Religious, Charitable, etc., Institutions and Community Chest

al
Department of the Treasury
Internal Revenue Service
Date: March 2e,, 2022
IRS
Tax Exemot and Government Entitles
Taxpayer !D nurr,ber:
Release Number: 202247010
Release Date: 11/25/2022
UIL Code: 501.03-00
CERTIFIED MAIL - RETURN RECEIPT REQUESTED Dear
Why we are sending you this letter
Form:
Tax periods ended:
Person to cc,ntact:
Name:
ID number:
Telephc,ne:
Fax:
This is a final determination that you don't qualify for exemption from federal income tax under Internal Revenue Code (IRC) Section 501(a) as an organization described in IRC Section 501(c)(3), effective . Your determination letter dated , is revoked.
Our adverse detennination as to yum exempt status was made for the following reas.:ms: You are not operated exclusively for one or more exempt purposes within the meaning of section 50l(c)(3) because more than an insubstantial part of your activities is not in furtherance of an exempt pu1pose. Section l.50l(c)(3)-l(c)(l). You do not serve a public rather than a private interest within the meaning of section 1.50 l ( c )(3)-1 ( d)(l )(ii) because you are operated primarily for the private benefit of your founder, his family and business partners.
Organizations that are not exempt under lRC Section 50 l generally are required to fiJE, federal income tax returns and pay tax, where applicable. For further instructions, fonns and information please visit www.irs.gov.
Contributions to your organization are no longer deductible under lRC Section 170.
What you must do if you disagree with this determination If you want to contest our final determination, you have 90 days from the date this determination letter was mailed to you to file a petition or complaint in one of the three federal courts listed below.
How to file your action for declaratory judgment
If you decide to contest this determination, you may file an action for declaratory judgment under the provisions oflR.C Sectioo 7428 in one of the following three venues: 1) United States Tax Court, 2) the United States Court of Federal Claims or 3) the United States District Court for the District of Columbia.
Please contact the clerk of the appropriate court for rules and the appropriate forms for filing an action for declaratory judgment by refemng to the enclosed Publication 892, How to Appeal au IRS Determination on Tax-Exempt Status. You may write to the courts at the following addresses:
United States Tax Court U.S. Court of Federal Claims U.S. District Cout1t ior tile District of Columbia 400 SecondS1reet,NW 717 Madison Place, NW 333 .constitution Ave., N.W.
Washington. OC 20217 Washington, OC 20439 Washington, DC 20001 Letter 8337 (12-2020)
Ca&alog Number 74808E
Processing of income tax returns and assessments of any taxes due will not be delayed if you file a petition for declaratory judgment under IRC Section 7428.
We'll notify the appropriate state officials (as permitted by law) of our determination that you aren't an organization described in IRC Section 50I(c)(3).
Information about the IRS Taxpayer Advocate Service
The IRS office whose phone number appears at the top of the notice can best address imd access your tax information and help get you answers. However, you may be eligible for free help from the Taxpayer Advocate Service (T AS) if you can't resolve your tax problem with the IRS, or you believe an IRS procedure just isn't working as it should. T AS is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Contact your local Taxpayer Advocate Office at:
Internal Revenue Service
Taxpayer Advocate Office
Or call TAS at 877-777-4778. For more information about TAS and your rights under the Taxpayer Bill of Rights, go to taxpayeradvocate.irs.gov. Do not send your federal court pleading to the TAS address listed above. Use the applicable federal court address provided earlier in the letter. Contacting T AS does not extend the time to file an action for declaratory judgment.
Where you can find more information
Enclosed are Publication I, Your Rights as a Taxpayer, and Publication 594, The IRS Collection Process, for more comprehensive information.
Find tax forms or publications by visiting www.irs.gov/forms or calling 800-TAX-FORM (800-829-3676).
If you have questions, you can call the person shown at the top of this letter.
If you prefer to write, use the address shown at the top of this letter. Include your telephone number, the best time to call, and a copy of this letter.
Keep the original letter for your records.
Enclosures:
Publication I
Publication 594
Publication 892
Sincerely,
Ii /i:~~¾,
/'}:;: A. Brinkl~Y
~g Director, Exempt Organizations Examinations
Letter 6337 (12-2020)
Catalog Number 74808E r..,a Department of the Treasury fall Internal Revenue Service IRS Tax Exempt and Government Entitles CER1IFIEO MAIL - Return Receipt Requested Dear
Why you're receiriag tins letter
De:
July 30, 2021
Taxpayer ID number:
Form:
Tu penoca ended:
PtnOn to contact:
Name:
ID number:
Telephone:
Fax:
Address:
Manager's contact 1ntormabon:
Name:
ID number:
Telephone:
Response due date:
August 31, 2021
We enclosed a copy of our audit report, Form 886-A, Explanation of Items, explaining that we propose to revoke your tax-exempt status as an organization described in Internal Revenue Code

(IRC) Section 501(cX3). lfyouagree If you haven't already, please sign the enclosed Form 6018, Consent to Proposed Action, and retum it to the contact person shown at the top of this letter. We'll issue a final adverse letter detennining that you aren't an organization described in IRC Section 501(c)(3) for the periods above.
After we issue the final adverse determination letter, we'll annolUlce that your organiz.ation is no longer eligil>le to receive tax deductible contributions under IRC Section 170.
If you disagree
1. Request a meeting or telephone conference with the manager shown at the top of this letter.
2. Send any information you want us to consider.
3. File a protest with the IRS Appeals Office. If you request a meeting with the manager or send additional infonnation as stated in I and 2, above, you'll still be able to file a protest with IRS Appeals Office after the meeting or after we consider the infonnation.
Letter 3618 (Rev. 8-2019) catalog hltlmbet" 34809F The IRS Appeals Office is independent of the Exempt Organizations division and resolves most disputes informally. If you file a protest, the auditing agent may ask you to sign a consent to extend the period of limitations for assessing tax. This is to allow the IRS Appeals Office enough time to consider your case. For your protest to be valid, it must contain certain specific information, including a statement of the facts, applicable law, and arguments in support of your position. For specific information needed for a valid protest, refer to Publication 892, How to Appeal an IRS Determination on Tax-Exempt Status.
Fast Track Mediation (FTM) referred to in Publication 3498, The Examination Process, generally doesn't apply now that we've issued this letter.
4. Request technical advice from the Office of Associate Chief Counsel (Tax Exempt Government Entities) if you feel the issue hasn't been addressed in published precedent or has been treated inconsistently by the IRS.
If you're considering requesting technical advice, contact the person shown at the top of this letter. If you disagree with the technical advice decision, you will be able to appeal to the IRS Appeals Office, as explained above. A decision made in a technical advice memorandum, however, generally is final and binding on Appeals.
Ifwe don't hear from you
If you don't respond to this proposal within 30 calendar days from the date of this letter, we'll issue a final adverse determination letter.
Contacting the Taxpayer Advocate Office is a taxpayer right
The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that can help protect your taxpayer rights. TAS can offer you help if your tax problem is causing a hardship, or you've tried but haven't been able to resolve your problem with the IRS. If you qualify for TAS assistance, which is always free, TAS will do everything possi.ble to help you.
Visit www.taxpayeradvocate.irs.gov or call 877-777-4778.
For additional information
You can get any of the forms and publications mentioned in this letter by visiting our website at www.irs.gov/forms-pubs or by calling 800-TAX-FORM (800-829-3676).
2
Letter 3618 {Rev. 8-2019)
Catalog Number 34809F
If you have questions, you can contact the person shown at the top of this letter.
Enclosures:
Form 6018
Form 4621-A
Form 886-A
Pub 892
Pub 3498
Sincerely,
0- 1/,t/ ¾
FOR Sean E. O'Reilly
Director, Exempt Organizations Examinations 3
Letter 3618 (Rev. 8-2019)
Catalog Number 34809F
Depanment oftbe TtNMy-intemal Revenue Senlice
Explanations of Items
Tax Jdantiflcation Number (last 4 dlglta) 186UE:
Sdld.llenumberor exhibit v ... /Period anded Whether coottnuets to qualify for exemption as an organization described in the Internal Revenue Code (IRC) Section 501(c)(3) because of no operation or activity.

# FACTS

(formeny ) was incorporated under the laws of the State of as a non-profit corporation on for the purpose of the following:
• Charitabte;
• Educational; and
•
Making distributions to organization that qualify as exempt under sections 501 (c)(3) and 170(c)(2) It's articlaa of incorporation also stated that.:
•No part the net earnings of the corporation shall intlre to the benent of or be dlstrlbutable to be Its rnettrbers, directors, Officers, or other private persons except that the corporation shalt authorized anct empowe!ed to pay reasonable compensatiOn tor servlceB rer,dered and to make payments and distributions in flJrtheran(;e of purposes set torth in thue articles of incorporation ... on , was recogniZed to be exempt from federal income tax as an organtzatton described in IRC sediOn 501{c)(3).
The intenc:led ··actMties were:
Examll1atlon: wwwn.aov Form 986-A (Rev. 5-2017)
Nam-.ottaxpayw
~oftbe T … ,.-y-~ ~
Service
Explanations of Items
Tm. kfantlftcatbi Nqmber (last 4 digits) Schedule number or exHbft
YNf/Pertod ended
An examination was initiated in to revieW the activities and financial operation$·of as reported on the Form retum. The purpose of the examinaticm was to enaure that , continued to operate for an exempt purpose through the conduct of its ad. Mties and financial affairs.
The initiat appointment letter dated addressed to the attention of was issued in the name of , but to commence on
• Trustee. The initial appointment was scheduled at the offices of At the commencement of the examination, what was divutged through discus1sions with ("Trustee;, and through various court filings, was that he {Trustee] had been appointed bV the to dismantle the operations of . The reason for his Involvement was because had :been identified as an *aler-ego" of (" j and that the income and assets of were used by . his Wife, girlfriend ·and ·l>ullnes$ ~ for their own ~ use from through was the onginal incoq)orator, sole president, S\W CEO and primary director of The issue of identifving as an *alter-ego• happened when filed a petition for relief under (jf the in the on prior f>usines8 ventures. toaerveaathe filed a petition for, relief beca\,ISe he was b1:!ing sued by was appointed by the in C8$8on Through discovery into financial activitjes, the Trustee noted discrel)ancies between What claimed he received in comparison to his lifestyle.
·NaS uncovered as ooe ofthe•~ entffies.whoslJ income and assets were being used by to support hiS lifestyle. was another non-profit entity created by as incc>rporator, ~and director.
Ma retsult·Of fh~disc::ovety~ DE Trustee petitioned the court to get a temporary restraining order to prliJYent· ~ U$1ng any more assets of . The Judge appmved the restraining order and gave the Trustee the authority to seize the assets of . The Trustere tl:'teq se~ the assets aftd prevented any further use. then filed for toprevent lawswts.
The Trustee wn appointed by a judge to serve as the trustee for both and fflinga. The Truttee duties With commenced on Once the ·Tn.astee·:comrofled the adMties of CQUld no longe,r conduct any bullness for or on liJellalf Of the organization.
---·---
Ciltlllog … OW
Fonnl8G,A (Rev. 5-2017)
0epattmel'lt of lMJ Treaury-1"'11mal Revenue SeNlce
Explanations of Items
Name ofta,cpayel'
T-.x tdeAtl'lcation NI.Jmber (last 4 c'igita) YNr/Peffod ended
Prior Activities:
Prior to the seizure of assets by the court appointed Trustee, , thro1Jgh , had been involved in soliciting indMduals to give tax~uctible donations in exchange for ( 41 j. Those were sold to donors as a retirement or exit planning vehicle. The promise to the investor was that they would be allowed an immediate deductible contribution and would be guaranteed fixed payments over several yiears for life.
From throUgh , more than $ was received by for the purpose noted.
However, from through , the funds were used by to purchase: a. Vehicles, induding a b.
C. d. e,. that mske up the entire of (lease purchase agreement); and f. Purported Interest in The funds were used by for other personal purposes unrelated to the tax-exempt status . 11'Je use included, but was not limited to: a. Use·of ~ owned cars, including all gasoline, insurance, maintenance aodtMes; b.. Rent~ ~ing at
• part1aly fumlshed, and all Utilities, cable, HOA fees and dub fees; c. Useofthe for business and personal purposes; d. Use of a.debit card for the bank account of , including use for personal purposes. and use of a credit card in '1a name of , without reimbUrsemer4t to , for what appe~rto be cash withdrawals, apartment rents, country dub dues, home furnishings, mental health Pap_L www.trs:p Fonn886-A (Rev. 5-2017) Form Ill-A D9partment of the T...-ury-lnJllmal ~ue SeNice
Explanations of Items
Tax •. ·NUmber (last 4 digits) ¢0llnselting, «thGdOntics, home improvement, natl polishing, clothing, legal bills, groceriea, "groupons", medical bills, health dub dues, tattoos, and Sd'ledute number or exhibit Year/Period~ was indicted, convicted and later sentenced to months in federal prison.
The Tl"Uatee completed his duties With respect to ·filings and was relieved of his duties in 1. From the time the Trustee seized the assets of up to the time the Trustee was relieved of his duties, by a judge, conducted no exempt, or non-exempt activity. AU of its remaining assets wene distributed based on diSposition of the court.
Prior to being relieved of his duties, the Trustee filed the Line 3; staWd, the operations ee~. See Exhibtt , .
Form . Schedule o, Part HI,
LAW;
I.R.C. § fi01(c)(3) exempts from federal inCome ~. organizations organized and operated excltlslYely tor religious, Charitable, seientlfic, or educational purposes whereby no part of the net eatninsJS inuf6lS fb the benefit of any pnvate.tlhsrehofder or indi\Jidual, no substantial part of the adiVitlea of Whlch··•·carrying on propaganda, or otherwise attempting to influence legislation and Which doe$ not intervene on behattof (or in opposition to) any candidate for pub~ie office.
Treas. Reg.§ 1.501(c)C3)-1 states that in orderto be exempt as an organiza1ion described in section 5D1(c)(3), an organization must be bQth organized and operated exclusively for one or more purpose$ specified in ~ section~ If.an Qfganization fails to meet eJther the organizational or the~ tut, it i9not exempt An O{gan'9tion is organized exclusively for one or more exempt putpOse$ only if Its articles of the organization as de.fined in subparagra1;>h (2) of this paragraph: (a) Umft the purppses.of such organization to one or more exempt purposes; and (b) Do not e,q,ressly empower the organization tb engage, otherwise than as an ins;I.Jbsfanttal part of Its actidies, in adivtties which in themselves are not in fultherance of one or m<>re exempt purposes;.
Treas. Reg.§ 1.501(c}(3)-1(c)(1) states that an organization Will be regarded as "operated exclultveV for one or moNt purposes only If it engages. primarily in actMties wtiich accomplish one or more such exempt purposes specified in section 501(c)(3). An organ11Zation will not be so regarded if more than an Insubstantial part of its activities is not in furtherance of an exempt purpose.
WW'ftgOV
Fonn 886-A (Qav. 5-2017)
Formll&-A
Namltof …
Depattn•ofthe T … ,-lntiemal~ue Service
Explanations of Items
Tax kfentilca1kln Nt,Jmber (last 4 digfta} Schedule m.nber or eld'llbl Year/Pertod ended The term •exclusively' has not been construed to mean "solely" or "absolutely without exception."
An organtzation ~ engages in exempt aetivlties qualifies for exempt status so long as any nonexempt actMttes are only Incidental and less than substantial. Better Business Bureau of WllbiDAtorJ, D.~, y. United §tltl,e. 326 U.S. 279 (1945); Cogyrtght Cl§arfll'11 Centgr v.
CqmnilS,loner. 79 r.c. 793, 804 (1982). In Better Business Bureau of Washirgon, o.c .. the Supreme Court held that the presence of a $Ingle non-exempt purpose, if substantial in nature. Wil prevent e>ternption regardless of the number or importance of truly exempt purposes. The Court held that a trade association had an "underlying commercial motive" that distinguished its educational program from that carried on by a university.
Treas. Reg.§ 1.501(c)(3)-1(d)(1)(U) provides that an organization is not organiZed or operated excluslvely for charitable purpo$8S unless it serves a public rather than a private interest. It is necessary for an organization to establish that it is not organized or operated for the benefit of private interests such as designated individuals, the creator or his family, shareholders of the orgamzation, or persons controkd, c.tirectly or indirectly, by such private interests.
A private benefit may inure to outsiders as well as insiders. The conferral of benefits on disinterested perNnS who are not members of a charitable class may cause an organization to serve a private interest within the meaning of Treas. Reg.§ 1.501 (c)(3)-1(d)(1)(ii). ADJedcan campaign AcademY y. Cpmmissionef, 92 T.C. 1053 (1989). Economic benefits flowing to persons• an incidental ~ of an organization pursuing exempt charitable purposes will AC#.-,atly canstitute prohibited private benefits. Kentucky Bar FgyndatiQ'l:L.
Commjgforg. 78 T.C. 921 (1182). However, when benefits to the public are St:M:Ondary, the private benefitwll preclude exemption. §I.I Gil:ldml v. Cqmmt§Sk>ner, 46 T.C. 47 (1966), in Wbid1 art organization dredged the waterways for the IR!nefit of these persons owning property or living an 1he shore$ thereof, am:f any benefit to the general public by providing a storm haven tor small craft.. if It existed at all, was a secondary one. fn Amergn CBrm>aign Aqademy, the organization trained individuals for car•eers as political catnPIIQn managers and consultants. The service conceded that the organization fUrthered an ectucatiQnal •purpp$e- Almost al of'1he ~s graduates became employee! b~·, or consultants to, the~ ot c:andidates of the ~ Party. The court concluded that the entitles and candidates of ~ &peeific political party are a "select group" that constitute s;1riv11te intel'e$ts for purposes of section 1.501 (cX3)-1(d)( 1 )(ii), and that the benefit the organizatbn was conferring on this.~ group (in the fom'J <>1 providing trained graduates as employees) was more than incidental. The court rejected petitioner's contention that "because all educ:atiortal programs lnher~ benefit both the ~t by increasing his or her skills and future earnings and the eventual employer Who profits from the services of trained individuals, the ed:ucational benefits it provides shOuld not be con&trued as prohibited private benefits." 92 T.C. at 1073.
The caurt also rejected the petitioner's argument that because it could not cxtntr,ol where the $tudents became employed, the benefit must be Incidental. noting that thens is no authority for the contention that non-inck:lental benefits must be controllable by the organizath:>n. Although the P.-...L --~ Fonn88&A (Rev. S.2011)
____ """""" ____ _
Sc::hedule number or exhlbl
~of the T … ,-lntiemalRfienue Setvk:e
Explenations of Items
Name:oftllxpayer
'Tex~ Number (last 4 Cf/QftsJ Year/Per1od erlded candtdatel and entities benefited were not organization "insiders," the court stated that the conferral ofbeneffls on disinterested persons who are not members of a charitable class may cause an organization to serve a private interest within the meaning of§ 1.5C)1(c)(3)-1(d)(1){ii).
Becauae rnore than an inSllbetantial part of the organization's activities furthered private interests more than incidentally, the court found that the organization failed to qualify for •~xemption under section 501(cX3).
Section 12.03 of Rev. Proc. 2021-5, 1.R.B. 2021 .. 5, provides exempt status may be revoke or modffled retroactively if the organization omitted or misstated a material fact or operated in a manner materially different from that originally represented.
TAXPAYER'S POSfflON:
The Ta,q>ayer was not avSffable for commentwtth respect to this revocation. Nevertheless, as stated on the Form , the Trustee declared that the organization is no tonger operating.
GOVERNMENT'S POSITION: does not meet the operational test for exempt status under section 501 (c)(3) of the Internal Revenue COde. because h'8 failed to establish that it is operating e~ for cbatlabfe purpoaes. The regulations define "exclusively" as E1ng.aging primarily In activities that accQmpliSh one or more of the exempt purposes specified in seetion 501(c}(3) OftheCode. easect·on·fle review of the records, the soie.·purpose·• to enrich the officer, of sedlon 501 (c)(3) of the COde. has never oertormed any EIXempt activity and . This viola1tes the provisions The sole.financial activity was that of the Trustee redaiming and selling assets for the purpme of paying creditors. The TrtJstee completed his court appointed duties in As· $Udl, fails to meet the Qperational requirements to continue its exemption status under IRC 501(c){3). Therefore, the effective revocation date will be tltle ,::tate of ~.

# CONCLUSION

Based on the abQve" we propase to revoke Ile e¥emplion letter dated . This proposed~ would be come effective the date of Incorporation, . Any contributions to are no longer deductible as <tiaritat1le Pa,a_L www.h.gov
Fonntl86-A (Rev. Ml017}
FOlffl888A Oepart,1ient of the TIUIUIY - lntllmal Revenue Setvice
Explanations of Items
Tax ldenfflic::atio Number (last 4 digit$}
Sc:hedute number or
&xhM>lt
Year/Period ended contribUtiOns. Any contributions to this organl.zation by those who were in part responsible for, or were aware of, the actMties or deficiencies on the part of the organization that gave rise to los8 of exempt status should not be allowed as a deduction. wiU be required to file Form 1120 for all years since If thi$ proposed revocation becomes final, appropriate State officials will be advised of the adion in accordance with Internal Revenue Code Sedion 6104(c) and applicable regulations. www.irs.gov Fonn 886,,A (Rev. 5-2017}
Schedule number or
Depam11e11t of the TfNSUfY-lntemal Revenue Service Fonn8N-A exhibit
Explanations of Items
(May2017)
Nameof~
EXHIBIT 1
PaJIII-L..
Letter 3618
Tax klenUficdon Number (last 4 digits) Ye.-/Penod ended f-orm 886-A (Rev. 5-2017) www..ir54l0V