Partners in Charity, Inc. v. Commissioner of Internal Revenue
United States Tax Court
141 T.C. 151 (2013)
- Written by Eric Miller, JD
Facts
Partners in Charity, Inc. (PIC) (plaintiff) was incorporated in 2000 with the stated purpose of providing down-payment assistance to low-income homebuyers. PIC applied for tax-exempt status under Internal Revenue Code § 501(c)(3). The Internal Revenue Service (IRS) (defendant) requested confirmation that PIC would (1) primarily serve homebuyers earning 60 percent or less of the area’s median income and (2) avoid furthering the private interests of individuals associated with the project. After receiving these assurances from PIC, the IRS approved PIC’s status as a tax-exempt § 501(c)(3) charity. However, in PIC’s its subsequent operations, PIC made its down-payment assistance available to homebuyers regardless of income level. Furthermore, these grants were entirely funded by home sellers in exchange for PIC’s efforts to put them in touch with prospective buyers, leading to an accumulation of more than $3.5 million in net assets by PIC. The IRS revoked its recognition of PIC’s tax-exempt status—an adverse determination that PIC challenged in the United States Tax Court.
Rule of Law
Issue
Holding and Reasoning (Gustafson, J.)
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