August 10, 2000 | Read Time: 1 minute
By JENNIFER MOORE
The U.S. Tax Court has ruled that a non-profit organization set up to audit structural steel fabricators to determine whether they meet industry standards has failed to qualify as a charitable group under federal law.
The organization, Quality Auditing Company, based in Bristol, Va., was started in 1995 largely in response to quality concerns raised by the American Institute of Steel Construction.
The inspection group had argued that it qualified for charity status because its work “both lessens the burdens of government and encourages the safe construction of buildings and bridges for the benefit of the general public,” according to the ruling.
The Internal Revenue Service, however, rejected the Quality Auditing Company’s application for charitable status because it said that a substantial portion of the group’s activities was aimed at furthering the private interests of the American Institute of Steel Construction and steel manufacturing companies rather than those of the general public.
The Tax Court sided with the I.R.S., ruling that Quality Auditing Company’s mission and activities did not qualify it for charity status.
“There is no indication in the record that governmental units consider it their burden to inspect or certify the quality control procedures in place in the facilities of private fabricators,” the court said.
It added:”The quality inspection and certification activities here are not part of a legislated governmental program, are not the result of an express governmental delegation of function, and do not seek to enforce governmentally established standards or guidelines.”
The full text of the ruling — Quality Auditing Company v. Commissioner of Internal Revenue, 114 T.C. No. 31 — is available on the court’s Web site at http://www.ustaxcourt.gov.
