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PLR 201620012

Religious, Charitable, etc., Institutions and Community Chest

Official textIRS Written Determinations (PLR · TAM · CCA)irs.gov
Summarize

# ISSUES 990

Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX

(1) Is ( organized and operated exclusively for exempt purposes within the meaning of Internal Revenue Code section 501 (c)(3) (IRC) and the Regulations?

(2) Does the records keeping practice of described below qualify to remain exempt under section IRC section 501 (c)(3)?

(3) Do withdrawals of cash, disbursements for personal expenses, and transferred funds to a personal business described below inure to the benefit of ( ),
____ 's President?

# FACTS

Purpose and exempt status of ____ _
____ was incorporated in January 20XX. The purpose is to enhance the lives of
Americans. Specifically, intends to identify and help victims of child sexual abuse. In addition, strives to educate the American public about the perils and destructive consequences and long-term manifestations of child sexual abuse in all aspects of a person's individual and family life. initially received recognition of its exempt status in July 20XX. The exempt status was automaticallyrevoked for failure to file Form 990-N in three consecutive years. reinstated its exempt status in 20XX.
Internal Revenue Service (IRS) received Forms 990-N from for the 20XX,
20XX, and 20XX tax years on May 15, 20XX, June 15, 20XX, and April14, 20XX, respectively.
Board of Directors and Corporate Officers
The following individuals were listed as officers and advisors on ____ 's Application for Recognition of Exemption in March XX:
____ , Founder/CEO
____ , Secretary
____ , Treasurer
____ , MD, Adviser
____ , PhD, Adviser
According to the Bylaws (remain effective since 20XX) attached to the Form 1023, none of these positions were paid positions. No Forms W-2 or 1 099s were issued by in any of the years at issue.
Referral from SB/SE agent
We received a referral from a Small Business and Self Employed (SB/SE) Division agent, who examined summonsed documents from a credit union showing the funds from
____ 's bank accounts were transferred into an account of 's Schedule C business, Administrative & Contract Services ( . This account was in turn Report issued on August 12, 20XX Catalog Number 20810W Page_1_ publish.no.irs.gov Department of the Treasury-Internal Revenue Service Form 886-A 990 Name of taxpayer Tax Identification Number Years/Periods ended 12/31/20XX 12/31/20XX 12/31/20XX paying many personal expenses. Meanwhile, ____ was making charitable contributions to that she controls.
Audit and Records of ---
On December 9, 20XX, we informed of the Form 990 audit for the year ended
December 31, XX and provided an initial Information Document Request (IDR1). On
February 2, 20XX provided the following records:
1. A statement of "Governing instruments not revised since 20XX'
2. A statement of "Minutes, etc.- None officially taken. Meetings that were held were largely conducted informally, by phone etc., largely due to President's medical condition"
3. Lease agreement between and ( ) and monthly billing statements of June and July 20XX
4. A statement of "Receipts submitted as substitute for receipt journal' with the following purchase receipts, purchase orders, and order conformations at retail stores: a. A purchase order of$ dated 1/29/20XX issued by to
____ paid by 's Card b. A credit card purchase receipt of$ dated 2/25/20XX, issued by
____ , signed by ____ _ c. An order confirmation of 10 t-shirts dated 11/1 0/20XX billed by to d. An order confirmation of $ ____ dated 12/13/20XX issued by ____ _ to ____ _ e. An order confirmation of and business cards dated 8/25/20XX billed by ___ _ f. An invoice of #1 0 envelopes billed by to an unknown customer (paid by ) g. A purchase receipt of$ at dated 4/25/20XX paid by
____ Card h. A purchase receipt of$ at dated 4/22/20XX paid by
____ Card i. Five sales receipts at USPS: i. $ (paid by , other prints were unreadable) ii. $ (paid by debit card, 1 lb. 9.9 oz. mailed to on 3/15/20XX) iii. $ (paid by , 8.7 oz. mailed on 3/17/20XX), iv. $ (paid by , 1 lb. 3.5 oz. mailed to on 6/19/20XX) v. $ (paid by , 1 lb. 8.9 oz. mailed to on 8/31/20XX) Report issued on August 12, 20XX Catalog Number 20810W Page_2_ publish.no.irs.gov Department of the Treasury-Internal Revenue Service 990 Name of taxpayer Years/Periods ended Tax Identification Number 12/31/20XX.
12/31/20XX.
12/31/20XX.
Two purchase receipts: $ j.
$ at at ____ (paid by ____ ,), and
(paid by ___
_J
____ General Ledger of 20XX (total $
5. and $ deposit/donation received expenses) - a five-column spreadsheet ledger with no specific date of debits and credits with a statement of" This ledger is based on receipts and statements that could be documented and is a reflection of circumstances at that time"
6. A brief introduction of ____ prepared in 20XX as to its mission and goals
7. An invitation issued by
20XX at on December 19,
8. A flyer of fund raiser at the ____ _
9. A blank order form of purchases are donated to: requesf' cosmetics with a statement of "All profits from your a 501c(3) charitable organization EIN upon
10. Seven thank-you letters to donors of issued on February 29, 20XX
11. A blank copy of application for grant-loan-scholarship
12. Monthly bank statements of
Saving # at
's accounts (Checking # ____ _ from January 20XX through December ), the deposits and withdrawals on the bank statements were 20XX listed below· Trans. Transaction Description of Checking Account Date ' (# 01/12/XX 01/13/XX 01/17/XX 01/18/XX 01/19/XX 01/21/XX 01/21/XX 01/21/XX 01/27/XX 01/27/XX 01/30/XX 01/31/XX 01/31/XX 02/01/XX 02/03/XX 02/03/XX 02/04/XX 02/06/XX 02/07/XX 02/07/XX Report issued on August 12, 20XX Funds transferred to Meals, Transfer to Entertain.
Personal or paid for and Misc.
Office
Cash
Credit Card
Note
Expenses
Exoenses
Withdrawal products Account
Deposits
A
1
2
3
4
5
6
A
7
Page_3_ publish.no.irs.gov Department of the Treasury-Internal Revenue Service
990
Name of taxpayer Years/Periods ended
Tax Identification Number
02/07/XX
02/07/XX
02/07/XX
02/08/XX
02/09/XX
02/15/XX
02/15/XX
02/15/XX
02/15/XX
02/17/XX
02/21/XX
02/21/XX
02/21/XX
02/22/XX
02/24/XX
02/24/XX
02/27/XX
02/27/XX
02/28/XX
02/28/XX
02/29/XX
03/02/XX
03/02/XX
03/05/XX
03/05/XX
03/06/XX
03/06/XX
03/06/XX
03/07/XX
03/09/XX
03/10/XX
03/10/XX
03/12/XX
03/13/XX
03/15/XX
03/15/XX
03/19/XX
03/19/XX
03/19/XX
03/27/XX
03/28/XX
03/30/XX
03/31/XX
03/31/XX
04/03/XX
Report issued on August 12, 20XX
12/31/20XX
12/31/20XX
12/31/20XX c
8
9
A
B
A
11
12
A
13
A
Page _A_
990
Years/Periods ended
Tax Identification Number
Name of taxpayer
04/04/XX
04/06/XX
04/10/XX
04/13/XX
04/16/XX
04/16/XX
04/17/XX
04/19/XX
04/20/XX
04/21/XX
04/23/XX
05/02/XX
05/04/XX
05/05/XX
05/07/XX
05/07/XX
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05/07/XX
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05/10/XX
05/12/XX
05/14/XX
05/15/XX
05/15/XX
05/18/XX
05/18/XX
05/19/XX
05/19/XX
05/19/XX
05/21/XX
05/21/XX
05/30/XX
06/08/XX
06/14/XX
06/14/XX
06/15/XX
06/16/XX
06/16/XX
06/20/XX
06/21/XX
06/22/XX
06/23/XX
06/27/XX
06/30/XX
07/01/XX
Report issued on August 12, 20XX
12/31/20XX
12/31/20XX
12/31/20XX c
A
D
A
15
Page_5_
990
Name of taxpayer Years/Periods ended
Tax Identification Number
07/03/XX
07/03/XX
07/09/XX
07/10/XX
07/10/XX
07111/XX
07111/XX
07/11/XX
07111/XX
07/11/XX
07/16/XX
07/16/XX
07/18/XX
07/20/XX
07/21/XX
07/25/XX
07/26/XX
07/27/XX
07/28/XX
07/30/XX
07/30/XX
08/02/XX
08/02/XX
08/04/XX
08/06/XX
08/08/XX
08/08/XX
08/08/XX
08/10/XX
08/13/XX
08/13/XX
08/15/XX
08/16/XX
08/16/XX
08/20/XX
08/20/XX
08/20/XX
08/21/XX
08/22/XX
08/22/XX
08/22/XX
08/23/XX
08/24/XX
08/27/XX
08/27/XX
Report issued on August 12, 20:XX
12/31/20XX
12/31/20XX
12/31/20XX
A
16
A
A
A
17
E
A
18
Catalog Number 20810W Page_§_ Department of the Treasury-Internal Revenue Service
990
Name of taxpayer Years/Periods ended
Tax Identification Number
08/27/XX
08/27/XX
08/27/XX
08/27/XX
08/29/XX
08/31/XX
09/04/XX
09/14/XX
09/17/XX
09/24/XX
09/28/XX
09/30/XX
10/10/XX
10/15/XX
10/16/XX
10/18/XX
10/18/XX
10/19/XX
10/20/XX
10/22/XX
10/22/XX
10/22/XX
10/29/XX
10/30/XX
10/31/XX
11/01/XX
11/03/XX
11/03/XX
11/05/XX
11/05/XX
11/05/XX
11/05/XX
11/05/XX
11/05/XX
11/06/XX
11/06/XX
11/07/XX
11/07/XX
11/07/XX
11/13/XX
11/13/XX
11/13/XX
11/13/XX
11/14/XX
11/14/XX
Report issued on August 12, 20:XX
12/31/20XX
12/31/20XX
12/31/20XX
A
D
A
A
Catalog Number 20810W Page_?_
990
Years/Periods ended
Tax Identification Number
Name of taxpayer
11/16/XX
11/16/XX
11/16/XX
11/19/XX
11/19/XX
11/21/XX
11/21/XX
11/23/XX
11/24/XX
11/26/XX
11/26/XX
11/27/XX
11/27/XX
11/27/XX
11/27/XX
11/27/XX
11/27/XX
11/27/XX
11/28/XX
11/29/XX
11/30/XX
12/05/XX
12/07/XX
12/08/XX
12/10/XX
12/10/XX
12/12/XX
12/13/XX
12/14/XX
12/14/XX
12/14/XX
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12/15/XX
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12/17/XX
12/19/XX
12/20/XX
12/20/XX
12/20/XX
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12/21/XX
12/21/XX
12/22/XX
Report issued on August 12, 20XX
12/31/20XX
12/31/20XX
12/31/20XX
A
19
7
A
17
A
A
Catalog Number 20810W Page_8_
Name of taxpayer Tax Identification Number
12/24/XX
12/26/XX
12/26/XX
12/27/XX
12/27/XX
12/27/XX
12/31/XX
Funds transferred to
990
Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX
D
Meals,
Transfer to or paid for Personal
Trans. Transaction Description of Saving Account
Entertain. and Misc.
Cash Office
Credit Card
Date Deposits Products Account )
(
04/20/XX
04/20/XX
04/21/XX
08/13/XX
12/05/XX
Total
Percentage
Deposits from 's personal
Note
Note
Expenses Expenses
Withdrawal
D
All financial charges due to withdrawal overdrawn were not included in the table above.
1 is a people search service that organizes information about people into comprehensive online profiles that are accessible to consumers, businesses and non-profits.
2 Subscription of
3 The to protect and grow your wealth
4 Customized promotional items
5 was not able to attest whether the mailing expenses paid to
6 Customizable Invites. Order
7 Cleaning services
8 Pizza Pasta Salad (deposit for Fundraiser)
9 Food and Beverage Service
10 Jazz Performance/Music event
11 Department of Transportation Parking Violations
12 Celebrate film at
13 Medical marijuana disQensary
15 Celebration of life together
16, 17 Office rent pay to the order of
18 . (Prom supplies)
19
A Deposit from President's personal checks
B Checks written from individuals other than President c
Records not available to show the source of deposits
D Check was pay to the order of
$ was donated by to . products. were for shipping of checks paid to the order of , two$
E remarked: Products donations
Summary of XX Bank Records
Report issued on August 12, 20XX
-one of them
Catalog Number 20810W Page_9_
Name of taxpayer Tax Identification Number
990
Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX
The gross receipts of in 20XX were$ The total amount of checks written by or checks paid to the order of her name was $ , which counted for % of 's gross receipts. had the following expenses:
• $ transferred to 's account
• $ was paid for products
• $ transferred to 's personal credit cards
• $ cash withdrawn by ____ _
• $ office expenses
• $ meals, grocery, gas, medical, entertainment, and miscellaneous expenses
On February 3, 20XX, a meeting with and (Representative) was held in 's office at , Conference Room on 20th Floor, . We learned the following issues from the information and documents provided above:
Resource Partners of ---
---provided consulting services to small business customers. To demonstrate the relationship between and , provided an invoice (# ) issued by to its customer. The address on the invoice was the same as ---'s. The invoice billed 's customer $ for voice mail services.
--- claimed that intended to use as a resource partner whose total profits would have been used to assist daily operations of---:
____ also provided an business card, on which shows a notation, "All profits are donated to: a 501c3 charitable organization".
Lack of records to substantiate credit card expenses and cash withdrawals
No records were provided to substantiate the purposes of $ in funds transferred from accounts to 's credit card accounts and $ of cash withdrawals --- made by . Some receipts provided on February 2 indicated that paid for those purchases but submitted for 's expenses.
Unallocated office expenses between and its resource partners
Office supplies, shipping, and promotion items expenses appeared on 's bank statements. No explanation was given as to how these expenses were related to ____ _ business. Some of them were for the business. Some of them were paid by
____ 's credit cards, but they were submitted as 's expenses. No allocation plan or records were maintained to divide these expenses between ____ _ and selling products.
Meals, entertainment, and miscellaneous expenses
____ used 's debit card to pay meals, entertainment, gas, medical, and miscellaneous expenses. The purpose of these expenses, claimed by , was mostly for 's clients ·or potential donors. did not maintain records to Report issued on August 12, 20XX Catalog Number 20810W Page__1Q publish.no.irs.gov Department of the Treasury-Internal Revenue Service Name of taxpayer Tax Identification Number 990 Years/Periods ended 12/31/20XX 12/31/20XX 12/31/20XX substantiate or indicate what was purchased and how these expenses were related to
____ exempt purposes.
Lack of records substantiate exempt activities
In addition to the invoice and business card, provided two pieces of colored publication: Prayer Ideas for January 20XX and a brief introduction prepared in 20XX stating 's mission and goals:
The Mission
To identify, protect, and help victims and survivors of child abuse, and educate the community at large about the perils and destructive consequences and long-term effects on all aspects of a person's individual and family life.
The Goals
• Provide classes and workshops on how to identify victims, perpetrators and unsafe places and situations.
• Protect "at-risk' children by providing safe, interim/transitional shelter:
• Provide counseling, support groups, workshops, and varied outlets encouraging creative expression of survivors.
• To experience and share infinite possibilities through belief and practice
____ claimed these publications were distributed to 's clients during activities conducted in 20XX. However, no records show what activities were held by
____ and how they were conducted.
On February 9, 20XX, we sent IDR2 to /Representative to verify information given on February 3, 20XX. On March 15, 20XX, Representative provided the following documents:
1. A transmittal e-mail
2. A cover letter
3. Fictitious Business Name Statements filed in 20XX and 20XX by ____ as
Proprietor/Owner of ____ _
4. Copies of subscribed by ____ _
5. An e-mail dated March 27, 20XX sent by ____ to ____ Representative
6. A request for VRNessel Record Information from to Department of
Motor Vehicle
7. Copies of 17 deposited items into 's bank accounts
8. A flyer of In-House Music for a jazz performance held in ____ Hotel
9. A purchase receipt of$ at paid by ____ _
10. 's response, edits, and clarifications on Memorandum of Interview
11. Narratives to items listed on IDR2
We learned the following information from the documents above:
Business ventures of ____ _
Report issued on August 12, 20XX
Catalog Number 20810W Page_tl publish.no.irs.gov Department of the Treasury-Internal Revenue Service Name of taxpayer Tax Identification Number 990 Years/Periods ended 12/31/20XX 12/31/20XX 12/31/20XX
____ started using as its resource partner in 20XX. Although ____ _ used 's address on its invoice, denied 's usage of
____ office space. issued 12 invoices to its customers in 20XX, which generated gross revenue of$ in that year. did not specify which transferred fund from 's account to 's account was related to the invoice in question (# ), but provided $ was the cost basis (not including cost of marketing). ____ _ did not demonstrate how it would receive benefit from the 's business with its customers. The Fictitious Business Name Statements filed in 20XX and 20XX by ____ _ indicated that she was Owner or Proprietor of started her business with in 20XX. She did not know how much in sales she made for ____ _ products, nor did she maintain the sales/inventory records. She did not contribute to-:--- from sales because she did not earn any profit. An estimate of$ to$ tax deduction was claimed on her tax return.
Substantiation provided for a couple of expenses
Articles of were provided to substantiate the subscription fees charged on
____ 's bank statements. We asked why paid for the reports when the beginning balance of bank accounts during the same calendar month was only $ (checking) and$ (saving). Representative stated that in an effort to find investments for , subscribed to these publications for guidance on how to invest funds. The service was not for the current balance, but for the anticipated donations and other funds raised.
A purchase receipt of $ at paid by 's Card on
March 30, 20XX was provided. The receipt, remarked with two individual's names, showed that chocolates and dinner certificates were purchased. Representative claimed that the purchased were promotional gifts for two perspective donors. One donated. The individual, who made a $ contribution, appeared on one of thank-you letters issued by on February 29, 20XX.
Unsubstantiated payments for personal credit cards and cash withdrawals
We asked for credit card statements and actual expense receipts for funds transferred to
____ 's credit accounts and cash withdrawals she made. Representative stated that not enough time was allotted to truly uncover the underlying charges as requested. All cash withdrawals were claimed to be used for stipends issued to 's clients, except the $ withdrawal on February 8, 20XX. believed that was used for the February fund raiser, a receipt was previously provided. However, the receipt, dated February 25, 20XX, showed total $ expenses, of which $ was paid by
____ 's credit card.
Report issued on August 12, 20XX
Catalog Number 2081 ow
Page ___.1.2. publish.no.irs.gov Department of the Treasury-Internal Revenue Service
990
Name of taxpayer Tax Identification Number Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX
CLIENT
M/F
AGE GRADE STIPEND SESSIONS
ATTENDED
1
F
17 10 90 Most
2
F
18 11 80 Some
3 F 18 12 110
All
4 F 17 11 100
All
5
F
18 11 90 Most
Unallocated office expenses between and its business ventures
We asked to provide the purpose, recipient, and mail-to/ship-to address of the following mail/shipments appearing on bank statements, and whether any of them were for shipping products to 's customers.
Trans. Date Transaction Description Amount
1/27/XX
2/15/XX
3/9/XX
3/19/XX
3/19/XX
3/31/XX
6/18/XX
8/13/XX
8/23/XX
10/18/XX
10/20/XX
11/3/XX.
11/6/XX
12/15/XX
Total
Representative stated that cannot attest to the specific names and addresses to whom mail was sent on specific days. She claimed the mailings were for the purpose of promoting , announcing events, soliciting donations, thanking donors or in some other way furthering business. was not able to identify whether these shipments were sales, but claimed that ____ _ often sent thank-you notes, invitations, solicitations. Mailed invitations would have cost more - explaining higher postage. However, receipts provided on February 2, 20XX showed that some shipments were sent to the state of or ___ _
Meals, entertainment, and miscellaneous expenses
Report issued on August 12, 20XX
Name of taxpayer Tax Identification Number
990
Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX
We asked for mileage logs and/or auto maintenance records to show mileage driven in 20XX for gas expenses. The representative stated that did not keep maintenance records for the personal vehicle she had in 20XX and she no longer has the vehicle.
We also asked for actual receipts of other expenses shown on bank statements, the purpose of the purchases, the name and contact information of individuals had meals with.
Representative stated that the debit card expenses were used for either prospective donors or anonymous clients. Moreover, did not possess the requested receipts, but stated that the best evidence of the amount of money spent and where is the actual bank statement that shows dates, amounts, location, etc.
____ 's activities based on 's best recollection
We asked for the number of group sessions and classes conducted, as well as the date/time, topic, and class material of each session. Representative stated that there were approximately 60 various sessions. did not retain calendars, but believed the information below reflects accurate information based on 's best recollection and review of the documents that are available to her. Maintaining the confidentially of meetings and pursuing the goal of establishing trust with participants would have precluded the taking of any notes. The number of participants would have varied from 1 to 5. Class hours were various. Topics included Health/Fitness, Self Worth, School, Dating, Fearful emotions, Spirituality, Relationships, Recreation, and Finances. However, no records show how
____ retrieved the information.
Februarv M<11'1:h April May lune July Aueust September Omber
November DKI!mber
6. 19, 3, 15,28 6,13,16 s,. 7, 14, 19 14,22 1(1,11,3() 13, 20, 27, 6,24
19,22. 21 5, 13, 21. 8,10, 17. 18,
24 28 23,24,26, 21,26,27
27,29
We asked how received information of foster children, who became 's clients. Representative stated that spoke with . During the course of her investigation, has been unable to verify Ms. 's true title. Ms. ____ _ is deceased.
No application for grant/loan/scholarship received
We also asked whether had ever received applications for grant/loan/scholarship, and what criteria were used to measure and approve the grant/loan/ scholarship. Representative stated that did not receive any official application.
Fundraising and recruiting flyers
We asked for the number of participants, the funds raised, and names of workers/volunteers as to
____ 's activities or flyers provided. Representative stated that no one attended and no funds were raised for the event held on December 19, 20XX. Two flyers were for events in 20XX, but inadvertently submitted. That was outside of audit scope.
Report issued on August 12, 20XX
Name of taxpayer Tax Identification Number
Treatments for clients struggling in trauma from violence/childhood abuse
990
Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX
We asked for the expense receipts at and how they were related to 's business. Representative stated that a licensed clinical psychotherapist believed that the services similar to those offered by can be extremely beneficial in the treatment of mental health problems resulting from mental traumas and personal tragedies.
We also asked how evaluate the progress and effectiveness of 's classes, group sessions, incentives offered (cash, meals, and grocery), treatment (prescription, message, and entertainment) to clients because did not hire or pay any professional therapist or consultant for its operations and programs offered to its clients.
Representative stated that the best evidence of the effectiveness would have been the participants' own statements, recounts (in group sessions, etc.), attendance, interactions with their mentor & other participants, and willingness to continue in the voluntary program. However, no clients' statements, recounts, records of attendance and interaction with their mentor & other participants were provided.
Official Website
We browsed 's official website on December 1, 20XX, March 17, 20XX and August
10, 20XX (see Attachment 1). did not make event calendar or similar information available on its official website to broadcast its coming events.
Statute extension solicited
A statute extension request sent on February 27, 20XX has been solicited from ____ _
____ declined to extend the statute of limitations.
Audit expanded to subsequent years
The audit was expanded to years 20XX and 20XX. A meeting was scheduled on April 7, 20XX for additional information and documents. Representative did not show up for the meeting.
Instead, she orally withdrew her representation for and stated that is terminally ill. also declined to attend the meeting because of her medical reasons.
She partially provided the bank statements of 's bank accounts - Page 1 and Page
3 of every 's monthly bank statement from April 20XX through December 20XX, with a statement that she had done her best with all the information requested.
Summonsed records from ---
We summonsed bank statements, deposit items, and cancelled checks of 's account at . The deposits and withdrawals of 's accounts at for 20XX are listed below:
---
Report issued on August 12, 20XX
· Form 886-A (1-1994)
Catalog Number 20810W Page_jQ publish.no.irs.gov Department of the Treasury-Internal Revenue Service 990 Name of taxpayer Years/Periods ended Tax Identification Number Trans.
Date Transaction Description of checking account Deposits
01/03/XX
01/04/XX
01/04/XX
01/04/XX
01/09/XX
01/09/XX
01/09/XX
01/11/XX
01/14/XX
01/15/XX
01/16/XX
01/22/XX
01/23/XX
01/24/XX
01/25/XX
01/25/XX
01/26/XX
01/28/XX
01/28/XX
01/29/XX
01/31/XX
01/31/XX
02/08/XX
02/11/XX
02/12/XX
02/13/XX
02/13/XX
02/13/XX
02/14/XX
02/14/XX
02/15/XX
02/16/XX
02/16/XX
02/19/XX
02/19/XX
02/19/XX
02/19/XX
02/19/XX
02/19/XX
Report issued on August 12, 20XX
12/31/20XX
12/31/20XX
12/31/20XX
Funds transferred to
_or paid
Meals
Transfer to for
Entertain.
Personal
Office and Misc.
Cash
Credit Card
Expenses Expenses Note
Withdrawal
Account
Products
1
A
A c
2
3
4 c
5
A
D
B
B
A
Page___j.Q.
Fonn number or exhibit
990
Name of taxpayer Years/Periods ended
Tax Identification Number
02/20/XX
02/20/XX
02/21/XX
02/22/XX
02/23/XX
02/25/XX
02/25/XX
02/25/XX
02/28/XX
02/28/XX
02/28/XX
03/04/XX
03/05/XX
03/06/XX
03/06/XX
03/11/XX
03/11/XX
03/11/XX
03/12/XX
03/13/XX
03/14/XX
03/14/XX
03/14/XX
03/18/XX
03/18/XX
03/18/XX
03/18/XX
03/18/XX
03/20/XX
03/20/XX
03/20/XX
03/21/XX
03/21/XX
03/21/XX
03/22/XX
03/25/XX
03/25/XX
03/25/XX
03/25/XX
03/27/XX
03/29/XX
03/30/XX
04/01/XX
04/01/XX
04/05/XX
Report issued on August 12, 20XX
12/31/20XX
12/31/20XX
12/31/20XX
6
F
A
7
7
8
9
10 c
D
11
Catalog Number 20810W Page__li
990
Name of taxpayer Years/Periods ended
Tax Identification Number
04/05/XX
04/06/XX
04/07/XX
04/09/XX
04/10/XX
04/10/XX
04/10/XX
04/10/XX
04/11/XX
04/12/XX
04/12/XX
04/13/XX
04/15/XX
04/16/XX
04/17/XX
04/20/XX
04/22/XX
04/22/XX
04/22/XX
04/26/XX
04/26/XX
04/26/XX
04/27/XX
04/29/XX
05/06/XX
05/07/XX
05/08/XX
05/09/XX
05/09/XX
05/10/XX
05/10/XX
05/11/XX
05/13/XX
05/14/XX
05/16/XX
05/17/XX
05/18/XX
05/18/XX
05/20/XX
05/20/XX
05/28/XX
05/28/XX
05/28/XX
05/28/XX
05/28/XX
Report issued on August 12, 20XX
12/31/20XX
12/31/20XX
12/31/20XX
F
D
12
F
Catalog Number20810W Page__l§_
990
Name of taxpayer Years/Periods ended
Tax Identification Number
05/29/XX
05/30/XX
06/02/XX
06/06/XX
06/06/XX
06/07/XX
06/07/XX
06/12/XX
06/14/XX
06/19/XX
06/20/XX
06/21/XX
06/24/XX
06/28/XX
06/28/XX
06/29/XX
06/30/XX
07/01/XX
07/01/XX
07/01/XX
07/01/XX
07/01/XX
07/02/XX
07/02/XX
07/03/XX
07/03/XX
07/03/XX
07/03/XX
07/03/XX
07/05/XX
07/05/XX
07/05/XX
07/08/XX
07/08/XX
07/08/XX
07/08/XX
07/08/XX
07/08/XX
07/08/XX
07/08/XX
07/08/XX
07/09/XX
07/10/XX
07/10/XX
07/10/XX
Report issued on August 12, 20:XX
12/31/20XX
12/31/20XX
12/31/20XX
D
A
A c
13
Catalog Number20810W Page___j_R Department of the Treasury-Internal Revenue Service
990
Name of taxpayer Years/Periods ended
Tax Identification Number
07111/XX
07111/XX
07/12/XX
07/12/XX
07/13/XX
07/13/XX
07/13/XX
07/15/XX
07/16/XX
07/16/XX
07/16/XX
07/17/XX
07/17/XX
07/17/XX
07/17/XX
07/18/XX
07/18/XX
07/19/XX
07/19/XX
07/19/XX
07/20/XX
07/20/XX
07/22/XX
07/22/XX
07/22/XX
07/23/XX
07/24/XX
07/24/XX
07/25/XX
07/25/XX
07/26/XX
07/26/XX
07/26/XX
07/27/XX
07/27/XX
07/29/XX
07/29/XX
07/29/XX
07/29/XX
07/30/XX
07/30/XX
07/30/XX
07/30/XX
07/31/XX
07/31/XX
Report issued on August 12, 20XX
12/31/20XX
12/31/20XX
12/31/20XX c
Catalog Number 20810W Page___2Q_
990
Name of taxpayer Years/Periods ended
Tax Identification Number
08/01/XX
08/01/XX
08/02/XX
08/02/XX
08/02/XX
08/02/XX
08/02/XX
08/03/XX
08/05/XX
08/05/XX
08/06/XX
08/07/XX
08/07/XX
08/09/XX
08/10/XX
08/10/XX
08/12/XX
08/12/XX
08/14/XX
08/14/XX
08/16/X
08/16/XX
08/17/XX
08/19/XX
08/19/XX
08/19/XX
08/20/XX
08/21/XX
08/26/XX
08/27/XX
08/29/XX
09/01/XX
09/03/XX
09/03/XX
09/11/XX
09/16/XX
09/16/XX
09/17/XX
09/18/XX
09/18/XX
09/19/XX
09/20/XX
09/20/XX
09/21/XX
09/21XX
Report issued on August 12, 20XX
12/31/20)0(
12/31/20XX
12/31/20XX c
14
A
A
16
A
Catalog Number20810W Page__21_ Department of the Treasury-Internal Revenue Service
990
Name of taxpayer Years/Periods ended
Tax Identification Number
09/23/XX
09/23/XX
09/23/XX
09/30/XX
09/30/XX
10/01/XX
10/05/XX
10/07/XX
10/12/XX
10/14/XX
10/15/XX
10/15/XX
10/16/XX
10/16/XX
10/16/XX
10/17/XX
10/17/XX
10/21/XX
10/21/XX
10/22/XX
10/22/XX
10/23/XX
10/23/XX
10/23/XX
10/24/XX
10/24/XX
10/24/XX
10/25/XX
10/25/XX
10/25/XX
10/25/XX
10/26/XX
10/28/XX
10/28/XX
10/28/XX
10/28/XX
10/29/XX
10/29/XX
10/29/XX
10/29/XX
11/01/XX
11/14/XX
11/18/XX
11/19/XX
11/19/XX
Report issued on August 12, 20XX
12/31/20XX
12/31/20XX
12/31/20XX c c
E
Catalog Number 20810W Page__22_
990
Name of taxpayer Years/Periods ended
Tax Identification Number
11/20/XX
11/20/XX
11/20/XX
11/20/XX
11/21/XX
11/22/XX
11/22/XX
11/22/XX
11/22/XX
11/23/XX
11/23/XX
11/23/XX
11/25/XX
11/25/XX
11/27/XX
11/27/XX
11/27/XX
11/29/XX
11/30/XX
11/30/XX
11/30/XX
11/30/XX
12/01/XX
12/02/XX
12/03/XX
12/04/XX
12/07/XX
12/07/XX
12/09/XX
12/09/XX
12/09/XX
12/12/XX
12/13/XX
12/15/XX
12/16/XX
12/16/XX
12/18/XX
12/18/XX
12/19/XX
12/19/XX
12/20/XX
12/20/XX
12/21/XX
12/23/XX
12/23/XX
Report issued on August 12, 20XX
12/31/20XX
12/31/20XX
12/31/20XX
17
18
19 c
A
A
A
Catalog Number20810W
Page_2_3.
Name of taxpayer
12/23/XX
12/23/XX
12/23/XX
12/27/XX
12/30/XX
12/30/XX
12/30/XX
12/30/XX
12/31/XX
Trans.
Date
Tax Identification Number
Funds transferred to
Transfer to
_or paid
President's for
Personal
Credit Card
990
Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX
Meals
Entertain. and Misc.
Cash Office
Expenses Note
Transaction Description of Savin!l Account
01/08/XX
02/13/XX
02/13/XX
04/17/XX
04/17/XX
04/18/XX
05/09/XX
05/17/XX
05/18/XX
05/18/XX
05/18/XX
05/28/XX
05/28/XX
05/28/XX
09/03/XX
10/29/XX
10/31/XX
10/31/XX
11/23/XX
12/04/XX
Deposits from President
Deposits Account
Products Withdrawal Expenses
D
D c
D
A c
Summary of 20XX bank records . The total amount of checks written
The gross receipts of in 20XX were $ or checks paid to the order of her name was $ by
_% of , which counted for
's gross receipts. had the following expenses:
• $ transferred to paid for
Report issued on August 12, 20XX
's account, products
' personal account, or
Catalog Number20810W Page__2!
990
Name of taxpayer Years/Periods ended
Tax Identification Number
•
12/31/20XX
12/31/20XX
12/31/20XX
's personal credit cards
$ __ transferred to
• $ cash withdrawn by ____ _
• $ office expenses
• $ meals, grocery, gas, medical, entertainment, and miscellaneous expenses
The deposits and withdrawals of ____ 's accounts at below· for 20XX are listed
---
Funds transferred to
Meals
Transfer to
Entertain.
Personal
_or paid for
Trans.
Date Transaction Description of Checking Account Deposits
01/02/XX
01/03/XX
01/03/XX
01/03/XX
01/04/XX
01/04/XX
01/06/XX
01/06/XX
01/06/XX
01/06/XX
01/07/XX
01/07/XX
01/09/XX
01/11/XX
01/13/XX
01/13/XX
01/13/XX
01/14/XX
01/14/XX
01/15/XX
01/15/XX
01/15/XX
01/21/XX
01/21/XX
01/21/XX
01/21/XX
01/21/XX
01/21/XX
01/21/XX
01/21/XX
01/22/XX
01/22/XX
01/23/XX
Report issued on August 12, 20XX
Office and Misc.
Credit Card Cash
Expense Expenses Note
Withdrawal
Account
Products
1 c
15
5
A c
Catalog Number 20810W Page__l§_
990
Name of taxpayer Years/Periods ended
Tax Identification Number
01/23/XX
01/24/XX
01/25/XX
01/25/XX
01/27/XX
01/28/XX
01/28/XX
01/28/XX
01/28/XX
01/28/XX
01/29/XX
01/30/XX
01/31/XX
02/03/XX
02/03/XX
02/03/XX
02/04/XX
02/05/XX
02/05/XX
02/06/XX
02/06/XX
02/06/XX
02/07/XX
02/10/XX
02/11/XX
02/12/XX
02/12/XX
02/12/XX
02/12/XX
02/12/XX
02/14/XX
02/14/XX
02/14/XX
02/14/XX
02/15/XX
02/15/XX
02/18/XX
02/18/XX
02/18/XX
02/18/XX
02/21/XX
02/26/XX
02/28/XX
02/28/XX
02/28/XX
Report issued on August 12, 20:XX
12/31/20XX
12/31/20XX
12/31/20XX
2
3
4
5
A
6
7
8
9
10
Catalog Number 20810W Page___2§_
990
Name of taxpayer Years/Periods ended
Tax Identification Number
03/01/XX
03/01/XX
03/05/XX
03/06/XX
03/06/XX
03/06/XX
03/07/XX
03/07/XX
03/08/XX
03/08/XX
03/08/XX
03/08/XX
03/08/XX
03/10/XX
03/10/XX
03/10/XX
03/12/XX
03/12/XX
03/13/XX
03/13/XX
03/14/XX
03/14/XX
03/17/XX
03/17/XX
03/18/XX
03/19/XX
03/19/XX
03/19/XX
03/19/XX
03/20/XX
03/20/XX
03/21/XX
03/21/XX
03/21/XX
03/21/XX
03/28/XX
03/28/XX
03/29/XX
03/31/XX
03/31/XX
04/03/XX
04/03/XX
04/03/XX
04/03/XX
04/04/XX
Report issued on August 12, 20XX
12/31/20XX
12/31/20XX
12/31/20XX c
11
12
A
13
14
A
15
A
16
Catalog Number20810W Page__li Department of the Treasury-Internal Revenue Service
990
Name of taxpayer Years/Periods ended
Tax Identification Number
04/04/XX
04/04/XX
04/05/XX
04/05/XX
04/05/XX
04/07/XX
04/07/XX
04/07/XX
04/07/XX
04/07/XX
04/07/XX
04/07/XX
04/08/XX
04/08/XX
04/09/XX
04/10/XX
04/11/XX
04/11/XX
04/11/XX
04/11/XX
04/11/XX
04/12/XX
04/12/XX
04/12/XX
04/14/XX
04/14/XX
04/14/XX
04/15/XX
04/15/XX
04/15/XX
04/19/XX
04/21/XX
04/21/XX
04/22/XX
04/24/XX
04/28/XX
05/01/XX
05/02/XX
05/02/XX
05/02/XX
05/05/XX
05/05/XX
05/06/XX
05/06/XX
05/06/XX
Report issued on August 12, 20:XX
12/31/20XX
12/31/20XX
12/31/20XX
A
17
A
A
18
A
A
Page____2§_
Catalog Number20810W Department of the Treasury-Internal Revenue Service
990
Name of taxpayer Years/Periods ended
Tax Identification Number
05/06/XX
05/06/XX
05/07/XX
05/07/XX
05/08/XX
05/08/XX
05/08/XX
05/09/XX
05/09/XX
05/09/XX
05/10/XX
05/12/XX
05/13/XX
05/14/XX
05/15/XX
05/15/XX
05/15/XX
05/16/XX
05/16/XX
05/16/XX
05/20/XX
05/20/XX
05/20/XX
05/21/XX
05/22/XX
05/24/XX
05/27/XX
05/27/XX
05/28/XX
05/29/XX
05/30/XX
05/30/XX
06/03/XX
06/06/XX
06/07/XX
06/09/XX
06/09/XX
06/13/XX
06/16/XX
06/17/XX
06/18/XX
06/18/XX
06/19/XX
06/20/XX
06/20/XX
Report issued on August 12, 20XX
Page' 29
12/31/20XX
12/31/20XX
12/31/20XX
19
20
21
23
A
12
A
Catalog Number 20810W Department of the Treasury-Internal Revenue Service
990
Name of taxpayer Years/Periods ended
Tax Identification Number
06/20/XX
06/23/XX
06/24/XX
06/25/XX
06/26/XX
06/27/XX
06/30/XX
06/30/XX
06/30/XX
07/01/XX
07/03/XX
07/07/XX
07/07/XX
08/07/XX
09/08/XX
10/09/XX
11/07/XX
11/25/XX
12/05/XX
12/08/XX
12/31/XX
12/31/20XX
12/31/20XX
12/31/20XX
A c
24
A
A c
Funds transferred to
Meals
Transfer to
Entertain.
Personal
_or paid for
Trans.
Date Transaction Description of Saving Account Deposits
02/28/XX
02/28/XX
06/30/XX
08/05/XX
08/13/XX
08/21/XX
08/22/XX
08/25/XX
08/27/XX
09/03/XX
09/15/XX
11/10/XX
12/04/XX
Total
PercentaQe
Fund from President
Note and Misc.
Office
Cash
Credit Card
Expenses
Exoense
Account Withdrawal
Products
B
B
B
B
All financial charges due to withdrawal overdrawn were not included in the table above.
1 A full-service salon and spa servin!l
2 online
3 Restaurant
Report issued on August 12, 20:XX
Page~
990
Name of taxpayer Tax Identification Number Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX
4 Women's clothing
5 Cruise trip
6 This shop affiliated with a ministry features a selection of spiritual books, gospel CDs & more.
7 is the fast, simjlle and secure way to pay online without using a credit card at more than 1000 stores.
8 Closeout chain selling a range of products, such as housewares, grocery items, furniture & apparel.
9 Upscale deli making pastries, salads, sandwiches & more for dining in or takeout
10 in & Streaming online
11 Car Wash
12 Professional services
13 Licensed clinical social worker, is a professional who provides counseling and psychosocial services to clients in clinical settings 14 24 hour emergency outside service 15 Cruise planning 16 Bars near Concert Hall 17 , LLC 18 Vehicle payment 19 Full Services Salon 20 Discount office supplies 21 of Beauty 22 . yacht club offering full service yacht club amenities 23 Medical Marijuana Dispensary in 24 Medical marijuana in quality medication and excellent service A Deposit from President's personal checks B Checks written from individuals other than President c Records not available to show the source of deposits D Check was pay to the order of
Summary of 20XX bank records
The gross receipts of in 20XX were$ . The total amount of checks written by or checks paid to the order of her name was $ , which accounted for _%of 's gross receipts. had the following expenses:
• $ transferred to 's account
• $ transferred to 's personal credit cards
• $ cash withdrawn by ____ _
• $ office expenses
• $ meals, grocery, gas, medical, entertainment, and miscellaneous expenses
On May 22, 20XX, we sent IDR4 with copies of the determination application
---:---filed with IRS in 20XX and asked whether any changes in methods of operation from what was described in the application.
On June 4, 20XX, we received ____ 's comment in response to IDR4: "No changes in methods of operation."
Report issued on August 12, 20XX
Catalog Number 20810W Page~ publish.no.irs.gov
Name of taxpayer Tax Identification Number
990
Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX
On July 29, 20XX, we sent the summonsed records to ____ and asked whether any errors appear on the bank records provided by ____ _ On August 4, 20XX, commented that no errors appear on the bank records.
Additionally, she informed us of Ms. Wilks' status as representative is no longer effective.
____ , , and Representative did not provide any other records to demonstrate or substantiate 's exempt activities.

# LAW

IRC section 501 (c)(3) provides, in part, for the exemption from federal income tax of corporations organized and operated exclusively for charitable, scientific, or educational purposes, provided no part of the organization's net earnings inures to the benefit of any private shareholder or individual.
IRC section 502(a) provides that an organization operated for the primary purpose of carrying on a trade or business for profit shall not be exempt from taxation under section 501 on the ground that all of its profits are payable to one or more organizations exempt from taxation under section 501.
Treasury Regulations (Treas. Reg.) section 1.501 (c)(3) -1 (c)(2) states that an organization is not operated exclusively for charitable purposes if its net earnings inure in whole or in part to the benefit of private shareholders or individuals.
Treas. Reg. section 1.501 (a)-1 (c) defines "private shareholder or individual" as referring to persons having a personal and private interest in the activities of the organization.
Treas. Reg. section 1.501(c)(3) -1(d)(1)(ii) states that an organization is not organized exclusively for any of the purposes specified in IRC section501 (c)(3) unless it serves public, rather than private interests. Thus, an organization applying for tax exemption under IRC section501 (c)(3) must establish that it is not organized or operated for the benefit of private interests.
Treas. Reg. section1.501 (c)(3)-1 (d)(3)(i) defines "educational" as" In general ... (a) The instruction or training of the individual for the purpose of improving or developing his capabilities; or (b) The instruction of the public on subjects useful to the individual and beneficial to the community.
In Better Business Bureau of Washington, D.C. v. U.S., 326 U.S. 279, 283 (1945), the Supreme
Court held that the "presence of a single ... [nonexempt] purpose, if substantial in nature, will destroy the exemption regardless of the number or importance of truly ... [exempt] purposes."
Report issued on August 12, 20XX
Catalog Number 2081 ow
Page~ publish.no.irs.gov Department of the Treasury-Internal Revenue Service
Name of taxpayer Tax Identification Number
990
Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX
In Airlie Foundation, Inc. v. U.S., 826 F. Supp. 537 (D. D.C. 1993), aff.d 55 F.3d 684 (D.C. Cir.
1995) the court acknowledged that Airlie's activities have some noncommercial characteristics, but found these outweighed by other factors such as the nature of Airlie's clients and competition, its advertising expenditures, and substantial revenues derived from weddings and special events. In the court's view, these factors support an adverse conclusion. Finally, citing a distinctive commercial hue to the way it carries out its business, the court concluded that Airlie does not qualify under IRC 501 (c)(3) because it operates its conference center in a manner consistent with that of a commercial business.
IRC section 6001 provides that every person liable for any tax imposed by the IRC, or for the collection thereof, shall keep adequate records as the Secretary of the Treasury or his delegate may from time to time prescribe.
IRC section 6033(a)(1) provides, except as provided in IRC section 6033(a)(2), every organization exempt from tax under section 501 (a) 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. The Secretary may also prescribe by forms or regulations the requirement of every organization to 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.
Treas. Reg. section 1.6001-1(c) states that in addition to such permanent books and records as are required by paragraph( a) of this section with respect to the tax imposed by section 511 on unrelated business income of certain exempt organizations, every organization exempt from tax under section 501 (a) shall keep such permanent books of account or records, including inventories, as are sufficient to show specifically the items of gross income, receipts and disbursements. Such organizations shall also keep such books and records as are required to substantiate the information required by section 6033. See section 6033 and sections 1.6033~1 through -3.
Treas. Reg. section 1.6001-1 (e) states that the books or records required by this section shall be kept at all times available for inspection by authorized Internal Revenue Service officers or employees, and shall be retained as long as the contents thereof may be material in the administration of any Internal Revenue law.
Treas. Reg. section 1.6033-1 (h)(2) provides that every organization that 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 (section 501 and the following), chapter 1 of the Code and IRC section 6033.
In accordance with the above cited provisions of the Code and Regulations under IRC sections
6001 and 6033, organizations recognized as exempt from federal income tax must meet certain
Report issued on August 12, 20XX
Name of taxpayer Tax Identification Number
990
Years/Periods ended
12/31/20XX
12/31/20XX
12/31/20XX 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 taxexempt status.
IRC Section 6033(a)(1) provides, except as provided in IRC Section 6033(a)(2), every organization exempt from tax under Section 501 (a) 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. The Secretary may also prescribe by forms or regulations the requirement of every organization to 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.
Treas. Reg. Section 1.6033-1 (h)(2) provides that every organization that 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 (section 501 and the following), chapter 1 of the Code and IRC Section 6033.
Revenue Ruling 59-95, 1959-1 C.B. 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 are so incomplete that the organization was unable to furnish such statements. The ruling held that the failure or inability to file the required information return or otherwise to comply with the provisions of IRC Section 6033 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.
GOVERNMENT'S POSITION
We are proposing revocation based on 's failure to operate exclusively for charitable purposes, failure to provide operational information requested, and a part of its net earnings inures to the benefit of individual prohibited by law, as discussed below.

# Issue 1

____ received recognition of its exempt status because it commits to help victims of child sexual abuse, and to educate the American public about the perils of child sexual abuse on all aspects. However, there is no indication that conducts activities to fulfill its exempt purpose.
____ provided two pages of handouts and claimed that they are given to 's clients during workshops. However, no records illustrate when the workshops take place, how Report issued on August 12, 20XX Catalog Number20810W Page 34 publish.no.irs.gov DepartmentoftheTreasury-lnternal Revenue Service Name of taxpayer Tax Identification Number 990 Years/Periods ended 12/31/20XX 12/31/20XX 12/31/20XX these handouts are used, and how they are related to 's educational and charitable purposes. Flyers show that hosted several fund raising events. However, no publications were created and presented to 's donors about 's progress of its programs or recent accomplishments.
Bank statements reveal that does not have expenses that normally occur for educational activities, such as fees for rental spaces of seminars, costs of class curriculum, charges by instructors or professionals' counseling for 's clients. Instead, we observe a long list of meals, grocery, medical, gas, entertainment, and miscellaneous expenses. In addition to these unsubstantiated expenses, 's funds paid for cosmetic products,
____ 's credit card bills, and 's Schedule C activities. also withdrew cash from 's account at her discretion.
Treas. Reg. section 1.501(c)(3)-1(d)(1)(ii) provides that an organization is not organized or operated for exempt purposes unless it serves a public rather than a private interest. The term "educational" is used in IRC section 501 (c)(3) in its general legal sense in the law of charities and does not have a separate and distinct meaning from the term "charitable." In construing the meaning of the phrase "exclusively for educational purposes" in Better Business Bureau v.
United States, 326 U.S. 279 (1945), the Supreme Court of the United States said, "This plainly means that the presence of a single noneducational purpose, if substantial in nature, will destroy the exemption regardless of the number or importance of truly educational purposes."
____ 's exempt status should be revoked because it is not organized and operated exclusively for exempt purposes within the meaning of IRC section 501 (c)(3) and the Regulations.

# Issue 2

____ has failed to provide records as required in Code Section 6033(a)(1) and
Regulation Section 1.6033-1 (h)(2). failed to provide operational information that was requested during the audit. We made many attempts to obtain records via correspondence and telephone contacts. Without 's records to substantiate its expenses, we cannot verify that is operating according to its exempt purpose.
This situation is similar to the case in Revenue Ruling 59-95. In that case, tax-exempt status is revoked for failure to establish that it is observing the required conditions for exempt status, namely, providing financial statements. has also failed to provide actual receipts or equivalent records of its spending shown on bank statements to substantiate its exempt purpose. should likewise have its exempt status revoked.

# Issue 3

Another primary focus is the question of whether any of 's net earnings inured to the benefit of private individuals. The term 'net earnings' as used in IRC section 501(c)(3) includes Report issued on August 12, 20XX Name of taxpayer Tax Identification Number 990 Years/Periods ended 12/31/20XX 12/31/20XX 12/31/20XX more than the net profits as reflected on the organization's books. Net earnings may inure to the benefit of an individual in a variety of ways, and not merely through the distribution of dividends.
____ does not correctly book its revenue and expenses on its general ledger.
____ provides that the figures recorded the 20XX ledger ($ income and $ __ _ expenses) is a reflection of circumstances at that time. does not rely on records for bookkeeping purposes. does not have a system or procedure to keep its cash receipts and disbursements accountable. , President of , is the only individual who has the access to 's bank account, signs checks, purchases using
____ 's debit card, and makes deposits or withdrawals. No Board is functioning to oversee
____ 's financial activities or review bank statements.
Bank records clearly show that substantial funds of are transferred to 's
Schedule C activities and personal credit card accounts. Moreover, significant amounts of expenses for meals, gas, grocery, medical, entertainment, and unsubstantiated withdrawals, are not distinguishable whether they were for operations or 's personal use.
Without reliable records, we cannot verify that these expenditures are exclusively for
____ 's exempt purpose. Our position is that a portion of 's net earnings inure to the benefit of and has thereby violated the requirements for tax exemption under IRC section 501 (c)(3).
TAXPAYER'S POSITION
The taxpayer's position is unknown at this time.

# CONCLUSION

As a result of the audit, we have determined that is not operating for exempt purposes as a IRC section 501 (c)(3) organization. fails the operational test prescribed in Treas. Reg. 1.501 (c)(3)-1. Because is not organized and operated exclusively for one or more exempt purposes under IRC section 501(c)(3), its Federal tax exempt status under such section is revoked effective January 1, 20XX. is required to file Form 1120, U.S. Corporation Income Tax Return, for the tax year ended December 31, 20XX and all years there after.
Report issued on August 12, 20XX

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