The IRS revoked the tax-exempt status under IRC Sec. 501(c)(3) of a foundation that claimed to support the descendants of Hungarian immigrants in the performing arts. Based upon audit findings, the IRS determined the foundation awarded scholarships to direct descendents of the founder and was organized and operated exclusively for private benefit. Furthermore, the IRS determined that the revocation of exempt status should apply retroactively “because it omitted and misstated material facts in its application for exemption.” The foundation argued that it was organized for tax-exempt purposes, but failed to prove that it operated exclusively for this purpose. The District Court upheld the retroactive revocation determining that the foundation (1) operated in a manner inconsistent with the exempt purpose as stated in its application, and (2) had made material misrepresentations of fact in the application. Educational Assistance Foundation for the Descendants of Hungarian Immigrants in the Performing Arts, Inc. (DDC No. 1:11-cv-01573.)