department of the treasury internal_revenue_service te_ge eo examinations commerce street dallas tx tax_exempt_and_government_entities_division release number release date uil legend org organization name org address date date xx date address address employer_identification_number person to contact id number contact numbers voice fax last date for filing a petition with the tax_court november 20xx certified mail-return receipt dear a final revocation letter as this is to your exempt status under sec_501 of the internal_revenue_code the internal revenue service’s recognition of your organization as an organization described in sec_501 is hereby revoked effective january 20xx we have made this determination for the following reasons are you operated exclusively not demonstrated that for you have charitable educational or other exempt purposes within the meaning of lr c sec_501 you failed to comply with the conditions of your exemption in that you did not fully respond to repeated reasonable requests information regarding certain identified expenditures you have not demonstrated you primarily engaged in activities furthering exempt purposes and admitted that your 20xx information_return form_990 misreported the facts of your operations activities describe provide fully your and to as such you failed to meet the requirements of sec_501 and sec_1_501_c_3_-1 in that you failed to establish that you were operated exclusively for an exempt_purpose 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 the year ending december 20xx and for all years thereafter processing of income_tax returns and assessment of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the internal_revenue_code if you decide to contest this determination in court you must initiate a suit for declaratory_judgment in the united_states tax_court the united_states claim court or the district_court of the united_states for the district of columbia before the day after the date this determination was mailed to you contact the clerk of the appropriate court for the rules for initiating suits for declaratory_judgment you may write to the tax_court at the following address you also have the right to contact the office_of_the_taxpayer_advocate however you should first contact the person whose name and telephone number are shown above since this person can access your tax information and can help you get answers you can call and ask for taxpayer_advocate assistance or you can contact the taxpayer_advocate office located nearest you by calling or by writing taxpayer_advocate assistance cannot be used as a substitute for established irs procedures formal appeals processes etc the taxpayer_advocate is not able to reverse legal or technically correct_tax determinations nor extend the time fixed by law that you have to file a petition in the united_states tax_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 if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely vicki l hansen acting director eo examinations legend org organization name 3f companie sec_4 director sec_4t emp-1 xx date employee poa poa dir-1 co-1 dir-2 co-2 city city dir-3 dir-4 co-3 co-4 co-5 15t issue is org an organization exempt from tax under sec_501 of the internal_revenue_code facts according to irs records org was formed in 19xx and received a favorable determination_letter in january 19xx the organization filed form_990 for the year 20xx which was received by the ogden service_center on august 20xx page of the return lists the directors of the organization as dir-1 dir-2 dir-3 and dir-4 on december 20xx the irs send an initial examination letter and form sec_8001 sec_8002 and sec_8005 along with publication to the organization asking for information about the year ending december 20xx form_8001 asked the organization to describe its activities and complete the support schedule of part iv- a schedule a of form_990 form_8002 asked the organization to describe the activities which produced the income of dollar_figure shown of line 6a of its return gross rents the income of dollar_figure shown on line 10a of its return gross_sales of inventory and the income of dollar_figure shown on line of its return other income the form also asked the organization to explain the expenditure of dollar_figure shown on line 43d of its return other itemized expenses form_8005 asked the organization to provide a list of properties it had sold documents showing how the purchasers of its properties were selected a list of individuals it had given financial assistance and how it had selected these individuals for assistance no response was received on june 20xx the irs sent a second request for this information to the organization stating that if there was no response the service would consider revocation of the organization's tax exempt status on july 20xx the irs received copies of cancelled checks dated from january 20xx to december 20xx from the organization it did receive answers to any of the questions in the previous two letters the irs sent a third request for information to the organization on october 20xx repeating the requests previously sent the request also asked for information about some of the cancelled checks and asked the organization to include documentation with its response such as invoices or receipts these checks the irs asked about were checks payable to emp-1 totaling dollar_figure checks payable to dir-3 totaling dollar_figure checks payable to cash totaling dollar_figure check payable to co-1 for dollar_figure check payable to co-2 for dollar_figure checks payable to co-3 totaling dollar_figure check payable to co-4 for dollar_figuredollar_figure check payable to co-5 for dollar_figure check payable to dir-1 for dollar_figure checks payable to dir-4 totaling dollar_figure on december 20xx the service received from poa power_of_attorney bank statements for the year 20xx a one page document entitled explanations for 20xx checks a list of three homes sold including related settlement documents and a document entitled amid strenuous conditions how org made low_income_housing in city the organization had in purchasing rehabilitating and selling three properties in document did not include documentation explain how the organization selected its beneficiaries or explain how the organization received rental income or over dollar_figure dollars in gross_receipts in 20xx city possible this document told the problems the on march 20xx the irs sent the organization a document request asking for documentation of the claims made in the document explanations for 20xx checks the irs also asked for copies of any forms w-2 or issued for 20xx the irs had no record of receiving any of these forms repeated once again the requests made on form sec_8001 sec_8002 and sec_8005 previously sent and asked the organization to explain why its 20xx form_990 showed dollar_figure in gross_receipts but its banks statements showed only dollar_figure in deposits for the same period no reply was received to this request on september 20xx the irs repeated this request for information stating that if there was no response the service would consider revocation of the organization's tax exempt status no reply was received to this request law sec_501 of the internal_revenue_code provides for exemption from taxation for organizations organized and operated exclusively for religious charitable scientific testing for public safety literary or educational_purposes or to foster national or international amateur athletic competition or for the prevention of cruelty to children or animals no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 of the income_tax regulations states that an organization will be regarded as ‘operated exclusively' for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose sec_1 c -1 d ii of the income_tax regulations states that an organization is not organized or operated exclusively for one or more of the purposes specified unless it serves a public rather than a private interest thus to meet the requirement of this subdivision it is necessary for an organization to establish that it is not organized or operated for the benefit of private interests such as designated individuals the creator or his family shareholders of the organization or persons controlled directly or indirectly by such private interests sec_1_6033-2 of the income_tax regulations provides that every organization which is exempt from tax whether or not it is required to file an annual information_return shall submit such additional information as may be required by the internal_revenue_service for the purpose in inquiring into its exempt status and administering the provisions of subchapter_f sec_501 and following chapter of subtitle a of the code government's position dollars in gross_receipts on its annual return including gross_income despite showing over from rents org did not describe any of its activities other than the rehabilitation and sale of three homes in city even in the case of these three houses it did not explain how it acquired the properties provide any documentation of its expenses of rehabilitation or state how the purchasers of the properties were members of a charitable_class its operations can not be distinguished from an ordinary commercial enterprise engaged in real_estate development in addition it was unable to provide documentation or full explanations of numerous disbursements to individuals including large sums paid to individuals who were directors or appear to be related to directors of the organization because the organization cannot show that it is engaged exclusively in exempt_activities and is unable to show that no net_earnings inured to the benefit of private shareholders or individuals it is not entitled to tax exempt status taxpayer's positions the organization has not provided its position conclusion effective as of january 20xx the organization is no longer recognized as tax exempt it is required to file form_1120 for the year 20xx and subsequent years internal_revenue_service department of the treasury te_ge division golden gate avenue ms sf san francisco california taxpayer_identification_number form tax_year s ended person to contact id number contact numbers telephone fax date date org address 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 please sign and return the enclosed form_6018 consent to proposed adverse action we will send you a final modification or 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 a ramirez director eo examinations enclosures publication publication report of examination letter rev catalog number 34809f


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 corp b06 plr-125464-11 date date legend parent ----------------------------------------------------------------------------- -------------------------------------------------- ----------------------------------- sub -------------------------------------------------- ------------------------------ year year ------- ------- dear --------------------- this letter responds to a letter from your authorized representatives dated date requesting a ruling under sec_1_1502-75 that sub joined in the filing of a consolidated federal_income_tax return with parent for its year return additional information was received in a letter dated date the information submitted is summarized below summary of facts parent is a corporation that was incorporated shortly before the beginning of year and adopted the calendar_year as its accounting_period beginning with its year federal_income_tax return parent filed a consolidated_return that included sub parent filed form_851 affiliations schedule with its return but failed to include form_1122 authorization consent of subsidiary_corporation to be included in a consolidated_income_tax_return plr-125464-11 for subsequent years these years and year are collectively referred to as the affected taxable years parent filed consolidated federal_income_tax returns and included form_851 with each such return these returns included additional subsidiaries these subsidiaries and sub are collectively referred to as the subsidiaries during year a potential buyer for parent performed a due diligence search and discovered that it had not filed a form_1122 with its year return parent then filed this request the statute_of_limitations under sec_6501 has expired on parent’s year return representation sec_1 except for the failure to timely file form_1122 parent and the subsidiaries were eligible to file a consolidated federal_income_tax return for the affected taxable years all of the income and deductions for each member of parent's group was included in the consolidated federal_income_tax return for the affected taxable years no separate federal_income_tax returns were filed by any of the members of parent's group for the affected taxable years all the members of parent's group were included and for future filings will be included on parent's form_851 for the affected taxable years the failure to timely file the sec_1_1502-75 election for the parent’s year consolidated taxable_year was inadvertent law sec_1_1502-75 provides in part that an affiliated_group_of_corporations that did not file a consolidated_return for the immediately preceding_taxable_year may file a consolidated_return in lieu of separate returns for the taxable_year provided that each corporation that has been a member of the group during any part of the taxable_year for which the consolidated_return is to be filed consents to the regulations under sec_1502 in accordance with sec_1_1502-75 if a group wishes to exercise its privilege of filing a consolidated_return such return must be filed not later than the last day prescribed by law including extensions of time for the filing of the common parent’s tax_return with regard to a corporation’s consent for a group's first consolidated_year sec_1_1502-75 provides as a general_rule that the corporation’s consent shall be made by such corporation joining in the making of the consolidated_return for such year a corporation shall be deemed to have joined in the making of such return if it files a plr-125464-11 form_1122 in the manner specified in sec_1_1502-75 sec_1_1502-75 provides that if a group wishes to file a consolidated_return for a taxable_year a form_1122 must be executed by each subsidiary for taxable years relevant to this ruling_request the group must attach to the consolidated_return for the taxable_year either executed forms or unsigned copies of the completed forms and retain the signed originals in its records in the manner required by sec_1_6001-1 form_1122 is not required for a taxable_year if a consolidated_return was filed or was required to be filed by the group for the immediately preceding_taxable_year sec_1_1502-75 provides that if a member of the group fails to file form_1122 the commissioner may under the facts and circumstances determine that such member nevertheless has joined in the making of a consolidated_return by such group factors that the commissioner will take into account in making this determination include i whether or not the income and deductions of the member for such taxable_year were included in the consolidated_return ii whether or not a separate_return was filed by the member for that taxable_year and iii whether or not the member was included in the affiliations schedule form_851 if the commissioner determines under the facts and circumstances that the member has joined in the making of the consolidated_return such member will be treated for purposes of sec_1 h as if it had filed a form_1122 for such year ruling based solely on the information submitted and representations made we rule that sub is treated under sec_1_1502-75 as if it had filed a form_1122 with the consolidated federal_income_tax return filed by parent for year sec_1_1502-75 procedural statements the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-125464-11 in accordance with the power_of_attorney on file with this office copies of this letter are being sent to your authorized representatives a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling sincerely richard m heinecke assistant to the branch chief branch corporate cc


number release date id office uilc cca-771044-08 ------------------------- from ----------------- sent monday july am to ------------------------------------ cc -------------------- subject re question -------- - i think you are correct this seems like a violation of of the taft hartley act besides your concerns below these contributions would have to be made pursuant to a written_agreement an additional_assessment that was not included in the collective bargaining agreement or other such agreement would be a violation --------