IRS PLR: American Business Networking Organization Exempt Status Denied for Failing Operational Test (IRC §501)

Exempt tax code Section 501(c)(3) status of a tiered business networking membership organization for specified American businesses to provide business referrals and promotions, online and in local business club meeting, denied for failure to operate exclusively for tax-exempt purposes in violation of Treasury Regulations Section 1.501(c)(3)-1(c)(1). The IRS stated that the organization was formed primarily to provide networking and business opportunities to members with specific activities that provide direct benefits to members. The IRS determined that spending a certain percentage of time fundraising for charity alone doesn’t change the nature of the organization or the fact that ...