IRS written determination 201532037

Private letter rulings and published taxpayer determination letters. Native document type is retained separately; a determination letter is not labeled a private letter ruling. These taxpayer-specific releases cannot be used or cited as precedent under 26 USC 6110(k)(3); applicability and current legal force are not independently certified. Keep repeated UILC subjects attached to one actual numbered document.

Internal Revenue Service
Number: 201532037
Release Date: 8/7/2015
Index Number: 501.09-00
Legend:
Taxpayer=
Company=
Plan=
Date X=
Date Y =
$X=
Dear
Department
of the Treasury
Washington, DC 20224
Third Party Communication: None
Date
of Communication: Not Applicable
Person To Contact:
Telephone Number:
Refer
Reply To:
CC:TEGE:EB:HW
PLR-T-103517-15
Date:
April 08, 2015
This responds to your letter dated April 25, 2014, and subsequent correspondence,
requesting a ruling regarding the tax consequences
of an amendment to the trust
agreement establishing Taxpayer ("Trust Agreement"). The amendment would permit
some
of Taxpayer's assets, now dedicated to post-retirement health benefits, to be
used to provide health benefits to active employees.
FACTS
Taxpayer received a determination letter, dated Date X, stating that it is a voluntary
employees'
beneficiary
association under section
501 (c)(9) of the Internal Revenue
Code (Code). Taxpayer is a trust that holds assets used to provide post-retirement
health benefits under Plan to eligible employees who retire from Taxpayer. Taxpayer·
and Plan were established on Date
Y. Trust Agreement will be amended to include

PLR-T-103517-15
2
active employees of Company as an additional class of participants entitled to receive
health benefits under Plan. The amendment will provide that
$X of Trust will be
segregated in a separate subpart
of Trust to be used exclusively to provide health
benefits to active employees
of Taxpayer.
RULING REQUESTED
Taxpayer has requested a ruling that the amendment
of Trust Agreement and the use of
Taxpayer's assets to provide health benefits to active employees will not result in
prohibited inurement to Taxpayer within the meaning of section 501 (c)(9) of the Code
and will not cause Taxpayer to fail to be an organization described in section
501 (c)(9).
LAW
Section
501 (c)(9) of the Code provides for the exemption from federal income tax of
voluntary employees' beneficiary associations providing for the payment of life, sick,
accident, or other benefits to the members
of such association or their dependents or
designated beneficiaries
if no part of the net earnings of such association inures (other
than through such payments) to the benefit of any private shareholder or individual.
Treas. Reg.
§ 1.501 (c)(9)-1 provides that for an organization to be described in
section 501 (c)(9), it must be an employees' association; membership in the association
must be
voluntary; the organization must provide for the payment
of life, sick, accident,
or other benefits to its members; and there can be no inurement (other than by payment
of permitted benefits) to the benefit of any private shareholder or individual.
Treas. Reg.
§ 1.501 (c)(9)-3(a) provides that the life, sick, accident, or other benefits
provided by a voluntary employees' beneficiary association must be payable to its
members, their dependents, or their designated beneficiaries. Life, sick, accident,
or
other benefits may take the form of cash or noncash benefits. A voluntary employees'
beneficiary association is not operated for the purpose
of providing life, sick, accident,
or other benefits unless substantially all of its operations are in furtherance of the
provision
of such benefits. Further, an organization is not described in this section if it
systematically and knowingly provides benefits (of more than a de minimis amount) that
are not permitted by paragraphs (b), (c), (d), or (e)
of this section.
Treas. Reg.
§ 1.501 (c)(9)-3(c) provides, in pertinent part, that the term sick and accident
benefits means amounts furnished to or on behalf of a member or a member's
dependents
in the event of illness or personal injury to a member or dependent. Such
benefits may be provided through reimbursement to a member or a member's
dependents for amounts expended because
of illness or personal injury, or through the
payment
of premiums to a medical benefit or health insurance program. Sick and
accident benefits may be provided directly
by an association to or on behalf of members
and their dependents, or may be provided
indirectly by an association through the

PLR-T-103517-15
3
payment of premiums or fees to an insurance company, medical clinic, or other program
under which members and their dependents are entitled to medical services or to
other
sick and accident benefits.
Treas. Reg. § 1.501 (c)(9)-4(a) provides, in pertinent part, that no part of the net
earnings of an employees' association may inure to the benefit of any private
shareholder
or individual other than through the payment of benefits permitted by Treas.
Reg.§ 1.501(c)(9)-3. Whether prohibited inurement has occurred is a question to be
determined with regard to
all
of the facts and circumstances, taking into account the
guidelines set forth in the regulations.
ANALYSIS AND CONCLUSION
From the information provided, it does not appear that the amendment of Trust
Agreement and the use
of Taxpayer's assets to provide health benefits to active
employees will result in prohibited inurement to a private shareholder
or individual other
than through the payment
of health benefits to employees. As described in Treas. Reg.
§ 1.501 (c)(9)-3, an organization described
in section 501 (c)(9) may provide health
benefits to employees. Accordingly, the transaction will
not cause Taxpayer to fail to be
an organization described
in section 501 (c)(9).
Except as expressly provided herein, no opinion is expressed
or implied concerning the
tax consequences of any aspect of any transaction or item discussed or referenced in
this
letter. Specifically, this ruling does not address tax consequences of the described
transaction to any employer who made contributions to Taxpayer.
This ruling is directed only to the taxpayer requesting it. Section 611 O(k)(3) of the Code
provides that it may not be used or cited as precedent.
The
rulings contained
in this letter are based upon information and representations
submitted by the taxpayer and accompanied by a penalty
of perjury statement executed
by an appropriate party.
While this office has not verified any
of the material submitted
in support of the request for rulings, it is subject to verification on examination.
Sincerely,
Janet
A. Laufer
Senior Technician Reviewer
Health & Welfare Branch
Office
of Associate Chief Counsel
(Tax Exempt & Government Entities)