a buyer are the down payment funds you state that you do not have any other programs or activities to ensure that the buyer is purchasing safe decent sanitary and affordable housing in your letter of date you restated your purposes and activities to include the acquisition and rehabilitation of homes for rental lease or sale as affordable housing you state that you will make the renovated homes available to affordable housing families as defined by hud you further state that you will provide downpayment assistance for the purchase of these rehabilitated homes however you did not provide any other information regarding this activity w the financial data that you submitted including your form_990 indicates that you received approximately operation you made gifts of approximately in your letter of date you indicate that you have paid approximately compensation to a b and c as trustees of you during your first year of operation in gross_receipts from services during your first two years of to m during that same period of time in you have represented that your program operates in a manner to lessen the burdens of government by providing housing opportunities in your letters of august initiative operated through hud’s home program you represent that your program is part of the american dream downpayment and january in your letter dated date you represent that you operate in a manner similar to several specified organizations the manner in which you and these organizations operate is referred to as seller-funded downpayment assistance’ in the final report an examination of downpayment gift programs administered by non-profit organizations commissioned by office of housing united_states department of housing and urban development hud contract no c-opc-22550 m0001 date the report concludes that seller-funded downpayment assistance for mortgage downpayments has led to underwriting problems that require immediate attention furthermore the report concludes that the effective costs of homeownership are increased even more by the processing fees charged by the seller-funded downpayment assistance providers which get passed through to borrowers in higher property tee prices a copy of the report is enclosed with this determination_letter law sec_501 of the code provides for the exemption from federal_income_tax of corporations organized and operated exclusively for charitable or educational_purposes provided no part of the net_earnings inures to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 of the income_tax regulations provides that an organization operates exclusively for exempt purposes only if it engages primarily in activities that accomplish exempt purposes specified in sec_501 of the code an organization must not engage in substantial activities that fail to further an exempt_purpose sec_1_501_c_3_-1 of the regulations provides that an organization is not operated exclusively for one or more exempt purposes if its net_earnings inure in whole or in part to the benefit of private shareholders or individuals sec_1_501_c_3_-1 of the regulations provides that an organization is not organized or operated exclusively for exempt purposes unless it serves a public rather than a private interest to meet this requirement it is necessary for an organization to establish that it is not organized or operated for the benefit of private interests sec_1_501_c_3_-1 of the regulations defines the term charitable as used in sec_501 of the code as including the relief of the poor and distressed or of the underprivileged the term charitable also includes the advancement of education sec_1 c -1 d i of the regulations provides in part that the term educational as used in sec_501 of the code relates to the instruction of the public on subjects useful to the individual and beneficial to the community sec_1_501_c_3_-1 of the regulations provides that an organization that operates a trade_or_business as a substantial part of its activities may meet the requirements of sec_501 of the code if the trade_or_business furthers an exempt_purpose and provided the organization’s primary purpose does not consist of carrying on an unrelated_trade_or_business in 326_us_279 the supreme court held that the presence of a single nature will destroy the exemption regardless of the number or importance of truly exempt purposes honexempt purpose if substantial in in easter house v u s cl_ct aff'd 846_f2d_78 fed cir cert_denied 488_us_907 the court found an organization that operated an adoption agency was not exempt under sec_501 of the code because a substantial purpose of the agency was a nonexempt commercial purpose the court concluded that the organization did not qualify for exemption under sec_501 because its primary activity was placing we zt children for adoption in a manner indistinguishable from that of a commercial adoption agency the court rejected the organization's argument that the adoption services merely complemented the health related_services to unwed mothers and their children rather the court found that the health-related services were merely incident to the organization’s operation of an adoption service which in and of itself did not serve an exempt_purpose the organization's sole source of support was the fees it charged adoptive parents rather than contributions from the public the court also found that the organization competed with for-profit adoption agencies engaged in substantial advertising and accumulated substantial profits accordingly the court found that the business_purpose and not the advancement of educational and charitable activities purpose of plaintiff's adoption service is its primary goal and held that the organization was not operated exclusively for purposes described in sec_501 easter house cl_ct pincite in 92_tc_1053 the court held that an organization that operated a school to train individuals for careers as political campaign professionals but that could not establish that it operated on a nonpartisan basis did not exclusively serve purposes described in sec_501 of the code because it also served private interests more than incidentally the court found that the organization was created and funded by persons affiliated with republican party entities and that most of the organization's graduates worked in campaigns for republican candidates consequently the court concluded that the organization conducted its educational activities with the objective of benefiting republican candidates and entities although the candidates and entities benefited were not organization insiders the court stated that the conferral of benefits on disinterested persons who are not members of a charitable_class may cause an organization to serve a private interest within the meaning of sec_1_501_c_3_-1 of the regulations the court concluded by stating that even if the republican candidates and entities did comprise a charitable_class the organization would bear the burden of proving that its activities benefited members of the class in a non-select manner in 71_tc_202 the court held an organization that marketed handicrafts made by disadvantaged artisans through museums and other non- profit organizations and shops be operated for exclusively charitable purposes within the meaning of sec_501 of the code the organization in cooperation with national craft agencies selected the handicrafts it would market from craft cooperatives in communities identified as disadvantaged based on objective evidence the bureau of indian affairs or other government agencies the organization marketed only handicrafts it purchased in bulk from these communities of craftsmen it did not select individual craftsmen based on the needs of the purchasers the court concluded that the overall purpose of the activity was to benefit disadvantaged communities the method it used to achieve its purpose did not cause it to serve primarily private interests because the disadvantaged artisans directly benefited by the activity constituted a charitable_class and the organization showed no selectivity with regard to benefiting specific artisans for exempt purposes therefore the court held that the organization operated exclusively in 283_fsupp2d_58 d d c the court relied on the commerciality doctrine in applying the operational_test because of the commercial manner in which this organization conducted its activities the court found that it was operated for a non-exempt commercial purpose rather than for a tax-exempt purpose among the major factors courts have considered in assessing commerciality are competition with for profit commercial entities extent and degree of below cost services provided pricing policies and reasonableness of financial reserves additional factors include inter alia whether the organization uses commercial promotional methods eg advertising and the extent to which the organization receives charitable donations in 86_tc_916 the court stated that while the payment of reasonable salaries does not constitute prohibited inurement the payment of excessive_salaries does revrul_67_138 1967_1_cb_129 holds that helping low income persons obtain adequate and affordable housing is charitable because it relieves the poor and distressed or underpriviteged the organization carried on several activities directed to assisting low-income families obtain improved housing including coordinating and supervising joint construction projects purchasing building sites for resale at cost and lending aid in obtaining home construction loans revrul_70_585 1970_2_cb_115 discusses four examples of organizations providing housing and whether each qualified as charitable within the meaning of sec_501 of the code situation describes an organization formed to construct new homes and renovate existing homes for sale to low-income families who could not obtain financing through conventional channels the organization also provides financial aid to eligible families who do not have the necessary down payment when possible the organization recovered the cost of the homes through very small periodic_payments but its operating funds were obtained from federal loans and contributions from the general_public the revenue_ruling holds that by providing homes for low-income families who otherwise could not afford them the organization relieved the poor and distressed situation describes an organization formed to ameliorate the housing needs of minority groups by building housing units for sale to persons of low and moderate income on an open- occupancy basis the housing is made available to members of minority groups who are unable to obtain adequate housing because of local discrimination the housing units are located to help reduce racial and ethnic imbalances in the community as the activities were designed to eliminate prejudice and discrimination and to lessen neighborhood tensions the revenue_ruling holds that the organization was engaged in charitable activities within the meaning of sec_501 of the code situation describes an organization formed to formulate plans for the renewal and rehabilitation of a particular area in a city as a residential community the median income level in the area was lower than in other sections of the city and the housing in the area was generally old and badly deteriorated the organization developed an overall plan for the rehabilitation of the area it sponsored a renewal project and involved residents in the area renewal plan the organization also purchased apartment buildings that it rehabilitated and rented at cost to low and moderate income families with a preference given to residents of the area the revenue_ruling holds that the organization is described in sec_501 of the code because its purposes and activities combated community deterioration situation describes an organization formed to alleviate a shortage of housing for moderate-income families in a particular community the organization planned to build housing to be rented at cost to moderate-income families the service held that the organization failed to qualify for exemption under sec_501 of the code because the organization's program did not provide relief to the poor or further any other charitable purpose within the meaning of sec_501 and the regulations revrul_72_147 1972_1_cb_147 holds that an organization that provided housing to low income families did not qualify for exemption under sec_501 of the code because it gave preference to employees of a business operated by the individual who also controlled the organization although providing housing for low income families furthers charitable purposes doing so in a manner that gives preference to employees of the founder's business primarily serves the private interest of the founder rather than a public interest rev_rul 1985_1_cb_177 sets out a two-part test for determining whether an organization's activities lessen the burdens of government the ruling holds that an activity is a burden of government only if there is objective manifestation by a governmental_unit that it considers such activities to be its burden the ruling also holds that little weight should be given to statements of government officials that merely praise or express approval of an organization and its activities rather the government must formally recognize the organization and its functions to be considered a governmental burden the ruling sets out relevant factors in determining whether the government unit has made the necessary objective manifestation include a astatute specifically creates the organization and clearly defines the organization’s structure and purposes the activity is an integral part of a larger governmental program or is acted jaintly with a governmental_unit the governmental_unit controls the activities of the organization such as appointing all the board members the organization pays governmental expenses regular government funding of the organization's activities through grants or general obligation bonds backed with the full faith and credit of the governmental_unit as opposed to general revenue bond financing the governmental_unit is not prohibited from performing the particular activity b c a e f revrul_85_2 1985_2_cb_178 holds that an organization is lessening the burdens of government if it engages in activities that a governmental_unit considers to be its burden and such activities actually lessen such governmental burden an organization must demonstrate through ail the relevant facts and circumstances that a government unit considers the organization to be acting on its behaif thereby freeing up the government assets that would otherwise have been devoted to the particular activity rationale and conclusion based on the information you provided in your application and supporting documentation we conclude that you are not operated for exempt purposes under sec_501 of the code an organization cannot be recognized as exempt under sec_501 unless it shows that it is both organized and operated exclusively for charitable education or other exempt purposes among other things the application and supporting documentation must demonstrate conclusively that the organization meets the operational_test of sec_1 c - c of the regulations your information indicates that your primary purpose is to operate a down payment assistance program that does not exclusively serve a purpose described in sec_501 charitable purposes include relief of the poor and distressed see sec_1 c - d of the regulations program in a manner that establishes that your primary purpose is to address the needs of low- income grantees by enabling low-income individuals and families to obtain decent safe housing see revrul_70_585 situation however you do not conduct your down payment assistance your down payment assistance program does not serve exclusively low-income persons instead your program is open to anyone without any income limitations you have not demonstrated that your down payment assistance program exclusively serves any other exempt_purpose such as combating community deterioration and lessening racial tensions you indicated that you do not specifically target the benefits of your program towards any one disadvantaged group for example you have not shown that your program is designed to attract a mixed-income group of homeowners to a specifically defined geographical area that has a history of racial problems see revrul_70_585 situation sec_2 and your information indicates that you do not limit your assistance to certain geographic areas or target those areas experiencing deterioration or racial tensions see revrul_70_585 situation your program is available to anyone who is able to qualify for a mortgage from any lender in any state in the united_states arranging the purchase of homes in a broadly defined metropolitan area does not combat community deterioration within the meaning of sec_501 of the code furthermore you do not engage in any activity to ensure that the house will be habitable or that the buyer will be able to afford to maintain the house over time instead you rely solely on the mortgage_lender insurance agency home inspector or other third party to conduct such review while you indicate that you require completion of an education program you do not provide oversight or conduct any educational program or other activity to ensure that buyers are purchasing properties that are safe decent sanitary and affordable only an insubstantial portion of the activity of an exempt_organization may further a nonexempt purpose as the supreme court held in better business bureau of washington d c inc v united_states supra the presence of a single non-exempt purpose if substantial in nature will destroy the exemption regardless of the number or importance of truly exempt purposes you conduct your operations in a manner that is consistent with a commercial firm seeking to maximize sales of services rather than in a manner that would be consistent with a charitable or educational_organization seeking to serve a charitable_class or the public at large the manner in which you operate your down payment assistance program indicates that you facilitate the sales of homes in a manner that is indistinguishable from an ordinary trade_or_business you operate as a business that provides services to home sellers for which you charge a market rate fee for example your sample transaction explains how the seller and agent will benefit from your program as sellers are able to sell their homes at the full list price this type of approach as well as your representation that the gift amount was determined to maximize the number of potential homeowners helps to demonstrate that your primary purpose consists of maximizing the fees you derive from facilitating sales of real_property respect you are similar to an organization which was denied exemption because it operated a conference center for a commercial purpose see 283_fsupp2d_58 d d c likewise operating a trade_or_business of facilitating home sales is not an inherently charitable activity thus a substantial part of your activities further a nonexempt purpose in this another indication of your substantial nonexempt purpose is your lack of public support you are not supported by contributions from the general_public government or private_foundation grants almost all of your revenue comes from the sellers you serve through m and r two related_organizations that your primary activity is to promote and to further your private business interests is reflected in the financing structure of your down payment assistance program n this respect you are similar to the organization described in easter house supra which derived most of its support from fees it charged for its adoption services in this case the court stated that the substantial fees were not incidental to the organization's exempt_purpose because they were designed to make a profit facilitating home sales like running an adoption service is not an inherently charitable activity and receiving support primarily from fees charged to home sellers is indicative of your commercial purpose even if your program is directed to exclusively low-income individuals your reliance entirely on home sellers or other real-estate related businesses that stand to benefit from the transactions to finance your down payment assistance activities demonstrates that you are operated for the purpose of benefiting private parties your grant making procedures indicate that gift funds are only provided if a seller has paid in fact while you call the funds you will a processing fee or has made a contribution to you receive from the sellers contributions these transactions are not contributions because they will not proceed from detached and disinterested generosity 363_us_278 your characterization of these transactions as contributions ignores the business realities surrounding the payments the sellers will make the payments to you and indirectly to the homebuyer through your contribution to m to facilitate the sale of their homes upon the closing of the sale the sellers’ contribution is returned to seller as part of the proceeds the seller receives from the sale of the home this demonstrates the circular character of the payments these contributions are more appropriately characterized as fees received in exchange for the sale of a service your information indicates that your staff is able to take into account whether there is a home seller willing to make a payment to cover the down payment assistance an applicant has requested that you receive a payment from the home seller corresponding to the amount of the down payment assistance in virtually every transaction indicates that the benefit to the home seller is not a mere accident but rather an intended outcome of your operations in this respect you are like easter house supra which provided health care to indigent pregnant women but only when a family willing to adopt a woman’s child sponsored similar to american campaign academy supra you are structured and the care financially operated to directly benefit the home sellers who pay for your services therefore a substantial part of your activities serve a private rather than a public interest moreover you have not established that your net_earnings will not inure to the benefit of private shareholders or individuals you state that you have paid your three trustees in compensation during your first two years of operations however you have not explained in sufficient detail what services these persons will perform in return for the compensation and how those services further exempt purposes within the meaning of sec_501 you have not established that these compensation levels are reasonable in addition you have not established that the compensation will be anything other than a distribution of your net earings to these individuals you state that your program makes home ownership available to persons in accordance with hud initiatives revrul_85_1 supra holds that an activity is a burden of government only if there is objective manifestation by a governmental_unit that it considers such activities to be its burden and the government must formally recognize the organization and its functions to be considered a governmental burden however you have not provided any facts documentation or otherwise that indicates that providing down payment assistance is a burden of the government or that the government formally recognizes such activity as an integral part of a larger governmental program even if an organization's activities lessen the burdens of government it must otherwise satisfy the requirements under sec_501 of the code thus an organization must demonstrate that its activities serve a public rather than a private interest within the meaning of sec_1 c -1 d of the regulations finally you assert that other organizations similarly situated have been recognized as exempt under sec_501 while you may have provided some facts relating to those other organizations you have not provided all the facts relating to the applications for recognition of exempt status submitted by those organizations in any event you must establish based on the facts you submitted that you are organized and operated exclusively for exempt purposes described in sec_501 see interneighborhood housing corporation v commissioner t c memo based on the facts and information submitted you are not operated exclusively for exempt purposes you have not established that you activities exclusively serve a charitable_class or any other purpose defined in sec_501 your proposed operations further a substantial nonexempt business_purpose and will further the private interests of home sellers and other in addition you have not established that your net_earnings will not inure to the private parties benefit of private shareholders or individuals therefore you are not described in sec_501 of the code accordingly you do not qualify for exemption as an organization described in sec_501 of the code and you must file federal_income_tax returns for more information about representation see publication practice_before_the_irs contributions to you are not deductible under sec_170 of the code you have the right to file a protest if you believe this determination is incorrect to protest you must submit a statement of your views and fully explain your reasoning you must submit the statement signed by one of your officers within days from the date of this letter we will consider your statement and decide if the information affects our determination you also have a right to request a conference to discuss your protest this request should be made when you file your protest statement an attorney certified_public_accountant or an if you individual enrolled to practice before the internal_revenue_service may represent you want representation during the conference procedures you must file a proper power_of_attorney form_2848 power_of_attorney and declaration of representative if you have not already done so and power_of_attorney all forms and publications mentioned in this letter can be found at www irs gov forms and publications if you do not file a protest within days you will not be able to file a suit for declaratory_judgment in court because the internal_revenue_service irs will consider the failure to protest as a failure to exhaust available administrative remedies code sec_7428 provides in part that a declaratory_judgment or decree shall not be issued in any proceeding unless the tax_court the united_states court of federal claims or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted all of the administrative remedies available to it within the irs if if you do not intend to protest this determination you do not need to take any further action we do not hear from you within days we will issue a final adverse determination_letter that letter will provide information about filing tax returns and other matters please send your protest statement form_2848 and any supporting documents to this address internal_revenue_service te_ge se t eo ra t constitution ave n w washington dc _ if you may also fax your statement using the fax number shown in the heading of this letter you fax your statement please call the person identified in the heading of this letter to confirm that he or she received your fax if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely lois g lerner director exempt_organizations rulings agreements enclosure an examination of downpayment gift programs administered by non-profit organizations hud contract no c-opc-22550 m0001 date department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division date date cng wean se ved n h q jl contact person identification_number contact number employer_identification_number form required to be filed tax years we dear f this is our final_determination that you do not qualify for exemption from federal_income_tax under internal_revenue_code sec_501 as an organization described in code sec_501 c we made this determination for the following reason s you have failed to establish that you will be operated exclusively for exempt purposes as required by sec_501 of the code more than an insubstantial part of your activities is not in furtherance of an exempt_purpose you are organized for the purpose of operating an unrelated_trade_or_business and furthermore you have failed to establish that your net_earnings do not inure to the benefit of insiders private shareholders or individuals because you do not qualify for exemption as an organization described in code sec_501 donors may not deduct contributions to you under code sec_170 you must file federal_income_tax returns on the form and for the years listed above within days of this letter unless you request an extension of time to file instructions and do not send them to this office failure_to_file the returns timely may result in a penalty file the returns in accordance with their if you decide to contest this determination under the declaratory_judgment provisions of code sec_7428 you must initiate a suit in the united_states tax_court the united_states court of federal claims or the district_court of the united_states for the district of columbia before the day after the date that we mailed this letter to you contact the clerk of the appropriate court for rules for initiating suits for declaratory_judgment filing a declaratory_judgment suit under code sec_7428 does not stay the requirement to file returns and pay taxes we will make this letter and our proposed adverse determination_letter available for public inspection under code sec_6110 after deleting certain identifying information please read the enclosed notice notice of intention to disclose and review the two attached letters that show our proposed deletions if you disagree with our proposed deletions you should follow the instructions in notice f you agree with our deletions you do not need to take any further action in accordance with code sec_6104 we will notify the appropriate state officials of our determination by sending them a copy of this final letter and the proposed adverse letter you should contact your state officials if you have any questions about how this determination may affect your state responsibilities and requirements if you have any questions about this letter please contact the person whose name and telephone number are shown in the heading of this letter federal_income_tax status and responsibilities please contact irs customer service pincite-829-1040 or the irs customer service number for businesses the irs customer service number for people with hearing impairments is if you have any questions about your sincerely lois g lerner director exempt_organizations rulings agreements enclosure notice redacted proposed adverse determination_letter redacted final adverse determination_letter


number release date id office uilc cca_2009011612064937 ------------- from -------------------- sent friday date pm to -------------------- cc ------------------------------- subject re partnership question you will have to look at the rest of the partnership return not just at the schedule_k-1 discussed below the partnership return reflects ordinary dividends but neglected to properly report this item on the partner's schedule_k-1 then sec_6241 allows us to assess the correct amount as a clerical_error no electing_large_partnership proceeding would be necessary since we apparently agree with the amount of ordinary dividends reported in the body of the form 1065b if


department of the treasury internal_revenue_service washington d c apr tax exempt and covernment entities uic legend taxpayer a sum sum company a bank e plan x ira y dear mr in letters dated 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code you requested a waiver of the and the following facts and representations have been submitted under penalty of perjury in support of the ruling requested from through taxpayer a was employed by company a which sponsored plan x taxpayer a was a participant in plan x on received a distribution from plan x in the amount of sum on taxpayer a rolled over sum into ira y an individual_retirement_account ira set up and maintained in his name with bank e said rollover was timely within the meaning of code sec_408 in taxpayer a received from the internal_revenue_service service a notice_of_intent_to_levy the notice_of_intent_to_levy applied to amounts held in iras shortly thereafter on or about taxpayer a taxpayer a withdrew sum from his ira y in an attempt to prevent the service from successfully the service mailed taxpayer aa levying on said ira amounts on or about notice_of_federal_tax_lien which taxpayer a asserts he received on or about during that effective on or about a had been discontinued taxpayer a received a letter from the service which indicated its pending lien action against taxpayer taxpayer a asserts that he has not spent sum which he withdrew from his ira y taxpayer a filed this request for letter_ruling after the service discontinued its lien action against him based on the facts and representations taxpayer a requests that the service waive the 60-day rollover requirement with respect to the distribution of amount from his ira y because the failure to waive such requirement would be a hardship and against equity or good conscience with respect to your ruling_request sec_408 of the code provides that except _ as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ra rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if - the entire amount received including money and any other_property is paid into i an ira for the benefit of such individual not later than the 60th day after the day on which the individual receives the payment or distribution or the entire amount received including money and any other_property is paid into ii an eligible_retirement_plan other than an ira for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 a i from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial - rollovers code sec_408 provides that paragraph d shall not apply to any amount to the extent such amount is required to be distributed under subsection a code sec_408 provides in general that rules similar to the rules of sec_401 shall apply to the distribution of the entire_interest of an individual for whose benefit the trust is maintained sec_408 of the code provides that the secretary may waive the 60-day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 r b date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented by taxpayer a demonstrates that he withdrew sum from his ira y solely as a result of his efforts to avoid the effects of a service levy actions by a taxpayer to deliberately avoid a service levy do not represent the type of circumstances upon which a waiver of the day rollover requirement should be based under revproc_2003_16 therefore pursuant to code sec_408 your request for the service to waive the 60-day rollover requirement with respect to the withdrawal of sum from taxpayer a's ira y on or about date is denied no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent if you wish to inquire about this ruling please contact ld please address all correspondence to se t ep ra t3 at sincerely yours poaucer uh boar frances v sloan manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose