Milk Saving Starving Children Foundation loses tax-exempt status
Milk Saving Starving Children Foundation v. Commissioner, T.C. Memo. 2026-1, No. 13274-22X.
The Tax Court upheld the IRS’s revocation of a charity’s §501(c)(3) status after it stopped its stated charitable activity and primarily ran a café, rented property, and held fundraisers without using proceeds for charitable purposes.
Holding
The court granted summary judgment to the IRS and upheld revocation of the foundation’s §501(c)(3) tax-exempt status effective July 1, 2017, because the organization failed the operational test.
Why It Matters
§501(c)(3) status depends on what an organization actually does, not what it claims.
Running commercial activities is not fatal by itself, but funds must further exempt purposes.
Restarting minimal charitable activity after an audit begins does not cure years of noncompliance.
Failure to respond to an IRS summary judgment motion is often decisive.
Timeline
2001–2002: Foundation incorporated. IRS recognizes §501(c)(3) status.
2003 onward: The Foundation operates Café Beignet.
2011: Powdered milk donations cease.
2018: IRS audits the foundation’s fiscal …
