[00:00:05] Speaker 02:
United States, 2022, 1376.

[00:00:08] Speaker 02:
Mr. Winters, when you are ready.

[00:00:13] Speaker 01:
Good morning, Your Honors.

[00:00:15] Speaker 01:
May it please the court, Paul Winters for Aliyar's Inc.

[00:00:19] Speaker 01:
In a case of actual controversy, the flush language of 742882 authorizes declaratory relief, and the IRS fails to determine the foundation classification of a requesting organization as here.

[00:00:34] Speaker 01:
The controversy in this case arises from the service's failure to make a determination as to Aliaris's foundation classification.

[00:00:42] Speaker 02:
Well, you didn't use the right form.

[00:00:45] Speaker 01:
Thank you, Your Honor.

[00:00:48] Speaker 02:
Isn't that correct?

[00:00:49] Speaker 01:
Well, no, Your Honor.

[00:00:51] Speaker 01:
We filed a letter request, as is permitted under the applicable RevProc 4.07

[00:00:59] Speaker 01:
provides that where no other form is applicable that the taxpayer may file a letter request.

[00:01:08] Speaker 02:
How about 1023?

[00:01:10] Speaker 01:
Form 1023, Your Honor, is inapplicable on its face.

[00:01:13] Speaker 01:
It's an application that's for a recognition of tax exemption under Section 501C3.

[00:01:20] Speaker 01:
Alia Arson, the administrative record in this letter of request, made clear that it was not seeking tax exemption under 501C3, but instead a classification as a non-private foundation classified under 170B1A1, independent of its classification with respect to tax exemption.

[00:01:37] Speaker 04:
Your letter request, though, indicated you were seeking an initial classification or reclassification.

[00:01:45] Speaker 04:
Submitted the fee, I think, that was corresponding to the reclassification.

[00:01:51] Speaker 04:
Said it didn't want 501C3 tax exemption, as you just mentioned.

[00:01:55] Speaker 04:
It was, I think, a confusing request that the IRS received.

[00:02:02] Speaker 04:
Would you agree with that?

[00:02:04] Speaker 01:
We would say, Your Honor, it's certainly unusual.

[00:02:07] Speaker 04:
The user fee that we... Unusual and not consistent with anything that the IRS would expect to see, particularly given the discrepancy between the fee and an initial classification request.

[00:02:23] Speaker 01:
My recollection, Your Honor, is that the user fee that was actually paid correlates to a letter determination.

[00:02:28] Speaker 01:
It wasn't the user fee related to the 8940.

[00:02:31] Speaker 04:
It may correspond to a bunch of things.

[00:02:33] Speaker 04:
It was $400, so it should be a bunch of things.

[00:02:36] Speaker 04:
But it didn't correspond to what you were really asking for, which was an initial classification.

[00:02:41] Speaker 04:
Would you agree with that?

[00:02:42] Speaker 01:
No, actually the initial classification, there's no form really that is provided for an initial classification of foundation status.

[00:02:50] Speaker 01:
So it corresponded to the user fee that was required for the letter of determination.

[00:02:56] Speaker 04:
All right.

[00:02:56] Speaker 04:
Well, what about the larger point of this was not something the IRS had seen or sees often.

[00:03:05] Speaker 04:
And so it took it some time to figure out what was going on.

[00:03:07] Speaker 04:
And then you ultimately had to clarify

[00:03:10] Speaker 04:
for the IRS some months into the process, what you were really asking for, right?

[00:03:16] Speaker 01:
That's correct, Your Honor.

[00:03:17] Speaker 01:
We admit that it's an unusual way to approach that, typically, when churches are asking for a foundation request, they, or foundation classification, they're typically filing a Form 1023 in Schedule A. But because tax exemption was not the issue that Aliara sought at the time of the request,

[00:03:38] Speaker 01:
It was not an appropriate form to file on its face.

[00:03:41] Speaker 01:
The controversy has led to now three and a half years of the IRS having, after the IRS received the request, the organization faces substantial legal uncertainty regarding a number of aspects of its operations, such as the status of retirement plans, FICA withholding obligations, things like payment of unemployment tax,

[00:04:03] Speaker 01:
And because of that, because of the actual controversy that we feel has been raised that's required under 7428, we asked this court to direct the Court of Federal Claims to declare that Aliaris is a non-private foundation under 170B1A1.

[00:04:19] Speaker 04:
Isn't it your burden to show that the Court of Federal Claims has jurisdiction?

[00:04:25] Speaker 04:
And if so, how do you suggest that you did that?

[00:04:29] Speaker 01:
We think that the straight language of 7428A2 provides that when the service fails to provide a determination, their jurisdiction lies.

[00:04:43] Speaker 01:
And that requirement can be met under 7428B by the lapse of 270 days, which certainly happened in this case.

[00:04:51] Speaker 01:
All ARs waited nearly a year before filing its letter request.

[00:04:56] Speaker 04:
It was only about six months after your clarification.

[00:04:59] Speaker 04:
So why should we say the clock didn't start till the clarification call?

[00:05:04] Speaker 01:
Right.

[00:05:04] Speaker 01:
The regulation states from the date filed and the call that Aliaris received regarding the classification itself.

[00:05:13] Speaker 01:
was really a clarification question.

[00:05:16] Speaker 01:
It was a question trying to understand what we were doing.

[00:05:20] Speaker 01:
The IRS only asked that Aliyar resend what it had originally submitted.

[00:05:25] Speaker 01:
It didn't ask for any new information.

[00:05:27] Speaker 01:
It didn't ask for any additional clarification.

[00:05:29] Speaker 01:
It didn't instruct us to file a certain form.

[00:05:32] Speaker 04:
I thought you alleged he clarified that it's an initial classification as opposed to a reclassification that you were seeking.

[00:05:39] Speaker 04:
That was unclear to the IRS until that call, it seems.

[00:05:42] Speaker 01:
It may have been unclear to the IRS, but that didn't toll the 278 o'clock.

[00:05:48] Speaker 01:
The 278 o'clock began at the time that the service received the application and submitted the user check for processing.

[00:05:58] Speaker 00:
Who bears the burden of showing that Alieris does or does not qualify as a church?

[00:06:03] Speaker 01:
Your Honor, Ali Aras submitted a treasurer regulation, a definition under 1.511-2, to show that it is classified as a church under that test, which the tax court and the IRS itself has used to instruct taxpayers about how to qualify as a church.

[00:06:23] Speaker 01:
We also, in our complaint, submitted that we pass muster under the associational test that this court has acknowledged is one of the tests that courts may use to determine whether an organization is described as a church.

[00:06:35] Speaker 01:
Of course, all these descriptions are just that, descriptions, not definitions.

[00:06:41] Speaker 00:
Did you answer my question, though, of who bears the burden?

[00:06:48] Speaker 00:
whether or not Polyaris does or does not qualify as a church.

[00:06:51] Speaker 00:
I think it's probably a one word answer I'm looking for.

[00:06:53] Speaker 01:
We think we have.

[00:06:55] Speaker 01:
We have.

[00:06:56] Speaker 01:
Yes, Your Honor.

[00:06:56] Speaker 01:
Thank you.

[00:06:58] Speaker 04:
And to determine if you met your burden, you acknowledge it's your burden, we would look to what you submitted, which the court of federal claims really boiled down to one page at most, which it said was your sort of allegation of facts, but not really evidence.

[00:07:16] Speaker 04:
Is that right, or is there more that we should look at to see if you met your burden?

[00:07:20] Speaker 01:
Your Honor.

[00:07:21] Speaker 01:
The one page statement of facts, or one and a half page statements of facts, was not the only section of facts where we demonstrated that we do qualify as a church under the 1.511 test.

[00:07:34] Speaker 01:
In fact, the Court of Claims made several material errors in its statement of what the complaint contained, as well as the administrative record.

[00:07:44] Speaker 01:
In particular, it concluded, or it seemed to infer, that Aliaris

[00:07:50] Speaker 01:
was instructed to file Form 1023.

[00:07:52] Speaker 01:
It was not.

[00:07:53] Speaker 01:
It was.

[00:07:54] Speaker 01:
Right.

[00:07:54] Speaker 04:
OK.

[00:07:55] Speaker 04:
But on the question of whether you met your burden under either our associational test or the 14-factor test, I didn't see where you at.

[00:08:03] Speaker 04:
I see where you assert that you did, but I didn't see where you go through the factors and respond substantively to the things that would be necessary if you engage with that test.

[00:08:16] Speaker 04:
Did I miss it, or is it in there?

[00:08:18] Speaker 01:
Well, Your Honor, we think it's important to think about that question through the lens of the role of the CFC in that case.

[00:08:24] Speaker 01:
And we think that the role of the CFC was to review the action or the inaction of the administrative agency itself, taking all... I'll ask a follow-up to Judge Stark's question.

[00:08:35] Speaker 00:
Where is there evidence of membership?

[00:08:38] Speaker 00:
Can you just like maybe point me to a page in the record or something?

[00:08:42] Speaker 01:
Yes, in the administrative record, in the sealed record,

[00:08:45] Speaker 01:
at pages 136 to 145 of the appendix.

[00:08:49] Speaker 01:
There are expressed references in the appendix to members.

[00:08:53] Speaker 01:
There are expressed references to each of the factors, four main factors, that are set forth in 1.511-2.

[00:09:01] Speaker 01:
For example, that it's an integral part of another church.

[00:09:04] Speaker 01:
For example, that it facilitates sacramental function.

[00:09:10] Speaker 01:
There are a number of places in those 10 pages where, both in the statement of facts and in the analysis sections, we argue and we articulate how Aliaris fulfills those functions on behalf of his sole member, the ecclesiological trust.

[00:09:30] Speaker 04:
If the court of power claims invited you to submit more evidence,

[00:09:36] Speaker 04:
You declined.

[00:09:38] Speaker 04:
Obviously, we don't take evidence.

[00:09:40] Speaker 04:
But if we look at these pages and we think no one could believe that you've actually met your burden under these tests,

[00:09:50] Speaker 04:
Where would that leave us?

[00:09:51] Speaker 04:
What would we do in this appeal?

[00:09:52] Speaker 01:
Well, we would say that this court's role, again, is to evaluate the action of the service or inaction, that under the tax court rules, this court takes the administrative record to be true, and that the burden, because the IRS did not shift in initial controversy cases or initial determination cases, that burden shifts to the IRS to show why we're not a church, to the government to show why we're not a church.

[00:10:15] Speaker 01:
the government can't meet that burden because it didn't provide any response whatsoever and so Aliaris is entitled to the declaration.

[00:10:23] Speaker 00:
And maybe I'm missing something so I apologize if I am.

[00:10:27] Speaker 00:
Did you go through each of the

[00:10:29] Speaker 00:
14 factors or so in these pages that you cited, or did you just kind of go through certain pick and choose?

[00:10:35] Speaker 00:
And I'm just trying to get a sense of what I'm going to expect when I'm looking at these pages.

[00:10:39] Speaker 01:
In the appendix itself with the letter request?

[00:10:41] Speaker 01:
Yes.

[00:10:41] Speaker 01:
Yes, Your Honor.

[00:10:42] Speaker 01:
We went through fairly carefully and showed not just in the one and a half pages statements of fact, but the application of the law section following that.

[00:10:51] Speaker 01:
paragraph by paragraph to show how we were an integral part of a church, that we carried out the functions of a church.

[00:11:00] Speaker 01:
There was a description of Aliaris' theology and the role that Aliaris plays, mediating that theology to its members on behalf of the church.

[00:11:10] Speaker 04:
Can you talk about sealing, just for a quick second?

[00:11:13] Speaker 04:
Sure.

[00:11:13] Speaker 04:
It's unclear to me, and I'm not asking you to disclose the substance of what's sealed, but how do I figure out what is still under seal?

[00:11:20] Speaker 04:
Because it seems like almost everything that you were concerned with is now public.

[00:11:25] Speaker 01:
Yes, Your Honor, we take your point that the cat is out of the bag with respect to some of these things.

[00:11:30] Speaker 01:
There are remaining things that are unsealed.

[00:11:33] Speaker 01:
The sealed version of our pleadings before this court, we would respectfully ask to remain sealed, because they do implicate sincerely held religious beliefs of a confidential nature.

[00:11:43] Speaker 01:
And the release of those things we think would burden our religious rights.

[00:11:48] Speaker 04:
Is that it, though?

[00:11:49] Speaker 04:
Just evaluate your briefs filed here?

[00:11:53] Speaker 01:
Yes, Your Honor.

[00:11:53] Speaker 01:
The order is already public.

[00:11:55] Speaker 01:
And so the briefs that we filed before this quarter, it would be important to all of yours for those to remain sealed.

[00:12:01] Speaker 00:
But you're not asking us to do anything with respect to what was below.

[00:12:05] Speaker 00:
You're just asking us with respect to the court.

[00:12:07] Speaker 01:
Yes, that's been published, Your Honor.

[00:12:08] Speaker 01:
Yes.

[00:12:08] Speaker 00:
Thank you.

[00:12:08] Speaker 00:
That's helpful.

[00:12:10] Speaker 01:
I see them at my rebuttal time.

[00:12:12] Speaker 02:
We will save this for you, Mr. Christensen.

[00:12:16] Speaker 03:
Thank you, Your Honors, and may it please the court, Jacob Christensen for the United States.

[00:12:21] Speaker 03:
Alieris is apparently a secretive organization that is seeking classification as a public charity, specifically a church, together with all the public benefits that go with that designation, but without having to provide the evidence under the proper test established by this court to prove its claim that it is a church.

[00:12:44] Speaker 03:
In the court of federal claims, the court, as the court has recognized, in fact, ordered Alieris to provide evidence that it qualified as a church because the letter request that Alieris had submitted to the IRS did not have any relevant information with respect to the proper test, which this court has applied as

[00:13:10] Speaker 00:
Is there filing somewhat unusual?

[00:13:12] Speaker 00:
Is it, in your experience, fairly rare to get these sort of letter requests?

[00:13:17] Speaker 00:
I'm just trying to understand.

[00:13:19] Speaker 03:
It's absolutely unusual and improper under the revenue procedure.

[00:13:25] Speaker 03:
The reason is that in order to grant an initial classification as to private foundation status versus public charity,

[00:13:35] Speaker 03:
A predicate determination must be made as to whether the organization is a 501c3 organization.

[00:13:42] Speaker 03:
So there is no such thing as a request for an initial classification as a private versus public charity.

[00:13:51] Speaker 00:
Would they go through the form 1023 in terms of what you would typically expect to see?

[00:13:56] Speaker 00:
Would it typically be that it would be Form 1023 that we filed?

[00:14:01] Speaker 03:
That is the form that Aliera should have used here.

[00:14:04] Speaker 03:
That was the proper form, because that form contains the information to make a determination with respect to 501c3 status initially.

[00:14:16] Speaker 03:
And then the second step is to determine whether that 501c3 organization is a public charity or a private foundation.

[00:14:25] Speaker 03:
And the Form 1023 solicits specific information in Schedule A that would provide the IRS with the information under the 14 criteria test that the IRS applies.

[00:14:39] Speaker 03:
And this court has recognized that the 14 criteria test overlaps with the associational test.

[00:14:46] Speaker 03:
And in the Foundation of Human Understanding case, this court clearly adopted the associational test

[00:14:52] Speaker 03:
as the proper test to determine whether an organization qualifies as a church.

[00:14:57] Speaker 03:
That test looks to whether there is a regular congregation, to whether there are regular religious worship services where the members can gather in communal worship together.

[00:15:09] Speaker 02:
Are you saying that a letter could not suffice no matter what it concluded?

[00:15:16] Speaker 02:
Or just that it didn't include enough information here?

[00:15:23] Speaker 03:
I would not say that if a letter request were submitted that contained all of the information that is specified in the Form 1023, I'm not prepared to say that that wouldn't be a substantially complete application.

[00:15:41] Speaker 03:
But in this case, the letter request had no relevant information with respect to making a determination.

[00:15:51] Speaker 04:
They say they don't want to be a 501c3.

[00:15:55] Speaker 04:
Is there something that requires them to apply for 501c3 status?

[00:16:00] Speaker 03:
So they certainly are not required to apply for that status if they want to take advantage of the presumption that a self-proclaimed church may presumptively be a church.

[00:16:13] Speaker 03:
But if they want to obtain an official determination from the IRS,

[00:16:20] Speaker 03:
then they must, as a predicate, the IRS must first determine whether it's a 501c3 organization.

[00:16:28] Speaker 03:
Because all churches, as described in section 170, are 501c3 organizations.

[00:16:37] Speaker 03:
Section 170, which describes church in this case, deals with charitable contributions.

[00:16:44] Speaker 03:
And it describes churches

[00:16:46] Speaker 03:
describes the church as being an organization that is eligible to receive a charitable contribution.

[00:16:53] Speaker 03:
And in paragraph C of section 170, charitable contribution is plainly defined as a contribution that's made

[00:17:01] Speaker 03:
to a 501c3 organization that can accept that donation.

[00:17:08] Speaker 03:
And then the donor can qualify for a deduction.

[00:17:11] Speaker 04:
So are you saying that?

[00:17:15] Speaker 04:
Does 170c preclude, as a matter of law, Alieris from doing what it wanted to do, which is not be a 501c3, but nonetheless still be a non-private foundation?

[00:17:30] Speaker 03:
Yes, absolutely.

[00:17:32] Speaker 03:
501c3 is a predicate.

[00:17:34] Speaker 02:
The claims court dismissed the case for lack of subject matter jurisdiction.

[00:17:41] Speaker 02:
Was that correct or should it have dismissed for failure to comply with the requirements of the law?

[00:17:49] Speaker 03:
So the failure on Alaris's part to provide relevant evidence supports both rulings.

[00:17:56] Speaker 03:
First, the court, without relevant facts,

[00:18:01] Speaker 03:
There's no actual controversy.

[00:18:03] Speaker 03:
The court does not have sufficient facts to decide one way or the other whether Alieris qualifies as a church.

[00:18:11] Speaker 03:
And that was the problem here.

[00:18:12] Speaker 02:
That's a failure to comply with the law.

[00:18:15] Speaker 03:
Well, I agree with that.

[00:18:17] Speaker 03:
I agree that the lack of facts also supports the failure to prove up its claim.

[00:18:26] Speaker 03:
But because jurisdiction is a threshold issue and the lack of facts

[00:18:31] Speaker 03:
also supports a lack of an actual controversy, the court was right to rule on that basis.

[00:18:38] Speaker 00:
If we disagree with the court on the subject matter jurisdiction question, do you still believe that you can win and that we would affirm?

[00:18:46] Speaker 03:
Yes.

[00:18:47] Speaker 03:
Yes, Your Honor, because the Court of Federal Claims has already given, has already ordered Alieres to provide evidence upon which it could make a determination.

[00:18:56] Speaker 03:
And Alieres refused to comply with the court's order.

[00:19:00] Speaker 03:
And the court explained in issuing that order to Aliaris, the court explained that without evidence, the plaintiff is a church as defined by section 170.

[00:19:12] Speaker 03:
We cannot proceed on the request for a declaratory judgment.

[00:19:15] Speaker 03:
The court can't make a determination one way or the other.

[00:19:18] Speaker 03:
If the relevant facts were known, I would say the IRS may agree that Elias is a church.

[00:19:25] Speaker 00:
What is your response to opposing counsel's suggestion that the relevant facts are located, I believe, in appendix page 136?

[00:19:33] Speaker 03:
I disagree.

[00:19:35] Speaker 03:
The letter request did not address at all the associational test or the 14 criteria test.

[00:19:42] Speaker 03:
Instead, it focused on

[00:19:45] Speaker 03:
an irrelevant and opposite test under the unrelated business income provisions under section 511, which is not the proper test for a church under this court's precedent in foundation of human understanding.

[00:19:59] Speaker 03:
So there are no relevant facts under the proper test, which was the dilemma that faced the Court of Federal Claims and which is why the court

[00:20:07] Speaker 03:
specifically ordered Alieris to submit evidence.

[00:20:11] Speaker 03:
And Alieris declined to do that.

[00:20:13] Speaker 04:
When they declined, they pointed to the government as support for their decision to decline.

[00:20:19] Speaker 04:
They said the status of this appeal from the service is such that we can't add to the merits.

[00:20:26] Speaker 04:
They can't add to the record to support our position on the merits.

[00:20:29] Speaker 04:
And they pointed to you making the very same argument.

[00:20:33] Speaker 04:
So weren't you both right?

[00:20:35] Speaker 03:
Well, so they cited to a footnote in the government's brief where we reserved the right to object to new evidence.

[00:20:43] Speaker 03:
But the government never filed an objection or a motion to reconsider the court's order.

[00:20:49] Speaker 03:
So the order was already in place, that alias provide evidence.

[00:20:53] Speaker 03:
We didn't ask for the court to reconsider that motion.

[00:20:56] Speaker 03:
Generally, the administrative record rule

[00:20:59] Speaker 03:
is meant, in fact, to protect the IRS.

[00:21:02] Speaker 03:
It's meant to prevent a petitioner from introducing new evidence in litigation that was never first presented to the IRS.

[00:21:11] Speaker 03:
So the Court of Federal Claims was being generous, in fact, in allowing them an opportunity to submit evidence that they had failed to submit in the administrative proceedings

[00:21:22] Speaker 03:
to prove their claim that they were a church.

[00:21:23] Speaker 03:
But Alias refused to comply with that order.

[00:21:27] Speaker 03:
The court was really left with no alternative but to dismiss the case.

[00:21:31] Speaker 03:
So I would submit that any remand wouldn't be helpful because the court was reasonable in doing what it could to receive evidence.

[00:21:42] Speaker 03:
And without relevant information, the court simply can't make a determination.

[00:21:47] Speaker 02:
But there was a case of controversy.

[00:21:51] Speaker 03:
Right, yeah, no actual case of controversy.

[00:21:54] Speaker 03:
Like I say, were the relevant facts known, the IRS may actually agree that Aliaris is a church.

[00:22:01] Speaker 03:
But we don't know, because we don't have that information.

[00:22:07] Speaker 04:
The IRS didn't respond, never at least told Aliaris, file a form 1023, or show us evidence of how you meet the associational test, or

[00:22:20] Speaker 04:
I don't think ever even said you're prohibited from asking for recognition without also seeking a 501c3 exemption.

[00:22:30] Speaker 04:
It doesn't seem like IRS did anything, and that's part of the complaint here.

[00:22:34] Speaker 04:
How can that be right that you didn't have an obligation to do something?

[00:22:40] Speaker 03:
So the record on that issue is somewhat sparse, I would say.

[00:22:44] Speaker 03:
What we have is paragraph 40 of the complaint, where Alieris admits that the IRS, in fact, did reach out and contacted Alieris' attorney and discussed concerns.

[00:22:59] Speaker 03:
The issues discussed were, first, you didn't file the form that you would need for a reclassification, which is the form 8940.

[00:23:08] Speaker 03:
You didn't file that form.

[00:23:12] Speaker 03:
Although, as Your Honor pointed out, the fee submitted with the request was $400, which does correspond to a reclassification request.

[00:23:22] Speaker 03:
So that issue was raised during the conversation.

[00:23:25] Speaker 03:
And we also know that the fact that Alieris had not submitted a Form 1023, which is the form used to make an initial request for private foundation versus public charity status, was also brought to Alieris' counsel's attention during that phone call.

[00:23:42] Speaker 03:
So I would say that the IRS did reach out, did raise these concerns, at least based on the information and the allegations in paragraph 40 of the complaint.

[00:23:52] Speaker 03:
But Alieris's counsel decided

[00:23:56] Speaker 03:
persist doing this its own way with a letter request rather than using the forms that have been specified for that purpose.

[00:24:05] Speaker 04:
Your friend argues though that 270 starts running the day they submit whatever they submit and he's got a right to bring a complaint on day 271 no matter how incomplete.

[00:24:16] Speaker 04:
or no matter what the IRS has done if you haven't made a determination.

[00:24:19] Speaker 04:
Is he right about that?

[00:24:20] Speaker 03:
No, that's incorrect because the 270-day period doesn't start to run until a substantially complete application has been filed.

[00:24:29] Speaker 03:
Here they never did that.

[00:24:31] Speaker 03:
And in addition,

[00:24:34] Speaker 03:
The 270-day period doesn't start to run when the IRS receives a request and refuses to accept it for processing, which is what happened here.

[00:24:44] Speaker 03:
The IRS didn't fail to make a determination.

[00:24:47] Speaker 03:
The IRS received a letter request and ultimately determined that it could not process it and determined to issue a refund.

[00:24:55] Speaker 03:
So it was never accepted for processing.

[00:24:57] Speaker 03:
And the revenue procedure explains that when a request is not accepted for processing, that that is not to be considered either a determination or a failure to make a determination under Section 7428.

[00:25:11] Speaker 03:
So the 270-day period never started to run in this case.

[00:25:15] Speaker 00:
Did the IRS ever tell Eliaris that it's not accepting the request?

[00:25:21] Speaker 03:
The IRS was in the process of issuing the refund when this litigation was initiated.

[00:25:27] Speaker 03:
And so the actual refund was not issued until later.

[00:25:31] Speaker 03:
So the answer is the record doesn't contain any evidence that the IRS had further contact with Alieres.

[00:25:44] Speaker 03:
Presumably, that would have happened along with the refund when that was issued, had the litigation not commenced and started a litigation freeze on everything.

[00:25:56] Speaker 03:
If there are no further questions.

[00:25:58] Speaker 02:
Thank you, counsel.

[00:25:59] Speaker 02:
Thank you.

[00:26:00] Speaker 02:
Mr. Winters has up to three minutes for bottle.

[00:26:04] Speaker 01:
Your Honor, the government was required to notify our client of any deficiency.

[00:26:10] Speaker 01:
The Treasury Regut 601-201-E9 says that.

[00:26:13] Speaker 01:
Their own revenue procedure says that.

[00:26:16] Speaker 01:
They didn't provide any notice of any deficiency, nor any notice of an intent not to accept the application.

[00:26:22] Speaker 01:
The government has not been able to, and cannot, we don't think, provide any example of a court ruling that a petition did not exhaust administrative remedies when, as here, the service both fails to make a determination and fails to provide notice of deficiency.

[00:26:41] Speaker 01:
And for good reason, such an outcome would render 7428A2 meaningless.

[00:26:48] Speaker 01:
The purpose of the statute

[00:26:49] Speaker 01:
is to provide relief of exactly the type that Aliaris is seeking.

[00:26:54] Speaker 01:
Further, Your Honor, we note that the tax code does bifurcate tax exemption from foundation classification.

[00:27:03] Speaker 01:
An example of that, as we illustrate in our brief, is 4947A, where you have non-exempt charitable trust.

[00:27:11] Speaker 01:
Another example is in the branch ministries case, affirmed by the DC Circuit, which found that even though

[00:27:19] Speaker 01:
The petitioner in that case was a bona fide church.

[00:27:23] Speaker 01:
It was nevertheless not described under 501C3.

[00:27:27] Speaker 01:
Aliaris followed the revenue procedure instructions exactly.

[00:27:32] Speaker 01:
The government's argument that Aliaris' letter was incomplete, as the Court and People's Translation Service stated, comes too late.

[00:27:41] Speaker 01:
Because the service never made a determination, Aliaris did not have an opportunity to address

[00:27:46] Speaker 01:
any deficiencies that the IRS may have perceived.

[00:27:50] Speaker 01:
Further, the plain language of Form 1023 makes it clear that that form is inapplicable for Aliaris' application.

[00:28:00] Speaker 01:
And it's not as though that Aliaris could have predicted that the IRS just wouldn't respond at all.

[00:28:07] Speaker 01:
OLLIAR wants clarification as to the status to clarify certain legal responsibilities.

[00:28:13] Speaker 01:
Three and a half years after submitting its request, those responsibilities remain uncertain.

[00:28:19] Speaker 01:
Finally, Your Honor, we would note that this court, and Smith Klein,

[00:28:23] Speaker 01:
has found that an appellate court can make a finding of facts even when the evidence is disputed if, as a matter of law, the court could only make one finding of fact or decide the facts a certain way.

[00:28:36] Speaker 01:
Otherwise, as this court is concerned about, protracted litigation and unnecessary delay in expense would occur.

[00:28:43] Speaker 01:
As the service's failure to respond places the burden of proof on the government, only one possible outcome is possible from the administrative record.

[00:28:53] Speaker 01:
Forcing Aliyar to spend several more years in court to return with an appeal on the same record contravenes the purpose of 7428.

[00:29:03] Speaker 01:
And with that, we thank the court.

[00:29:05] Speaker 02:
Thank you, counsel.

[00:29:06] Speaker 02:
The case is submitted.

[00:29:08] Speaker 02:
That concludes our arguments for this morning.