Amend16RobertWirengard v. Commissioner , 2005 T.C. Memo. 30 ( 2005 )

T.C. Memo. 2005-30UNITED STATES TAX COURT
AMEND16ROBERTWIRENGARD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 18437-03X. Filed February 22, 2005.
R.O. Wirengard (an officer), for petitioner.
Helen F. Rogers, for respondent.
MEMORANDUM OPINION
WELLS, Judge: In a final adverse determination letter,
respondent determined that petitioner did not qualify for
exemption from Federal income taxation pursuant to section 501(a)
as an organization described in section 501(c)(3).1 Having
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
(continued...)
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exhausted its administrative remedies, petitioner challenged
respondent’s determination by timely filing a petition for a
declaratory judgment pursuant to section 7428(a). The
administrative record was submitted to the Court by joint motion
pursuant to Rules 122 and 217(b). For purposes of the instant
proceeding, the facts and representations contained in the
administrative record are accepted as true and are incorporated
herein by reference. The sole issue to be decided is whether
petitioner qualifies for tax exemption as an organization
described in section 501(c)(3).
Background
On or about August 16, 2001, petitioner filed a Form 1023,
Application for Recognition of Exemption Under Section 501(c)(3)
of the Internal Revenue Code (Form 1023). In its Form 1023,
petitioner reported that it was organized as an association and
that it had an address in Hillsborough County, Florida.
In the Form 1023, petitioner reported that it was a school.
Petitioner’s Web site described petitioner as a “free school”
whereby education is provided via the Internet on how to obtain a
microloan; how to establish an IRA; how to obtain health care;
and how to “think about reality or other religions”. An article
on petitioner’s Web site entitled “Article of an Unincorporated,
1
(...continued)
are to the Tax Court Rules of Practice and Procedure.
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Non-Profit Individual Organization” stated that the purpose of
the organization is “to educate as many people as possible about
the existing Amendment 16 of the Constitution of the United
States of America, its fundamental flaws that are contrary to the
views of our founding fathers and ways to correct these.”
Along with its Form 1023, petitioner submitted articles of
association2 (hereinafter referred to as the Articles). The
Articles provided:
ARTICLE III
PURPOSES
Amend16robertwirengard is not for profit and organized
exclusively for educational, welfare and charitable
purposes, including to:
1. Provide education and advocacy, principally of the
economic and financial sciences
2. Provide for food, shelter, healthcare,
access/transportation and environments
3. Study, research and test welfare, healthcare and
environmental models
4. Identify socio-economic and sustainability
problems and provide economic solutions
5. Assist and organize employees and unemployed and
unpaid workers for their and children’s welfare
2
The record shows that petitioner submitted to respondent
drafts of its articles of association on three separate
occasions. Each of the three drafts was dated Aug. 31, 2001.
The first draft was signed only by Robert Wirengard and submitted
as an attachment to petitioner’s Form 1023. The second draft,
set forth above, was identical to the first, except that it was
signed by all four directors and was submitted by petitioner as
an attachment to a letter to respondent dated Oct. 9, 2001. The
third draft was not identical to the first two drafts but was
substantially similar; it was signed by Robert Wirengard and
Mauricio Rosas and submitted by petitioner as an attachment to a
letter to respondent dated Apr. 3, 2003. The signature of
Mauricio Rosas was dated Apr. 3, 2003.
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6. Study, assist and organize economic welfare
arrangements and alliances for and/or with other
community concerns, including employee, employer,
government, faith based, corporate, other business
and environmental entities
7. Publish economic mechanisms and applications based
on Nobel Laureate types of economic and financial
theories; as well, publish test conclusions of
models built, be they successful or failures (and
how they may be amended or corrected to build a
sustainable universe)
* * * * * * *
ARTICLE VI
BY-LAWS
Provisions for the regulations of the internal affairs
of Amend16robertwirengard are to be determined and set
forth in the By-Laws. The Board of
Amend16robertwirengard shall adopt the original By-
Laws. Thereafter, By-Laws may be adopted, amended or
repealed by the Board of Directors in accordance with
the By-Laws. Any decision before the board must be
concluded with unanimous vote, in favor or against.
* * * * * * *
ARTICLE VIII
OVERSEERS
The number of Directors of Amend16robertwirengard shall
be three, or more than three, as fixed from time to
time by the By-Laws of Amend16robertwirengard. The
number of Directors constituting the initial Board of
Directors is four, and the names and addresses of the
persons who are to serve as directors or overseers
until their successors are elected or otherwise
appointed and shall qualify are:
Robert Wirengard
6234 Falkenburg Road North
Fair Share, FL 33610-9491
(Note, “Fair Share” is not within Tampa city limits, is
in an unincorporated area of Hillsborough County, and
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our post office, approving the name so long as the
correct zip code is used, delivers to our Fair Share
address).
Mauricio Rosas
P.O. Box 7641
Tampa, FL 33673
John Larsen
532 De Resine Carre
Seffner, FL 33532
Tom Hoyt
611 De Resine Carre
Seffner, FL 33584
* * * * * * *
IN WITNESS WHEREOF, I have executed these Articles of
Amend16robertwirengard in duplicate this 31st day of
August 2001, and say that I know the contents thereof
and am liable for the entity, both economically and
financially, and to the letter and in the spirit of
governing laws.
(Signed ROWirengard)
Robert Wirengard, FOUNDER, PRINCIPAL AND AGENT
Mauricio Rosas, Board of Directors
(Signed Mauricio Rosas)
Thomas Hoyt, Board of Directors
(Signed Thomas Hoyt)
John Larsen, Board of Directors
(Signed John Larsen)
Petitioner subsequently submitted to respondent a
document entitled “Agreement to Amend” (hereinafter referred
to as the Agreement) in which petitioner agreed to “enact”
the following amendment to the Articles:
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a. The organization is organized exclusively for
charitable, religious, educational, and/or
scientific purposes under section 501(c)(3) of the
Internal Revenue Code.
b. No part of the net earnings of the organization
shall inure to the benefit of, or be distributable
to, its members, trustees, officers or other
private persons, except that the organization
shall be authorized and empowered to pay
reasonable compensation for services rendered and
to make payments and distributions in furtherance
of the purposes set forth in the purpose clause
hereof. No substantial part of the activities of
the organization shall be the carrying on of
propaganda, or otherwise attempting to influence
legislation, and the organization shall not
participate in, or intervene in (including the
publishing or distribution of statements) any
political campaign on behalf of any candidate for
public office. Notwithstanding any other
provision of this document, the organization shall
not carry on any other activities not permitted to
be carried on (a) by an organization exempt from
federal income tax under section 501(c)(3) of the
Internal Revenue Code, or corresponding section of
any future federal tax code, or (b) by an
organization, contributions to which are
deductible under section 170(c)(2) of the Internal
Revenue Code, or corresponding section of any
future federal tax code.
c. The organization will not discriminate based on
gender, race, religion, disability, or ethnic or
national origin.
The Agreement stated that the amendment would be adopted in
accordance with petitioner’s internal rules of operation. Robert
Wirengard alone signed the Agreement; the Agreement was not
signed by all directors as required by Article VI of the
Articles.
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As an attachment to a letter dated June 20, 2002,
petitioner submitted to respondent a document entitled “By-Laws
of Amend16robertwirengard (Under Review)” (hereinafter referred
to as the Bylaws). The Bylaws provided:
Article I: Name
Sec. 1. The name of this organization shall be
Amend16robertwirengard, with its divisions and
wholeness through the Circle of Life Ministry, United
Health Payers, United Arrangements, United Affiliations
and, United Bank, severally and jointly
Of Amend16robertwirengard
We are an integral part of our local community,
Hillsborough County, Florida, and the United States of
America and our greater community, all territories,
nations, our Earth and our Universe.
Article II: Purpose and Policy
Sec. 1. Purpose. To teach about, apply and treat each
as each would be treated.
* * * * * * *
Article IX: Programs/Divisions
Sec. 1. Authorization. The Principles of “treating
each as each would be” and freedom to choose, without
dictate, threat or coercion, adopted by us as a whole,
constitute the authorization for the adoption of
Programs.
Sec. 2. Programs. The programs shall consist of those
issues chosen for concerted study and action.
Sec. 3. Current Agenda and Continuing Responsibilities.
These categories of programs are defined as follows:
a. The Current Agenda focuses on universal, market
priced healthcare, the absence of which in the United
States, involves a million people in medical mishaps,
including losses of lives, and a half million personal
bankruptcies (impoverishments) annually, involving
healthcare debts. The healthcare issue is eminent as a
national issue and in local governmental issues limited
to indigent care through a general sales tax.
b. The Continuing Responsibilities shall consist of
working with local government staff in its objective to
co-pilot universal, market priced healthcare, currently
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having established a Health Insurance Study Work Group
relative to this.
c. The long term agenda, of which healthcare represent
close to a third, is the elimination of poverty and
war, or, put positively, having world wide peace
(unfair activity, violence and terrorism being
preempted by treating each as each would be: that each
should have needs met and work and trade freely for
more than what the needs of sustenance are).
Article I, section 1, of the Bylaws provides that petitioner
is organized into five divisions: (1) Circle of Life Ministry;
(2) United Health Payers; (3) United Arrangements; (4) United
Affiliations; and (5) United Bank. Petitioner’s Web site
provided the following description of the five divisions:
For welfare purposes and what may be described as
scientific and experimental models, practical
applications and/or assistance programs, divisions of
Amend16robertwirengard exist. These, similar to
colleges within a university, are:
United Arrangements of Amend16robertwirengard -
educational, practical and real welfare application
purposes and assuring compliance with the Multi
Employer Welfare Arrangement of the Employee Retirement
Income Security Act, passed by the U.S. Congress and
under the U.S. Department of Labor. This school may
remain in perpetuity until the end of poverty and
systematic impoverishment.
United Health Payers of Amend16robertwirengard (Mary
Lasano, nurse and consultant) - experimental model for
market-priced, universal healthcare in a non-socialist
society. Once the success that is envisioned is
accomplished, it is expected that this one-payer system
will be bought out at future cost to become an
efficient one-payer system established as a Government
Sponsored Entity (much as the U.S. Federal Reserve
system currently is a GSE).
United Bank of Amend16robertwirengard (DeVara Sims,
Tampa Police Dept./reach out, consultant and trustee) -
a non-profit banking facility for people and businesses
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to learn about and apply banking products and services;
establish IRA’s, pooling of funds, also for other
financial services such as electronic payroll
depositing for small firms, including, possibly, for
our no-profit United Health Payers deposits, accruals,
and disbursements, or employees being able to pull
partial cash funds from payrolls of their employers for
a day’s work, as well as store year to date information
on wages, tax withholdings and benefit costs; micro
loans to persons and small businesses, mainly for work
or volunteer initiatives. $8,000 already has been
donated for this endeavor.
Circle of Life Ministry of Amend16robertwirengard
(Merry Wiesenborn, director, volunteer, trustee) -
provides food and shelter for needy; transportation;
financial assistance for single mothers, particularly
those who have experienced violent, physical abuse
[cash assistance for food, shelter and education plus
transportation needs, exceeds $5,000, plus $12,000 in
loaner vehicle assets are tied up]; potential center
specifically for working with youth involving hate
crime; religious* studies, discussions and advocacy as
regards religions of Wiesenborn’s Circle of Life
Ministry and realism as opposed to or inclusive of
faiths in a deity or deities (possibly of the more
modern government preferred religions, such as of
Judeo-Christianity or Islam, etc.) Its doctrines are
based on the natural earth and universe, spirit of
people, “big boom” theory, treating others as one wants
to be treated, amending where we are wrong, repairing
where we have hurt, and civil and consensual activities
as opposed to systematic corruption that can stem from
the concentration of power in governments or from
individual violent abuses (often the physical power of
a man over a woman, rather than logic and
reasonability; or the difficult challenge of teaching
children without expeditiously inflicting pain that
causes long term and deep problems).
* * * * * * *
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United Alliances of Amend16robertwirengard3 (Mauricio
Rosas, independent citizen, activist, and trustee) -
advocacy and reach out program to join in common
grounds with other businesses, government, schools and
universities, community concerned (including those
concerned with global healthcare, environmental issues
and community sustainability, from local “Tomorrow
Matters”, League of Women Voters, Independent Citizens,
ACLU, Results!, Amnesty International, Planned
Parenthood to the Federal Reserve Bank of the U.S and
other central banks, United Nations, International
Monetary Fund and World Bank), and faith based
organizations.
In a letter to respondent dated November 30, 2001,
petitioner described the organization as a university “based on
theory”, whereas the five divisions are “subordinate colleges,
arranged to complete the fundamentals of a 103 T.C. 140, 145 (1994), affd. 71 F.3d 808(11th Cir. 1996); Am. Campaign Acad. v. Commissioner, 92 T.C.
1053, 1062 (1989); IHC Health Plans, Inc. v. Commissioner, T.C.
Memo. 2001-246, affd. 325 F.3d 1188 (10th Cir. 2003). Section
501(c)(3) provides for the following exempt purposes: Religious,
charitable, scientific, testing for public safety, literary,
educational, and prevention of cruelty to children or animals.
Sec. 1.501(c)(3)-1(d)(1)(i), Income Tax Regs.
It is well established that our inquiry focuses on the
reasons given by the Commissioner for denying an organization’s
application for exemption. See Aid to Artisans, Inc. v.
Commissioner, 71 T.C. 202, 208 (1978). Thus, in making our
declaration, we do not engage in a de novo review of the
administrative record. See Am. Campaign Acad. v. Commissioner,
supra at 1063; Church in Boston v. Commissioner, 71 T.C. 102,
105-106 (1978); Houston Lawyer Referral Serv., Inc. v.
Commissioner, 69 T.C. 570, 573-574, 577 (1978).
The first of the section 501(c)(3) requirements mandates
that an organization be organized exclusively for one or more of
the exempt purposes. The exempt purposes requirement is met only
if the organization satisfies the organizational as well as the
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(...continued)
intervene in (including the publishing or distributing of
statements), any political campaign on behalf of (or in
opposition to) any candidate for public office.
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operational test. See sec. 1.501(c)(3)-1(a)(1), Income Tax Regs.
The organizational test is set forth in section 1.501(c)(3)-
1(b)(1)(i):
(i) An organization is organized exclusively for
one or more exempt purposes only if its articles of
organization * * * as defined in subparagraph (2) of
this paragraph:
(a) Limit the purposes of such organization
to one or more exempt purposes; and
(b) Do not expressly empower the organization
to engage, otherwise than as an insubstantial part
of its activities, in activities which in
themselves are not in furtherance of one or more
exempt purposes.[1]
[1]
The term “articles of organization” includes an
organization’s articles of association. Sec. 1.501(c)(3)-
1(b)(2), Income Tax Regs.
Furthermore, to satisfy the organizational test, an organization
must serve a public rather than a private interest. See sec.
1.501(c)(3)-1(d)(1)(ii), Income Tax Regs; Columbia Park &
Recreation Association, Inc. v. Commissioner, 88 T.C. 1, 13
(1987), affd. without published opinion 838 F.2d 465 (4th Cir.
1988); Retired Teachers Legal Fund, Inc. v. Commissioner, 78 T.C.
280, 286 (1982); Baltimore Regl. Joint Bd. Health & Welfare Fund
v. Commissioner, 69 T.C. 554 (1978).
Even if an organization’s articles of organization set forth
purposes no broader than those specified in section 501(c)(3),
the organization is not organized exclusively for exempt purposes
if such articles expressly empower it to carry on (other than as
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an insubstantial part of its activities) activities not in
furtherance of one or more exempt purposes. Sec. 1.501(c)(3)-
1(b)(1)(iii), Income Tax Regs.
In the instant case, the enumerated activities set forth in
Article III of the Articles are broad in scope and vague in
description.7 For instance, the Articles empower petitioner to
provide economic solutions to identified socioeconomic problems.
Such activities do not necessarily further an educational or
charitable purpose regardless of the fact that the Articles state
that petitioner is organized “exclusively for educational,
welfare and charitable purposes.” See id. This Court has held,
however, that the mere existence of power to engage in activities
other than those set out in section 501(c)(3) does not in itself
prevent an organization from meeting the organizational test.
Peoples Translation Serv./Newsfront Intl. v. Commissioner, 72
T.C. 42, 48 (1979). A determination of whether an organization
is organized exclusively for exempt purposes is based on an
examination not only of the articles of organization but also of
other evidence in the administrative record. See Peoples
Translation Ser./Newsfront Intl. v. Commissioner, supra; Gen.
7
The enumerated activities include providing “education and
advocacy, principally, of the economic and financial sciences”;
providing healthcare and transportation; testing “welfare,
healthcare and environmental models”; providing economic
solutions to identified “socio-economic and sustainability”
problems; assisting and organizing employees; and organizing
economic welfare arrangements.
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Conference of the Free Church of Am. v. Commissioner, 71 T.C.
920, 927 (1979); Levy Family Tribe Found., Inc. v. Commissioner,
69 T.C. 615, 619 (1978). Consequently, an examination of the
administrative record in the instant case for evidence that the
enumerated activities of the Articles will further an exempt
purpose is appropriate.
We understand petitioner’s contention to be that it is a
school organized to disseminate theory to the public at-large via
petitioner’s Web site and to engage in the practical application
of such theory through its five divisions. Petitioner includes
banking activities among such practical applications.
As noted above, the Articles expressly empower petitioner to
identify socioeconomic problems and provide economic solutions.
Article I of the Bylaws establishes United Bank as one of
petitioner’s five organizational divisions but does not further
describe the organization or operations of United Bank.
Petitioner’s Web site stated that United Bank of
Amend16robertwirengard would provide banking products and
services to individuals and businesses. According to the Web
site, such services include establishing IRAs, pooling funds,
electronic payroll deposits for small firms and possibly for
United Health Payers, accruals, disbursements, and providing
micro loans. In its letter of June 20, 2002, petitioner stated
that United Bank is primarily distinguished from commercial banks
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in that United Bank is neither incorporated nor a member of the
FDIC. Rather, Robert Wirengard assumes all liability related to
United Bank. Petitioner stated that loans were to be “of micro-
level (small) nature to help