Summary

Among this week's release of private letter rulings were two rejection letters, PLRs 201211025 and 201211026.

Extended Summary

1. PLR 201211025

The Service rejected the application for Section 501(c)(3) status of an organization that was to conduct research documenting the effectiveness of hypnotherapy in treating various disorders. The board was comprised of a practicing hypnotherapist and his wife, both of whom would be paid. Citing Rev. Rul. 69-632, the Service determined that:

• the organization was created to serve a private rather than a public purpose; and
• its earnings would inure to the private benefit of insiders.

The organization did not protest the adverse determination.

2. PLR 201211026

The Service rejected the application for Section 501(c)(3) status of a small family-owned restaurant that sought to become eligible for grants, which it proposed to use to provide free meals to targeted groups and to train local residents in food production and distribution.

The Service determined that this was essentially a commercial operation, and the organization did not protest the adverse determination.

CPC Commentary

Editors' Note: Nearly every week, as part of its release of private letter rulings, the IRS issues copies of rulings rejecting applications for exempt status or revoking existing exemptions, often as many as a dozen of such rulings per week.

In the past, we limited our coverage to the handful of questionable revocations and rejections, which contained controversial reasoning, or served as cautionary examples. Starting in the summer of 2010, we began posting a list of the week's rejections and revocations on Tuesdays, with brief summaries.

We will continue to provide short summaries, but will also explore in more detail the occasional ruling of unusual interest.

Relevant Documents

	201211026	3/17/12
	201211025	3/17/12
	Rev. Rul. 1969-632	3/1/07
	Section 501: Exemption from tax on corporations, certain trusts, etc.	3/24/10