Religious, Charitable, etc., Institutions and Community Chest

Department of the Treasury
Internal Revenue Service
Tax Exempt and Government Entities
Exemot Or!4anizatio11s Examinations Release Number: 202447017 Release Date; 11/22/2024 UIL Code: 501.03-00
CERTIFIED :MAIL - Return Receipt Requested Dear
\Vhy ·we nre sending you this letter
Date:
August26,2024
Taxpayer 10 number (last 4 digits):
Form:
Tax periods ended:
Person to contact:
Name:
!Dnumber:
Telephone:
Fax:
Last day to file petition with United States Tax Court: November 24, 2024 This is a final detenuinatio11 that you don't qualify for exemption from federal income tax under Internal Revenue Code (IRC) Section 50l(a) as an organization described in IRC Section 501(c)(3), eflecfrve . Your detem1111aiio11 letter dated , is revoked.
Our adverse detenuination as to your exempt status was made 1<.)r the t(11lowing: reasons: Yon have not derncnstrated that you are both organized and operated exclusively for drnritab1e, educational, or other exempt purposes within the meaning of IRC Section 50 You did not engage in any activity that accomplished one or more exempt pm1mses under IRC Section 50l(c)(3). As such, you failed to meet the requirement ofIRC Section 50l(c)(3) and Treasury Regulations Section l.501(c)(3)-l{a).
Organizations that are not exempt under IRC Section 501 genemUy are required to file federal income tax retums and pay tax, ,vhere applicable. For forther instmctions, and i11fonnatio11 please visit IRS.gov.
Because you Yvere a private foundation as of the effective date of the adverse detenTooatio11, you are considered to be a taxable private foundation until you terminate your private founc!ation status under IRC Section 507.
In addition to your income tax return, you must also continue to file Fo11n 990-PF, Ret1m1 of Private Foum:lation or Section 4947(a}(l} Trust Treated as Private Foundation, by the 15th day of the fifth month after the end of your am:mal accounting period.
Contributions to your organization are no longer deductible under IRC Section l 70,
\Vhat you must do if you disagree vvith this determination
If you want io contest our final detenninatioR you bave 90 days from the mailed to you to file a petition or complaint in one of the tlrree federal courts below.
Ho,Y to file you:r action for declaratory judgment
If you decide to contest this determination, you can file an action for declaratory judgment under the provisions of Section 7428 of the Code in either:
• The United Tax Court,
• The United States Court of Federal Claims, or
• The United States District Court for the District of Columbia
Letter 6337 {Rev. 3-2024)
Catalog Number 74808£
You must file a petition or complaint in one of these three courts within 90 days from the date we mailed this determination letter to you. You can download a fillable petition or complaint form and get information about filing at each respective court's website listed below or by contacting the Office of the Clerk of the Court at one of the addresses below. Be sure to include a copy of this letter and any attachments and the applicable filing fee with the petition or complaint.
You can eFile your completed U.S. Tax Court petition by following the instructions and user guides available on the Tax Court website at ustaxcourt.gov/dawson.html. You will need to register for a DAWSON account to do so. You may also file your petition at the address below:
United States Tax Court
400 Second Street, NW
Washington, DC 20217 ustaxcourt.gov The websites of the U.S. Court of Federal Claims and the U.S. District Court for the District of Columbia contain instructions about how to file your completed complaint electronically. You may also file your complaint at one of the addresses below:
US Court of Federal Claims
717 Madison Place, NW
Washington, DC 20439 uscfc.uscourts.gov
US District Court for the District of Columbia
333 Constitution Avenue, NW
Washington, DC 20001 dcd.uscourts.gov 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 50l(c)(3).
The IRS office whose phone number appears at the top of the notice can best address and access your tax information and help get you answers. However, you may be eligible for free help from the Taxpayer Advocate Service (TAS) if you can't resolve your tax problem with the IRS or if you believe an IRS procedure just isn't working as it should. TAS is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Visit Taxpayer Advocate.IRS.gov/contact-us or call 877-777-4778 (TTY /TDD 800-829-4059) to find the location and phone number of your local advocate. Learn more about TAS and your rights under the Taxpayer Bill of Rights at Taxpayer Advocate.IRS.gov. Do not send your Tax Court petition to TAS. Use the Tax Court address provided earlier in the letter. Contacting T AS does not extend the time to file a petition.
Where you can find more information
Enclosed are Publication l, Your Rights as a Taxpayer, and Publication 594, The IRS Collection Process, for more comprehensive information.
Find tax forms or publications by visiting 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.
Letter 6337 (Rev. 3-2024)
Catalog Number 74808E
You may fax your documents to the fax number shown above, using either a fax machine or online fax service.
Protect yourself when sending digital data by understanding the fax service's privacy and security policies.
Keep the original letter for your records.
Enclosures:
Publication 1
Publication 594
Publication 892 cc:
Sincerely,
!
/tJj11A
(},_~,n A. Brinkley
Director, Exempt Organizations Examinations
Letter 6337 (Rev. 3-2024)
Catalog Number 74808E
Department of the Treasury
Internal Revenue Service
Tax Exempt and Government Entities
Exempt Omaniza.tions Exruninations Date:
03/12/2024
Taxpayer ID number:
Form:
Tax periods ended:
Person to contact:
Name:
ID number:
Telephone:
Fax:
Address:
Manager's contact information:
Name:
!D number:
CERTIFIED 'MAIL - Return Receipt Requested Telephone:
Response due date:
04/11/2024
Denr
Why you're receiving this letter
We enclosed a copy of our audit report, Form 886-A, ExpJanation ofltcms, explaining that \Ve propose to revoke your tax-exempt status as an organization described in Intemal Revenue Code (IRC) Section 501(c)(3), If you agree ff you haven't already, please sign the enclosed Fo1m 6018, Consent to Proposed Action, and return it to the contact person shown at the top of this letter. We'll issue a final adverse letter determining that you aren't an organization described in lRC Section 501{c)(3) for the periods above.
After we issue the final adverse determination letter, we'll announce that your organization is no longer eligible to receive tax deductible contributions under IRC Section 170.
If you disagree
1. Request a meeting or telephone conference with the ma11age-r shown at the top of this letter.
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 inforrnatfon as stated in l and 2, above, you'll stm be ahJe to file a protest with IRS Appeais Ofiice after the meeting or after we consider the inforn1atio11.
The IRS Appeals Office is independent of the Exempt Organizations division and resolves most disputes infonnally. If you file a protest, the auditing agent may ask you to sign a consent to extend the period of li1nitations 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 infonnation, including a statement offhe facts, applicable law, and arguments in support of your position. For specific infonna.tion needed for a valid protest, refer to Publication 892, How to Appeal an IRS Deten-nination on Tax-Exempt Status.
Fast Track IVIcdiation (FT'M) referred to in Publication 3498, The Examination Process, generally doesn't apply now that wr:/ve issued this letter.
Letter 3618 (Rev. 3·2024)
Catalog Number 34809F
4. Request tcdU1ical advice from the Office of Associate Chief Counsel (Tax Exempt Government Entities) if you feel the issue hmm. •t been addressed in published precedent or has been treated inconsistently by the 1RS.
If you're considering requesting technical advice> contact the person shown at the top of this letter. If you disagree ,vith the technical advice decision, you will be able to appeal to the IRS Appeals Office, as explained above. A decision made in a technica1 advice memorandum, however, generally is final and binding on Appeals.
Ifwe don't hear from you
If you don't respond to this proposal "vithin 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 (T AS) is un independent organization within the IRS that can help protect your taxpayer rights. TAS can offer you help if your tax problem is causing a l1ardship, 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 everythi11g possible to hel1, you. Visit \V\VW.taKpaycradvocate.irs.gov or ca.11 877-777-4778.
Additional infom1ation
You can get any of the fonns and publications mentioned in letter by visiting our website at \V\.Vw.irs.gov/fonns-pubs or by caning 800-TAX-FORM (800-829-3676).
If you have ques1ions, you can contact the person shov,111 at the top of this letter.
Enclosures:
Fonn886-A
Form 6018 cc:
Hilda Rodriquez
Group Manager
Letter 3618 (Rev. 3-2024)
Catalog Number 34809F
Form886-A
(May2017)
Name of taxpayer

# ISSUE

Revenue Service
Explanation or Items or exhibit Tax Identification Number (last Yea1:!Pe1iod -J digits) ended \\11ed1er , continues to qualify for exemption from Federal income tax under§ 50l(a) of the Internal Revenue Code (Code) as a charitable organization described in§ 501(c)(3) of the Code.
FACTS: was incmpornted nuder the la\vs of the State o1 as a non-profit cmporation in As noted in the cm:rent Articles ofincorporation. the organization's pmpose is as follows:
On ,.,-,,,as granted exemption under 501(c)(3) sections 509(a) (1) and l 70(b) (l) (A) (vi). They ,vere given advance rulings from to and later became nonopernting private foundation.
In , the Tax Exempt and Governmental Entities (TE/GE) division of the IRS selected for exmni11ation the Fonn 990 remrn filed by for the calendar year. The notice of examination package issued to is dated , and consists of IRS letter #6031, Forni 4564, l1tfon11atio11 Documem Request {]DR), Publication L Your Rig/us as a Taxpayer, illld Notice 609, Privacy Act Notice.
Form 886-A (J:vfay 2017) Depa1·tmeut of the Tnrnmry - Internal Ren•nut> Service Form886-A (May1017) Department oftlie Treasury- futemal Revenue Service ExJlhmation of Items or exhibit Name of taxpayer Tax Identification Number (last Year/Period 4 digits) iended TDR # l issued to on infonnation covering the , requests copies of the following records and calendar year under examination:
• Copy of bank, credit card and investment statem.ents for through
• Copy of the transaction register for PayPal, Venmo, cryptocum:ncy or other virtual payment for through (if applicable).
• Copies of fimmcial records maintained electronically or in hard copy foimat including: a. Cluut of Accounts b. Trial Balance (Beginning, Ending amlAdjusted) c. General Ledger
• Copy of auditor's report (if applicable).
• Written statement describing your exempt pmpose(s) and current activities.
• 1vfinute books shmving any recorded meetings of your governing body (officers, directors, or trustees), including committee m.eetings.
• Copies of pamphlets, brochures, ne,vsletters or other printed literature or advertising regarding your organization and its activities. was not able to pmduce any financial information as they did not have any activities.
Initial interview ,vas held on , at , presidenfs office location. Identified below are the persons intervie\ved, and their titles: , President (TP) , Comptroller , The organization's representative (POA) During the interview, IRS examiner asked TP that during the response to IDR, organization provided bank: statements which had bank b:alance as of end of year $ and Fonn 8283, Noncasb Charitable Contributions noted that organization received$ worth of Arts.
However, these were not induded in the 990-PF retnm. TP admitted these should be reported. relied on previous accountant and \Vas not a;,vare of these requirements. Currently, the arts are in the storage- room for future usage.
Form 886-A (J:Vfay 20i 7) l)epartment of d1e Trt>a,ury - Internal Re..:euue Serdce Fmm886-A (~,fay 2017) Name of taxpayer Revenue SetVice
EXJlianation of Item\
Tax Identification Number llast 4 digirs.J or exhibit Year/Pedod ended During the interview, TP declared that the organization had no operational nor financial activities fi .. ,r the year ended . During the review of990-PF returns, it was noted no activities for last five years . Analysis of Revenue and Expenses, and Balance Sheets had zero balances. TP responded that did not have enough funding and resources. Funding was intended to be provided by the profit generated by the . It is only in ve1y recently that the is beginning to reach a growih level to enable funding to commence in the near future. had 110 incomes, no distributions, no assets and no liabilities for last five yeru.·s. Therefore, did not opernte in fu1thernnce of charitable purposes or satisfy the operational test described in the regulations under Code§ 50l(c)(3). President agreed in principle with the IRS examiner. The organization vvas unable to provide any court opinic,ns or other published precedent which provides support for its exempt status bi:ised on its cument operations.
!vioreover, agent asked about how is related to . Agent was concerned about possible self-dealing under IRC 4941, and agent vvam.ed TP about the taxes on self-dealing under 1RC 494L See Treas. Reg. § 53.494 I(d)-2(d) & (i). TP noted fimding for wa.<:; intended to be provided by the profit genernted by the . Agent asked ,1bont the ru.ts donated to shared ,vith . IP stated arts were not shared with and that they are in a storage room for fhture usage. and TP stated that 1ntends to use its arts to conduct studies and research on the ever-evolving l:mman sexuality in conjunction ,vith various institutions such as the LA\V IRC § 501(c)(3) exempts fiom federal irn:::ome tax organizations which are organized and operated exclusively for religious, charitable. scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur spmts competition (but mlly if no part of its activities involve the pm vision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no pali of the net earnings of which inures to the benefit of any pri·vate shareholder or individual, no substantial vart of the activities of which is canJ'iug: on propaganda. or othenvise attempting, to influence legislation ( except as otbenvise provided i11 subsection (h)), and which does not pmiicipate in, or intervene in (including the publishing: or distributing of statements), any political cmnpaign on behalf of (or i11 opposition to) any candidate for public office, Federal Tax Regulations ("Regulations")§ L50l(c)(3)-l(a)(1) of the Treasmy Regulations states that to be exempt as an organization described in§ 50l(c)(3), m1 organization must be both organized and operated exdusively for one or more of the purposes specified in such section - charitable, religions, educational, scientific, literary, testing for public safoty, or for the
Di.'Jl8l'fmenf of the Treamry, Iuti.'nuil Ren·nne Servke
Page! ,3_
Fonn886-A
(iv'fay 2017)
Name of taxpayer
Departmem of the Treasury - Internal Revenue Service
Extllanatton of Items
Sd1edule number or exhibit
Tax Identification Number (last Year/Period 4 digitrJ ended prevention of crnelty t<) <;hildreu or animals . .If an organization fail.s to meet either the organizational lest or the operational test it is not exe1npt Regulations§ L50l(c)((3)-l(c) of the regulations describes the operational test requirements for 501(c)(3) exemption. The operational test focuses on how the organization is actually operated, regardless of whether it is properly organized for tax-exempt pmposes.
Regulations§ l.50l(c)(3)-l(c)(l) of the regulations provides that an organization \ViH be regarded as 0 operated exclusively!! for one or more exen1pt pu111oses only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in § 50l(c)(3). An organization will not be so regarded if more than an insubstantial part of its activities is not in fltrtherance of an exempt purpose. This is refeued to as the "primary activities" test Revenue Ruling 58-617, 1958-2 CB 260, (Jan. Ol, I 958) Rulings and determinations letters granting exemption fimn federal income tax to m1 organization described in§ 50l(a) ofthe 1ntenrn1 Revenue Code of 1954, to which contributions are deductible by donors in computing their taxable income in the manner and to the extent provided by § l 70 of the Code, are effoctive only so long as there are no material changes in the character of tbe organization, the pmJ1oses for which it was organized. or its methods of operation. Failure to comply with this requirem.e11t may result in serious consequences to the organization for the reason that the ruling or deten11inatio11 letter hokhng the organization exempt may be revoked retroactively to the date of the changes affecting its exempt status, depending upon the circumstances involved, and subject to the limitations ou retroactivity ofrevocation found in§ 503 of the Code.
GOVERi'Jl\1IENT'S POSITION
The EO has failed to shmv us that they meet the operational test for a§ 501(c)(3) organization for the year under examination. In order to meet the operational test, they must show that they engage primarily in adi vi ties which accomplish one or more of such exempt pm1)oses specified in sedion § 50i(c)(3). \Ve ,viH not regard an organization as having met this test if more than au insubstrmiial part of its activities is not in fi1rtherauce of an exen1pt pm13ose.
As evidence of their fi1ilure to opernte for exempt purposes, we revie\ved the Form 990 filings and found no supp011 for exempt operations. The originally filed fonn 990-PF for year ended , did not show· any operational or financial activities. In fact, they explicitly stated in Part I & Part II that all the line items were zeros. Same follo,ved for previous years.
Last five years , organization had no activities. TI1e prior year retum.s also do not show any exempt purpose activities. Clearly, they have not been perfonning exempt purpose activities, which is required for a §50l(c)(3) organization to keep their tax-exempt status.
Accordingly. \Ve are proposing revocation because they do not operate for exempt purposes.
Form 886-A (May 2017) Departn1t•nt of tl1e Treasury .. Internal Revenue Service Fonn886-A (May2017) Name of taxpayer
TAXPAYE.R'S POSITION
Revenue Se1vke
Explanation of Items or exhibit
Tax Identification Number (last Year/Period 4 digits} ended The organization's president and organization's representative agreed that the organization has no operational or fimmcial activities, Agent discussed revocation ,vith the organiza!:ion 's president and organization's representative on , and they agreed to the proposed revocation as organization ,vas not operating fr,r an exempt pm1,ose,

# CONCLUSION

By not complying ,vith the Code and Regulations, the organization has jeopardized its exempt status. They failed to shmv that they were operating for exempt purposes. They have t:'liled to show any evidence of their exempt activities. \Ve have no reason to believe that the EO is operating fcir exempt purposes.
As a result oftbe examination, we have detennined that the EO is not opernting for exempt purposes as a § 50 l ( c )(3) organization. They have not provided any infonuation to the contrary.
Accordingly, since the organization failed to operate primarily for exempt purposes, ,ve are proposing revocation of their tax-exempt status, efiective IRC 507 provides the exclusive method oftennination of private foundation status. Until your private foundation status is tennmated, excise taxes m1der Chapter 42 of the Code, including the taxes iinposed under IRC 4941 and 4942, are still applicable.
Since the organization \ViU no longer have tax-exempt status beginning , they are liable for filing Fonn 1120, US. Corporation Income Tax Return, and Fonn 990-PF, Return of Private Foundation, as of that date.
Please no1e that this Form 886-A, Expkmatitm ofltems, \Vhich is also known as the revenne agent report (R.A.R), constitnies an integral part of the attached 30-day letter #36 HL Please re for to the attached letter #3618 for additional infonnation including appeals rights and other options available fo the organization and, the instructions fcir ho,v to respond.
If you agree to this conclusion, please sign the attached Form.
If you disagree, please submit a statement of your position.
De1rnrtmenl of the Tr;,a,ury • Internal Revenm.> SN·viee
Pag.-: -5-