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Subsequently, on March 3, 2000, the SBOE issued a final order
denying the school’s motion for rehearing.
IRS Examination
Examination by the IRS into petitioner’s tax-exempt status
began in late 2001, precipitated by the forwarding to the IRS of
a newspaper article reporting the revocation of the school’s
charter. The IRS conducted an investigation into whether
petitioner complied with the standards imposed under section
501(c)(3). In particular, the IRS sought financial and
governance records in order to verify the information reported by
petitioner on Forms 990, Return of Organization Exempt from
Income Tax, and to evaluate the records for possible instances of
private benefit and personal inurement. To that end, dozens of
information document requests were issued to petitioner, but only
a very limited portion of the requested materials was ever
provided, and often only after repeated inquiries, missed or
delayed appointments, and a general lack of cooperation on the
part of petitioner. Consequently, additional information was
sought and obtained from third-party sources, including public
records and the TEA.
The examination culminated with issuance on September 8,
2004, of the final adverse determination underlying this
litigation. The conclusion was that petitioner failed to
establish that it was operated exclusively for an exempt purpose,
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Last modified: November 10, 2007