74 T.C. 293">*293 OPINION

This case was assigned to Special Trial Judge Francis J. Cantrel for the purpose of conducting the hearing and ruling on respondent's motion to dismiss for lack of jurisdiction. After a review of1980 U.S. Tax Ct. LEXIS 134">*138 the record, we agree with and adopt his opinion which is set forth below. ¹

74 T.C. 293">*294 OPINION OF THE SPECIAL TRIAL JUDGE

Cantrel, Special Trial Judge: Petitioner, challenging an adverse determination issued by respondent, attempts to invoke the jurisdiction of this Court pursuant to section 7428, ² for a declaratory judgment that it is entitled to exemption from Federal income taxes under section 501(c)(3). Respondent filed a "Motion to Dismiss for Lack of Jurisdiction" on the ground that the petition for declaratory judgment was not filed by a proper party. Petitioner filed a memorandum of law in opposition to respondent's motion to dismiss, and a hearing was held thereon at the motions session in Washington, 1980 U.S. Tax Ct. LEXIS 134">*139 D.C.

On October 18, 1976, respondent received a Form 1023, "Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code" (referred to herein as Form 1023 or application), from "Life Science Church (Chapter 669)," an unincorporated entity formed by charter on December 30, 1975, with its address at 4125 Dillon Way, San Diego, Calif. The application was signed by Walter A. Stark (referred to herein as Stark), head of the board of trustees of the Life Science Church, Chapter 669 (hereinafter referred to as L.S.C.). Some of the answers to part III of the application, relating to the organization's programs, operations, services, and fundraising are either vague or incorrect. The only answers written in response to the questions in part V of the application relating to L.S.C.'s financial data were statements to the effect that the organization was new; that it had received no money1980 U.S. Tax Ct. LEXIS 134">*140 to date and did not anticipate income in 1976; that it had no assets nor liabilities as of August 4, 1976; and that "these parameters [an analysis of financial support] have not yet been established." The charter of L.S.C. which accompanied the application reads, in pertinent part, as follows:

This is to certify that Rev. Walter A. Stark D.D. of San Diego, Cal., is ordained and established as an Auxiliary Church, and is granted a Church Charter by the LIFE SCIENCE CHURCH to further the free exercise of Religion, upon the express agreement of the Trustees of the Church ordained 74 T.C. 293">*295 and established by this Charter to the following terms and conditions; TO WIT:

* * * *

2. No other Churches or Orders may be formed by this Auxiliary Church, which shall remain unincorporated.

* * * *

12. That the names and addresses of the Trustees shall at all times be filed with the Head Office of the Church at Bloomington, Minnesota.

13. That this Church organization is formed and organized exclusively for Religious, Charitable, Literary and Educational purposes within the meaning of section 501(c)(3) of the Internal Revenue Code of 1954.

* * * *

17. Upon the Disolution [sic] of the Church, the1980 U.S. Tax Ct. LEXIS 134">*141 Board of Trustees shall, after paying and disposing of all legal liabilities of the Church, dispose of all assets of the Church exclusively for the purposes of the Church in such manner and to such organization(s), organized and operated exclusively for charitable, educational, religious or scientific purposes which shall at the time qualify as an Exempt organization under 501(c)(3), of 26 U.S. Code, as the Board of Trustees shall determine. If there is any dispute as to the disposition of the assets, the property shall be returned to the donar [sic], grantor, or person conveying it to the Church. All property capable of being identified, shall be returned to the party that was the prior owner or his heirs, assigns, or trustees, if deceased.

* * * *

23. This Charter is granted upon the further condition that the members of the Life Science Church are bound by oath or affirmation that they support the principles of the Life Science Church * * *

After respondent received the Form 1023 from L.S.C., correspondence by letter ensued to supplement the answers given in the application and to obtain the information necessary for respondent's administrative consideration of the application. 1980 U.S. Tax Ct. LEXIS 134">*142 On February 22, 1977, respondent received a letter from Stark responding to several questions asked by respondent in a previous letter. Therein Stark stated that the instrument governing his organization was the charter granted to it by its parent church, the Life Science Church, which is a division of the Basic Bible Church headquartered in Minneapolis, Minn. The letter further stated that "the correct and full name of the organization is the Life Science Church Chapter 669, which is exactly what we stated in our 1023 application." After approximately 9 months of administrative consideration by respondent of the application received from L.S.C., petitioner mailed respondent a letter on July 15, 1977, stating that it would like to change its name to "The New Covenant Church in America"; 74 T.C. 293">*296 that this church had absolutely no affiliation with the Basic Bible Church of Minneapolis, Minn. (incorrectly called the Life Science Church), its officers, or directors; and that it was a completely separate and independent church. No charter or application Form 1023 relating to the New Covenant Church in America was forwarded with this letter.

Based upon the information in respondent's1980 U.S. Tax Ct. LEXIS 134">*143 possession, consisting of an application, charter, supporting documents for an unincorporated organization entitled "Life Science Church (Chapter 669)," and a request to change the name of the entity, respondent issued a detailed proposed adverse ruling letter on August 9, 1977, to L.S.C., which reads in relevant part as follows:

The information submitted discloses that you were formed on January 30, 1976, ³ under a Church Charter that was granted to you by the Life Science Church, whose Head Office is located in Bloomington, Minnesota. You said that your full name was the Life Science Church, Chapter 669. Under the Church Charter granted by the Life Science Church, you were established as an Auxiliary Church of that Church. Under the conditions set forth in this charter, which were agreed to by your trustees, no other churches could be formed by you.

Your charter states that you were formed and organized exclusively for religious, charitable, literary and educational purposes within the meaning of section 501(c)(3) of the Code. Article 17, thereof, states, with respect to your remaining assets, that upon dissolution, if there is any dispute as to the disposition of the assets, 1980 U.S. Tax Ct. LEXIS 134">*144 the property shall be returned to the donor, grantor, or person conveying it to the church. Also, that all property capable of being identified shall be returned to the party that was the prior owner or his heirs, assigns, or trustees, if deceased.

In addition, your charter provides that the names and addresses of your trustees shall at all times be filed with the Life Science Church at Bloomington, Minnesota. You stated that the Life Science Church, from whom you received your Church Charter, was chartered as a division of the Basic Bible Church of America, 101 West Groveland Avenue, Minneapolis, Minnesota.

In your certified letter to us that was mailed on July 15, 1977, you stated: "We would at this time like to change the name of our church in our 1023 application to: The New Covenant Church in America." Also, in this letter, you stated that The New Covenant Church in America had absolutely NO affiliation with the Basic Bible Church of Minneapolis, Minnesota (incorrectly called the Life Science Church), its officers and/or directors, and, therefore, that you were a completely separate and independent church.

74 T.C. 293">*297 * * * *

In response to our request for certain additional 1980 U.S. Tax Ct. LEXIS 134">*145 information, including the sources of your receipts, in order that we could make a determination whether you qualified for exemption from Federal income tax under section 501(c)(3) of the Code and also, whether you were a church within the meaning of sections 509(a)(1) and 170(b)(1)(A)(i), you not only failed to provide all the requested information but your responses where [sic] generally vague and incomplete.

Section 501(c)(3) of the Code provides, in part, for the exemption of corporations that are organized and operated exclusively for religious, charitable, literary, scientific, and educational purposes, no part of the net earnings of which inures to any private shareholder or individual.

Section 1.501(c)(3)-1(b)(2) of the Income Tax Regulations provides that the term "articles of organization" or "articles" includes the trust instrument, the corporate charter, the articles of association, or other written instrument by which an organization is created.

Section 1.501(c)(3)-1(b)(4) of the Regulations provides that an organization is not organized exclusively for one or more purposes, unless its assets, upon dissolution, are dedicated to 501(c)(3) purposes.

Rev. Proc. 72-4, 1972-1 C.B. 706,1980 U.S. Tax Ct. LEXIS 134">*146 provides, in part, that an exempt status will be recognized if proposed operations can be described in sufficient details to permit a conclusion that an organization will clearly meet the particular requirements under which exemption is claimed. An organization must fully describe the activities in which it expects to engage including the standards, criteria, procedures or other means adopted or planned for carrying out the activities; the anticipated sources of receipts; and, the nature of contemplated expenditures.

Based on the information presented, we are unable to rule on your exempt status under section 501(c)(3) of the Code. The Church Charter that you provided established you as an Auxiliary Church of the Life Science Church of Bloomington, Minnesota. That Church is an unincorporated church granted a Church Charter by the Basic Bible Church Inc. of Minnesota. The Basic Bible Church, Inc., is also known as the Basic Bible Church of America, and its address is 101 West Groveland Avenue, Minneapolis, Minnesota.

You stated that there was absolutely NO affiliation with the Basic Bible Church of Minneapolis, Minnesota, incorrectly called the Life Science Church, its officers1980 U.S. Tax Ct. LEXIS 134">*147 and/or directors. Yet the Life Science Church, which granted you a charter whereby you were established as one of its Auxiliary Churches, itself is affiliated with the Basic Bible Church of America. Your charter is conditioned on the basis that the members of the Life Science Church support the principles of the Life Science Church. As a division of the Basic Bible Church of America, the Life Science Church is affiliated with it. Therefore, this affiliation is inherent in the Church Charter granted to you by the Life Science Church.

If as you claim, The New Covenant Church in America has absolutely NO affiliation with the Basic Bible Church of America, the Church Charter granted by the Life Science to you cannot be considered the articles of of [sic] organization of the New Covenant Church in America. Also, if as you claim, The New Covenant Church in America is a completely separate and independent church, then the Church Charter granted to you by the Life Science Church, which established you as an Auxiliary Church of the Life Science 74 T.C. 293">*298 Church may not be described as the articles of organization of The New Covenant Church in America. * * *

Furthermore, because you were1980 U.S. Tax Ct. LEXIS 134">*148 unable or unwilling to provide us with certain requested information, including the sources of your receipts, we were unable to make a determination whether you qualify for exemption from Federal income tax under section 501(c)(3) of the Code.

When you are able to provide a proper creating document and the information requested, whereby we can make a determination whether you are organized and operated exclusively for religious, charitable, literary, scientific, or educational purposes within the meaning of section 501(c)(3) of the Code, you may submit a new application to the District Director, Internal Revenue Service, 300 N. Los Angeles Street, Los Angeles, California 90012. Supporting documents already furnished need not be resubmitted. However, you should attach the enclosed copy of this letter to your next application. [Emphasis added.]

1980 U.S. Tax Ct. LEXIS 134">*149 In response to the August 9, 1977, proposed adverse ruling letter, petitioner consulted an attorney who, on August 31, 1977, sent to the Internal Revenue Service a copy of the articles of incorporation of the organization entitled "The New Covenant Church in America," along with a short letter stating that the entity complied with the "organization test" for a section 501(c)(3) organization. That letter further stated that the New Covenant Church in America intended to affiliate with the International Federation of the Covenant People of Johannesburg, South Africa. Shortly thereafter, petitioner's attorney (who is also one of three directors of American New Covenant Church) informed respondent by a letter written on September 14, 1977, that the New Covenant Church in America had changed its name to "American New Covenant Church" and enclosed a copy of the articles of incorporation of American New Covenant Church, issued on September 12, 1977, by the secretary of state of the State of California. The articles of incorporation state that the corporation is organized pursuant to the General Nonprofit Corporation Law of the State of California. The articles, which are signed by Stark, 1980 U.S. Tax Ct. LEXIS 134">*150 as president of the corporation, make absolutely no reference that said entity is a successor corporation. Petitioner's counsel further advised respondent that petitioner had previously furnished all necessary information and that further delay in effecting consideration of the application was unwarranted. No application or supporting documentation was ever submitted to respondent to seek a determination that the entity entitled "American New Covenant Church" qualified as a section 501(c)(3) organization.

74 T.C. 293">*299 Respondent did not consider the materials received from American New Covenant Church as support for L.S.C.'s application for recognition of exemption, and on January 31, 1978, respondent issued a final adverse ruling to L.S.C. ⁴ Thereafter, a petition for declaratory judgment contesting respondent's final ruling letter issued to L.S.C. was filed with this Court on March 24, 1978; such petition was filed by the American New Covenant Church, a nonprofit corporation incorporated under the laws of the State of California on September 12, 1977.

1980 U.S. Tax Ct. LEXIS 134">*151 Respondent, pursuant to Rule 53, Tax Court Rules of Practice and Procedure, has moved to dismiss this case for lack of jurisdiction on the ground that the petition for declaratory judgment was not filed by a proper party. In support thereof, respondent contends the following: L.S.C., not American New Covenant Church, was the organization named in the adverse ruling letter of January 31, 1978. When L.S.C., an unincorporated organization, reorganized into a corporation entitled "American New Covenant Church," a new legal entity was created which was required to file an application for exemption in its own right. Respondent, following the procedure outlined in Rev. Rul. 67-390, 1967-2 C.B. 179, ⁵ based his final adverse ruling only on the operations and organization of the unincorporated organization L.S.C. and did not consider the representations and submissions of American New Covenant Church as support for L.S.C.'s application. Since American New Covenant Church was not the subject of respondent's final adverse ruling, it is not the proper party to contest the final adverse ruling letter issued to L.S.C. on January 31, 1978.

1980 U.S. Tax Ct. LEXIS 134">*152 Petitioner, in its memorandum in opposition to respondent's motion, maintains the following. Respondent knew that "the former Life Science Church (Chapter 669) was no longer a viable entity but had undergone a name change to its present name, American New Covenant Church." Accordingly, new "creating documents" (articles of incorporation) were furnished and petitioner reapplied relying on the supporting documentation 74 T.C. 293">*300 and the application previously submitted. Furthermore, "At no time did anyI.R.S. official suggest, hint, or otherwise imply that a new Form 1023 would be in order." Since respondent failed to notify petitioner that a new application should have been submitted, he should be estopped from making such an assertion now.

Initially, we find petitioner's estoppel claim that respondent never informed it to submit a new application is completely without merit. Respondent's proposed adverse ruling letter of August 9, 1977, explicitly instructed petitioner that the submission of a creating document and a new application was necessary before he could make a determination; that letter, quoted above, reads in salient part as follows:

When you are able to provide1980 U.S. Tax Ct. LEXIS 134">*153 a proper creating document and the information requested, whereby we can make a determination whether you are organized and operated exclusively for religious, charitable, literary, scientific, or educational purposes within the meaning of section 501(c)(3) of the Code, you may submit a new application to the District Director, Internal Revenue Service, 300 N. Los Angeles Street, Los Angeles, California 90012. Supporting documents already furnished need not be resubmitted. However, you should attach the enclosed copy of this letter to your next application. [Emphasis added.]

Having disposed of the estoppel claim, we must next decide whether this Court has jurisdiction to make a determination with respect to petitioner's status. Section 7428(a)⁶ confers jurisdiction on this Court to "make a declaration" with respect to the "initial qualification" of an organization as an organization described in section 501(c)(3) which is exempt from tax under 74 T.C. 293">*301 section 501(a). Petitioner, desiring to invoke this Court's jurisdiction, alleges that the application for tax-exempt status submitted by L.S.C. on October 18, 1976, was erroneously denied by respondent. We disagree. 1980 U.S. Tax Ct. LEXIS 134">*154

1980 U.S. Tax Ct. LEXIS 134">*155 Subsection (b) of section 7428 provides certain limitations on our jurisdiction for declaratory judgments relating to section 501(c)(3) status, as follows:

(b) Limitations. --

(1) Petitioner. -- A pleading may be filed under this section only by the organization the qualification or classification of which is at issue.

(2) Exhaustion of administrative remedies. -- A declaratory judgment or decree under this section shall not be issued in any proceeding unless the Tax Court * * * determines that the organization involved has exhausted administrative remedies available to it within the Internal Revenue Service. An organization requesting the determination of an issue referred to in subsection (a)(1) shall be deemed to have exhausted its administrative remedies with respect to a failure by the Secretary to make a determination with respect to such issue at the expiration of 270 days after the date on which the request for such determination was made if the organization has taken, in a timely manner, all reasonable steps to secure such determination.