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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
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