IRS Revokes Tax Exempt Status of Trust for Serving Private Interests of Creators

The Internal Revenue Service (“IRS”) revoked an organization’s tax exempt status under section 501(c)(3) for serving the private interests of the organization’s creators.

The decision, which was made in 2009 and released on November 21, 2014, explained that tax exempt organizations must be organized and operate exclusively for the exempt purpose. The organization that lost its exempt status loaned the entire amount of its assets to the organization’s creator, and the loan was apparently not secured or paid by the creator. In addition, the loan was used to pay the business and personal expenses of the creator. Therefore, the IRS deemed the activity as not sufficient for the purpose of exempt status and revoked it accordingly.

See PLR-201447049 (Nov. 21, 2014).

Posted by Jin Keol Park, Associate Editor, Wealth Strategies Journal

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