At Cost Services, Inc. - Page 11

                                       - 11 -                                         

               The only real difference between petitioner and a for-profit           
          temporary service agency is that petitioner does not charge local           
          businesses the standard markup that such agencies routinely                 
          collect for services.  However, this Court has held in analogous            
          circumstances that furnishing services to local businesses at               
          cost does not establish that an activity is charitable.  See                
          B.S.W. Group, Inc. v. Commissioner, 70 T.C. 352, 360 (1978).                
               In B.S.W. Group, a taxpayer’s sole activity was offering               
          consulting services at cost to nonprofit, limited resource                  
          organizations engaged in various rural-related activities.  Some,           
          but not all, of the clients of the taxpayer were other exempt               
          organizations.  Services of the taxpayer consisted of obtaining             
          individuals to perform research projects for the clients.  The              
          individuals that were engaged received fees for their services.             
          This Court held that the taxpayer did not operate exclusively for           
          charitable purposes as required by section 501(c)(3) because its            
          primary purpose was commercial rather than educational,                     
          charitable, or scientific.  See B.S.W. Group, Inc. v.                       
          Commissioner, supra.                                                        
               The activities of petitioner similarly constitute the                  
          conduct of a temporary service agency, which is essentially a               
          commercial venture.  Petitioner’s own services or the services of           
          its clients are in direct competition with for-profit businesses            

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  Next

Last modified: May 25, 2011