Religious, Charitable, etc., Institutions and Community Chest

UIL: 501.03-00
Number: 202248011
Release Date: 12/2/2022
Letter 6337 (12-2020)
Catalog Number 74808E
We’ll notify the appropriate state officials (as permitted by law) of our determination that you aren’t an organization described in IRC Section 501(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 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 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. Contact your local Taxpayer Advocate Office at:
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 TAS does not extend the time to file an action for declaratory judgment.
Where you can find more information
Enclosed are Publication 1, 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.
Sincerely,
Lynn A. Brinkley
Acting Director, Exempt Organizations Examinations Enclosures:
Publication 1
Publication 594
Publication 892 cc:
Letter 3618 (Rev. 8-2019)
Catalog Number 34809F
Department of the Treasury
Internal Revenue Service
Tax Exempt and Government Entities
Date:
November 17, 2021
Taxpayer ID number:
Form:
Tax periods ended:
Person to contact:
Name:
ID number:
Telephone:
Fax:
Manager’s contact information:
Name:
ID number
Telephone:
Response due date:
CERTIFIED MAIL – Return Receipt Requested :
Why you’re receiving this letter
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(c)(3).
If you agree
If you haven’t already, please sign the enclosed Form 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 IRC 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 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 information as stated in 1 and 2, above, you’ll still be able to file a protest with IRS Appeals Office after the meeting or after we consider the information.
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
Letter 3618 (Rev. 8-2019)
Catalog Number 34809F
2 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.
If we 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 possible 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).
If you have questions, you can contact the person shown at the top of this letter.
Sincerely, for Sean E. O’Reilly Director, Exempt Organizations Examinations Enclosures:
Form 886-A
Form 6018
Name of taxpayer
A Human Project
Tax Identification Number
47-4575599
Year/Period ended
12/31/2017 and
12/31/2018
Form 886-A (1-1994) Catalog Number 20810W Page 1 publish.no.irs.gov Department of the Treasury – Internal Revenue Service

# ISSUES

Whether A Human Project (the Organization) qualifies for exemption from federal income tax under Internal Revenue Code (IRC) Section (Sec.) 501(c)(3).

# FACTS

Formation
The Organization was incorporated as a nonprofit corporation on March 16, 2015 in Nevada using the generic Articles of Incorporation provided by the state and listed Wesley Chapman, Jodie Jensen and Frank Shankwitz as the Board of Trustees/Directors.
On August 19, 2015, prior to its first meeting, the Organization submitted a “Certificate of Amendment to Articles of Incorporation for Nonprofit Corporations” to the state of Nevada stating that its purpose was “to give youth incentive to work toward goals and receive experiences that improve their lives and (to) operate exclusively for charitable purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code.” The Certificate of Amendment also included the requisite purpose and dissolution clauses, including the requisite language restricting private inurement and political activity.
Application for Recognition of Exemption
On August 5, 2015 the Organization submitted a Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. Under Part IV, “Narrative Description of Your Activities,” in the attachment to the Form 1023, the Organization provided the following:
A Human Project is a nonprofit corporation organized and operated exclusively for educational and charitable purposes. The specific purpose of this organization is to instruct or train individuals, with a focus on youth, for the purpose of developing their goals and improving their lives.
The remainder of the three-page description provided a detailed explanation of how the Organization would carry out its activities through Speaking Engagements and Online Empowerment, its two main programs.
Exemption
On September 4, 2015 the Organization received recognition of exemption under IRC §501(c)(3) as a public charity, effective March 16, 2015.
Activities
During the tax years ended December 31, 2017 and December 31, 2018 the Organization conducted speaking engagements at schools where Mr. Chapman provided insights from his own life experiences as a child living through an abusive relationship in order to reach out to children and youth who might be living in similar abusive relationship. Afterwards, he met with those in need one on one to determine how to best meet their needs. When possible, affected children and youth were invited to attend a three-day camp, “Camp Human,” to participate in fun activities and informal counseling sessions to help them break down the barriers created by abuse and empower them to move forward with their lives. These activities met the tax-exempt requirements as prescribed under IRC Sec. 501(c)(3).
Name of taxpayer
A Human Project
Tax Identification Number
47-4575599
Year/Period ended
12/31/2017 and
12/31/2018
Form 886-A (1-1994) Catalog Number 20810W Page 2 publish.no.irs.gov Department of the Treasury – Internal Revenue Service
Financials Per Form 990
For the Tax Year Ended December 31, 2017 Revenue:
Fundraising Events $ 75,856 All Other Contributions, Gifts, Grants, & Similar Amounts $ 193,377 Total Revenue $ 269,233 Expenses:
Compensation of Current Officers, Directors, etc.
Management (Fees for Services, Non-employees) Legal (Fees for Services, Non-employees) Accounting (Fees for Services, Non-employees) Other (Fees for Services, Non-employees) Advertising and Promotion Office Expenses Occupancy Travel $ 82,871 $ 120 $ 2,993 $ 338 $ 118,076 $ 1,478

Total Expenses $ 294,466
Assets: BOY EOY
Cash – non-interest-bearing Land, Buildings and Equipment less Accumulated Depreciation $ 136,273 $ 28,614 $ 125,718 $ 21,923 Total Assets $ 164,887 $ 147,641 Liabilities:
Accounts Payable and Accrued Expenses Loans and Other Payables to Officers Unsecured Notes and Loans Payable to Unrelated Third Parties Total Liabilities

($ 4,600) $ 27,975

$ 145,365
$ 168,740
($ 12,804)
$ 27,975
$ 161,556
$ 176,727
[Note that the Organization didn’t file a Form 990 for the tax year ended December 31, 2018. Further, as discussed in the Examination section below, the Organization didn’t consider the QuickBooks file provided for 2018 to be complete or reliable. As such, no financials are provided herein for the tax year ended December 31, 2018.]
Examination
On October 2, 2019, Revenue Agent Chow (RA Chow) issued an initial contact letter, Information Document Request (IDR), and Publication 1 to inform the Organization of the examination and request an Initial Interview on December 3, 2019.
The initial contact letter package was returned as undeliverable to RA Chow on October 16, 2019, so she identified six different addresses for the officers as listed on the Form 990 and resent the package to those addresses on October 16, 2019 requesting an Initial Interview on the same date, December 3, 2019.
Name of taxpayer
A Human Project
Tax Identification Number
47-4575599
Year/Period ended
12/31/2017 and
12/31/2018
Form 886-A (1-1994) Catalog Number 20810W Page 3 publish.no.irs.gov Department of the Treasury – Internal Revenue Service Subsequently, RA Chow left the Service and the case was transferred to Revenue Agent Petkash (RA ) on November 25, 2019. [Note that the case was subsequently transferred to Revenue Agent (the Examiner) on September 4, 2020.]
RA Petkash rescheduled the Initial Interview and conducted the interview on February 5, 2020 with Wesley Chapman, the Organization’s Secretary and point of contact for the examination, Michael Whitmore, CPA (POA Whitmore), and Jessica Wood, CPA (POA Wood).
During the Initial Interview, Mr. Chapman confirmed that the Board of Directors listed on the Form 990 for the tax year ended December 31, 2017 was correct but explained that he and Jodie Jensen were currently the only board members left. He also stated that he and Miss Jensen were now married. [Note that for purposes of this document we will refer to Miss Jensen by her maiden name, as Jodie Jensen or Miss Jensen, since that corresponds with her name of record for the years under examination.]
Mr. Chapman further stated during the Initial Interview that the Organization provided funds for his and Miss Jensen’s personal expenses. In addition, he indicated these personal expenses were commingled within the books and records of the Organization and that there was no form of tracking to bifurcate the personal expenses from the Organization’s expenses.
As stated in the Organization’s Form 990 for the tax year ended December 31, 2017, and further confirmed during the examination, Miss Jensen currently serves as the Organization’s President and Mr.
Chapman currently serves as the Organization’s Secretary.
The Organization’s Form 990 for the tax year ended December 31, 2017 listed $12,768.00 for Miss Jensen and $18,777.00 for Mr. Chapman as “Reportable compensation from the organization (W-2/1099)” on Part VII, Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and Independent Contractors.
RA Petkash noted that the Organization hadn’t filed a Form 990 for the tax year ended December 31, 2018 prior to the beginning of the examination, so he asked why this was the case during the Initial Interview.
Mr. Chapman stated that the Organization was still trying to figure out its books and records for 2017. He explained that Jamie Templar, the Organization’s Treasurer, was responsible for the Organization’s books and records and for all of its required tax filings. He stated that she had filed the Form 990 for the tax year ended December 31, 2017 without allowing him or Miss Jensen to review or approve the Form 990. He further explained that in 2018 he and Miss Jensen discovered that Miss Templar was misappropriating funds. When confronted, Miss Templar departed abruptly and left the Organization’s books and records that were still intact in disarray. As such, Mr. Chapman indicated that he and Miss Jensen weren’t sure if the books and records or the Form 990 for the tax year ended December 31, 2017 were correct and were in the process of researching this information when the examination began. Thus, the Form 990 for the tax year ended December 31, 2018 wasn’t filed.
A review of the Organization’s records and documentation provided by Mr. Chapman revealed that Miss Jensen received $20,926.76 and Mr. Chapman received $51,337.20 as reasonable compensation for services provided in 2018. These amounts were included in the agreed Employment Tax examination for the Organization with instructions to issue Forms W-2 to Miss Jensen in the amount of $20,926.76 and Mr.
Chapman in the amount of $51,337.20.
Name of taxpayer
A Human Project
Tax Identification Number
47-4575599
Year/Period ended
12/31/2017 and
12/31/2018
Form 886-A (1-1994) Catalog Number 20810W Page 4 publish.no.irs.gov Department of the Treasury – Internal Revenue Service Examination of the Organization’s books and records and the Organization’s bank records indicated that Miss Jensen was a signatory of the Organization’s bank account number 501020741233 and that she was provided a debit card ending in number 6069 associated with the Organization’s bank account number 501020741259.
A review of the Organization’s books and records relative to this information revealed the following:
1. Besides the amount of reasonable compensation Miss Jensen received during the tax year ended December 31, 2017, she also received bank transfers from the Organization’s bank accounts totaling $18,295.00 and received checks written to her, or for personal items purchased or paid for by her, from the Organization totaling $8,644.50.
2. Besides the amount of reasonable compensation Miss Jensen received during the tax year ended December 31, 2018, she also received checks written to her, or for personal items purchased or paid for by her, from the Organization totaling $13,322.61 and the Organization made a payment to the IRS on her behalf in the amount of $128.00.
3. During the tax year ended December 31, 2018 the Organization transferred $3,632.94 and wrote three checks totaling $25,836.38 to Wake The Hero, LLC, an entity controlled by Miss Jensen. As such, these amounts have been included in the 2018 Bank Transfers and Checks as payments made to Miss Jensen below.
Further examination of the Organization’s books and records for the tax year ended December 31, 2018, taking into account the amount paid to her as compensation during 2018, indicated that the Organization paid for the following purchases recorded on the aforementioned debit card assigned to Miss Jensen:
Tax year Type Amount
2018 Amazon 4,548.51
2018 Groceries 269.21
2018 iTunes 665.46
2018 Meals 595.83
2018 Retail purchases 129.81 Total for 2018 6,208.82 As such, the examination of the Organization’s books and records for the tax years ended December 31, 2017 and December 31, 2018 revealed that Miss Jensen received additional income from the Organization as follows:
Payments Made to Miss Jensen 2017 2018 Bank Transfers $18,295.00 $ 3,632.94 Checks $ 8,644.50 $39,158.99 IRS Payments - $ 128.00 Total Debit Card Purchases - $ 6,208.82 Totals: $26,939.50 $49,128.75 Name of taxpayer A Human Project Tax Identification Number 47-4575599 Year/Period ended 12/31/2017 and 12/31/2018 Form 886-A (1-1994) Catalog Number 20810W Page 5 publish.no.irs.gov Department of the Treasury – Internal Revenue Service Examination of the Organization’s books and records revealed that Mr. Chapman was provided debit cards ending in numbers 9249 and 4362 associated with the Organization’s bank account number 501020741233 and a debit card ending in number 4379 associated with the Organization’s bank account number 501020741259.
A review of the Organization’s books and records relative to this information revealed the following:
1. Besides the amount of reasonable compensation Mr. Chapman received during the tax year ended December 31, 2017, the Organization paid $1,096.86 for his life insurance and $3,826.00 to his PayPal account.
2. Besides the amount of reasonable compensation Mr. Chapman received during the tax year ended December 31, 2018, the Organization paid $1,095.32 for his life insurance.
Further examination of the Organization’s books and records for the tax years ended December 31, 2017 and December 31, 2018, taking into account the amount paid to him as compensation during 2017 and 2018, indicated that the Organization paid for the following purchases recorded on the aforementioned debit cards assigned to Mr. Chapman:
Tax year Vendor Amount
2017 Amazon 6,812.56
2017 Cable TV 144.96
2017 Groceries 565.92
2017 Insurance 1,529.12
2017 Meals and entertainment 2,128.44 2017 Medical 1,928.61 2017 Retail 16,328.24 2017 Ski & Snowboarding 117.74 2017 Travel 3,114.39 2017 Utilities in California 1,326.76 2017 Childcare 109.20 Total debit card purchases 34,105.94 Tax year Vendor Amount 2018 Amazon 727.03 2018 Groceries 137.69 2018 Meals and entertainment 1,151.39 2018 Medical 632.42 2018 Retail 12,275.69 2018 Travel 1,118.59 Total debit card purchases 16,042.81 Name of taxpayer A Human Project Tax Identification Number 47-4575599 Year/Period ended 12/31/2017 and 12/31/2018 Form 886-A (1-1994) Catalog Number 20810W Page 6 publish.no.irs.gov Department of the Treasury – Internal Revenue Service As such, the examination of the Organization’s books and records for the tax years ended December 31, 2017 and December 31, 2018 revealed that Mr. Chapman received additional income from the Organization as follows:
Payments Made to Mr. Chapman 2017 2018

Total Debit Card Purchases $34,105.94 $16,042.81 Totals: $39,028.80 $17,138.18

# LAW

Internal Revenue Code (IRC)
IRC Sec. 501(c)(3) exempts from income tax entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.
Treasury Regulations (Treas. Reg.)
Treas. Reg. Sec. 1.501(c)(3)-1(a)(1) states that in order to be exempt as an organization described in section 501(c)(3), an organization must be both organized and operated exclusively for one or more of the purposes specified in such section. If an organization fails to meet either the organizational test or the operational test, it is not exempt.
Treas. Reg. Sec. 1.501(c)(3)-1(c)(1) states that an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in section 501(c)(3). An organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt purpose.
Treas. Reg. Sec. 1.501(c)(3)-1(c)(2) states that an organization is not operated exclusively for one or more exempt purposes if its net earnings inure in whole or in part to the benefit of private shareholders or individuals. For the definition of the words private shareholder or individual, see paragraph (c) of section 1.501(a)-1.
Treas. Reg. Sec. 1.501(a)-1(c) states that the words private shareholder or individual in section 501 refer to persons having a personal and private interest in the activities of the organization.
Name of taxpayer
A Human Project
Tax Identification Number
47-4575599
Year/Period ended
12/31/2017 and
12/31/2018
Form 886-A (1-1994) Catalog Number 20810W Page 7 publish.no.irs.gov Department of the Treasury – Internal Revenue Service
GOVERNMENT’S POSITION
It is the Government’s position that the Organization does not qualify for exemption under IRC Sec.
501(c)(3).
For an organization to qualify for exemption under IRC Sec. 501(c)(3), no part of the net earnings of the organization can inure to the benefit of any private shareholder or individual.
Under Treas. Reg. Sec. 1.501(c)(3)-1(c)(1), an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in IRC Sec. 501(c)(3). An organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt purpose.
Under Treas. Reg. Sec. 1.501(c)(3)-1(c)(2) an organization is not operated exclusively for one or more exempt purposes if its net earnings inure in whole or in part to the benefit of private shareholders or individuals.
Under Treas. Reg. Sec. 1.501(a)-1(c) the words private shareholder or individual in section 501 refer to persons having a personal and private interest in the activities of the organization.
Based on the facts and circumstances stated above, Miss Jensen and Mr. Chapman are individuals that have a “personal and private interest in the activities of the organization” and, thus, are “private shareholders and individuals” of the Organization.
Since Miss Jensen and Mr. Chapman received additional income from the Organization over and above the amounts they received as reasonable compensation for services provided in 2017 and 2018, these amounts represent net earnings which “inure in whole or in part to the benefit of private shareholders or individuals,” Miss Jensen and Mr. Chapman.
As such, the Organization failed to meet the requirements for tax exemption under IRC Sec. 501(c)(3) and the Regulations thereunder.
TAXPAYER’S POSITION
The Examiner discussed his findings with Mr. Chapman and POA Wessman and explained that the Government will be recommending revocation of the Organization’s exemption under IRC Sec. 501(c)(3).
Mr. Chapman stated that the Organization ceased operations in mid-2020 due to COVID-19. As such, it appears the Organization will accept the proposed revocation.
The Organization is being solicited for its position at this time.

# CONCLUSION

The Organization does not qualify for exemption from federal income tax as it failed to substantiate that it is operated exclusively for one or more exempt purposes due to inurement, resulting in its failure to comply with the requirements of IRC Sec. 501(c)(3) and Treas. Reg. Sec. 1.501(c)(3)-1(c)(2).
Name of taxpayer
A Human Project
Tax Identification Number
47-4575599
Year/Period ended
12/31/2017 and
12/31/2018
Form 886-A (1-1994) Catalog Number 20810W Page 8 publish.no.irs.gov Department of the Treasury – Internal Revenue Service It is the Government's position that the Organization failed to operate exclusively to accomplish one or more of such exempt purposes specified in IRC Sec. 501(c)(3). Because the Organization was not operated exclusively for the exempt purpose under IRC Sec. 501(c)(3), its Federal tax-exempt status under such section should be revoked effective January 1, 2017. The Organization is liable for filing Form 1120, U.S. Corporation Income Tax Return, and paying any related tax liabilities for the tax year ended December 31, 2017 and all years thereafter.