Dog training club denied charitable exemption

Plain-English summary

A volunteer dog club applied for exemption under Section 501(c)(3). It conducted public hunt tests and trials, offered training and seminars, held club meetings, and stated that its activities served the recreational and social benefit of members. The IRS found that dog training, testing, and member recreation were substantial nonexempt purposes and that the club did not primarily educate individuals. It therefore denied exemption, and the determination became final after the club did not protest within 30 days.

Ruling snapshot

• Question: Did the dog training and testing club qualify for exemption under IRC § 501(c)(3)?
• Outcome: denied
• Key authorities: IRC § 501(c)(3); Treas. Reg. § 1.501(c)(3)-1; Rev. Rul. 71-421

Full text (IRS public release)

Department of the Treasury Date:
Internal Revenue Service 03/04/2024

IRS Box 2508

Cincinnati, OH 45201 Form you must file:

. , Tax years:
Release Number: 202422012

Release Date: 5/31/2024 Person to contact:
UIL Code: 501.00-00,
501.03-00, 501.03-30

Dear

This letter is our final determination that you don't qualify for exemption from federal income tax under Internal
Revenue Code (IRC) Section 501(a) as an organization described in IRC Section 501(c)(3). Recently, we sent
you a proposed adverse determination in response to your application. The proposed adverse determination
explained the facts, law, and basis for our conclusion, and it gave you 30 days to file a protest. Because we
didn't receive a protest within the required 30 days, the proposed determination is now final.

Because you don't qualify as a tax-exempt organization under IRC Section 501(c)(3), donors generally can't
deduct contributions to you under IRC Section 170.

We may notify the appropriate state officials of our determination, as required by IRC Section 6104(c), by
sending them a copy of this final letter along with the proposed determination letter.

You must file the federal income tax forms for the tax years shown above within 30 days from the date of this
letter unless you request an extension of time to file. For further instructions, forms, and information, visit
www.irs.gov.

We'll make this final adverse determination letter and the proposed adverse determination letter available for
public inspection after deleting certain identifying information, as required by IRC Section 6110. Read the
enclosed Letter 437, Notice of Intention to Disclose - Rulings, and review the two attached letters that show our
proposed deletions. If you disagree with our proposed deletions, follow the instructions in the Letter 437 on how
to notify us. If you agree with our deletions, you don't need to take any further action.

If you have questions about this letter, you can call the contact person shown above. If you have questions
about your federal income tax status and responsibilities, call our customer service number at 800-829-1040
(TTY 800-829-4933 for deaf or hard of hearing) or customer service for businesses at 800-829-4933.

Letter 4038 (Rev. 11-2021)
Catalog Number 47632S

Sincerely,

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements

Enclosures:

Letter 437

Redacted Letter 4034
Redacted Letter 4038

Letter 4038 (Rev. 11-2021)
Catalog Number 47632S

Department of the Treasury
Internal Revenue Service
Cincinnati, OH 45201
Date: 1/3/2024

Employer ID number:

Person to contact:

Name:
ID number:
Telephone:
Fax:
Legend: UIL:
C = Date 501.00-00
D = State 501.03-00
E = Organization 501.03-30
F = Name
H = Name
Dear

We considered your application for recognition of exemption from federal income tax under Internal Revenue
Code (IRC) Section 501(a). We determined that you don’t qualify for exemption under IRC Section 501(c)(3).
This letter explains the reasons for our conclusion. Please keep it for your records.

Issues
Do you qualify for exemption under IRC Section 501(c)(3)? No, for the reasons stated below.

Facts
You submitted Form 1023-EZ, Streamline Application for Recognition of Exemption Under Section 501(c)(3)
of the Internal Revenue Code.

You attest that you were incorporated on C, in the state of D. You attest that you have the necessary organizing
document, that your organizing document limits your purposes to one or more exempt purposes within the
meaning of Section 501 (c)(3), that your organizing document does not expressly empower you to engage in
activities, other than an insubstantial part, that are not in furtherance of one or more exempt purposes, and that
your organizing document contains the dissolution provision required under Section 501(c)(3).

You attest that you are organized and operated exclusively to further charitable purposes. You attest that you
have not conducted and will not conduct prohibited activities under Section 501(c)(3). Specifically, you attest
you will:

• Refrain from supporting or opposing candidates in political campaigns in any way
• Ensure that your net earnings do not inure in whole or in part to the benefit of private shareholders or
individuals

Letter 4034 (Rev. 01-2021)
Catalog Number 47628K

2

• Not further non-exempt purposes (such as purposes that benefit private interests) more than
insubstantially

• Not be organized or operated for the primary purpose of conducting a trade or business that is not related
to your exempt purpose(s)

• Not devote more than an insubstantial part of your activities attempting to influence legislation or, if you
made a Section 501(h) election, not normally make expenditures in excess of expenditure limitations
outlined in Section 501(h)

• Not provide commercial-type insurance as a substantial part of your activities

Form 1023-EZ states that your mission is to further the breeding and training of registered purebred H. Also,
you assist members by upholding the standards and assist members and the public in achieving these standards.

During review of your Form 1023-EZ, detailed information was requested supplemental to the above
attestations.

You state you are a licensed E club consisting of a group of volunteers who share their knowledge and time
with other dog owners and interested individuals who desire to train their H. You explained that all of your time
and your resources are spent on providing the training, testing, and other club activities.

You conduct hunt tests/trials open to the public and other H owners where participants pay fees. These fees are
determined by the expenses to provide and cover the costs of the tests/trials. Further, you offer H training, and
seminars related to training. Individual training is scheduled weekly based on the needs of members. Club
training days are held quarterly, and tests/trials are held bi-annually. Individual training, training days, and
tests/trials are conducted at members’ and guests’ properties. You also state you conduct monthly club meetings
at local commercial establishments. In addition, you provide exhibitions to groups, associations, nursing homes.
and youth clubs.

You state that all planned and scheduled activities are directed for the recreational and social benefit of your
members. You have no membership fees and membership is voluntary. You are supported by fees from hunts
and trials. You provide donations to F groups and your parent club scholarship fund.

Law

IRC Section 501(c)(3) provides, in part, for the exemption from federal income tax to organizations organized
and operated exclusively for charitable, religious, or educational purposes, where no part of the net earnings
inures to the benefit of any private shareholder or individual.

Treasury Regulation Section 1.501(c)(3)-1(a)(1) states that in order to qualify under IRC Section 501(c)(3), an
organization must be both organized and operated exclusively for one or more exempt purposes. If an
organization fails to meet either the organizational or operational test, it is not exempt.

Treas. Reg. Section 1.501(c)(3)-1(c)(1) states that an organization will be regarded as “operated exclusively”
for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of
such exempt purposes specified in IRC Section 501(c)(3). An organization will not be so regarded if more than
an insubstantial part of its activities is not in furtherance of an exempt purpose.

Letter 4034 (Rev. 01-2021)
Catalog Number 47628K

3

Revenue Ruling 71-421, 1971-2 C.B. 229, held that a dog club formed to promote the ownership and training of
purebred dogs which conduct obedience training classes didn’t qualify for exemption under IRC Section
501(c)(3).

In Better Business Bureau of Washington D.C., Inc. v. United States, 326 U.S. 279 (1945), the Supreme Court
held that the presence of a single non-exempt purpose, if substantial in nature, will destroy the exemption
regardless of the number or importance of truly exempt purposes.

In American Kennel Club, Inc. v. Hoey, 148 F.2d 920 (2d Cir. 1945), the court held that the taxpayer wasn’t
exempt from federal taxation under the predecessor to IRC Section 501(c)(3) because regulating the sport of
dog shows and field trials doesn’t further charitable, educational, or scientific purposes.

In Ann Arbor Dog Training Club, Inc. v. Commissioner, 74 T.C. 207 (1980), the court held that the training of
animals does not come within the meaning of “educational” as set forth in IRC Section 501(c)(3). The
organization held dog obedience training classes, awarded the dogs a degree after completion of the course and
also awarded them prizes at show events. While the owners of the dogs received some instruction as to the
training of the dogs, it was the dog that was the primary object of the training and evaluation.

Application of law

IRC Section 501(c)(3) sets forth two main tests for qualification of exempt status. As stated in Treas. Reg.
Section 1.501(c)(3)-1(a)(1), an organization must be both organized and operated exclusively for purposes
described in Section 501(c)(3). You fail the operational test.

You are not operated in accordance with Treas. Reg. Section 1.501(c)(3)-1(c)(1) because you are not operated
exclusively for exempt purposes. For example, you explained that all of your time and your resources are spent
on providing for H training, testing, and other club activities. You also stated that that all planned and scheduled
activities are directed for the recreational and social benefit of your members. This shows you are operated for
substantial social and recreational purposes which precludes exemption under IRC Section 501(c)(3).

You are like the organization described in Rev. Rul. 71-421 where, because the dogs are the primary focus of
your training, your training programs for dogs are not within the meaning of educational as defined in the
regulations.

Although you may conduct some activities that further IRC Section 501(c)(3) purposes, you conduct a
substantial amount of recreational and social activities that do not further Section 501(c)(3) purposes. Applying
Better Business Bureau, the presence of substantial non-exempt purposes destroys qualification.

Like the organizations described in American Kennel Club, Inc. and Ann Arbor Dog Training Club, Inc, you
primarily promote the training of registered purebred dogs. You do not exclusively provide for the education of
individuals. As a result, tax exemption under IRC Section 501(c)(3) is precluded.

Conclusion

Based on the information submitted, you have not shown that you meet the requirements for recognition of tax
exemption under IRC Section 501(c)(3). You are operating for substantial nonexempt recreational and social
purposes. Therefore, you fail to qualify for exemption under Section 501(c)(3).

Letter 4034 (Rev. 01-2021)
Catalog Number 47628K

If you agree

If you agree with our proposed adverse determination, you don’t need to do anything. If we don’t hear from
you within 30 days, we’ll issue a final adverse determination letter. That letter will provide information on
your income tax filing requirements.

If you don't agree
You have a right to protest if you don’t agree with our proposed adverse determination. To do so, send us a
protest within 30 days of the date of this letter. You must include:

* Your name, address, employer identification number (EIN), and a daytime phone number
* A statement of the facts, law, and arguments supporting your position
* A statement indicating whether you are requesting an Appeals Office conference

* The signature of an officer, director, trustee, or other official who is authorized to sign for the
organization or your authorized representative

* The following declaration:

For an officer, director, trustee, or other official who is authorized to sign for the organization:
Under penalties of perjury, I declare that I have examined this request, or this modification to the
request, including accompanying documents, and to the best of my knowledge and belief, the request
or the modification contains all relevant facts relating to the request, and such facts are true, correct,
and complete.

Your representative (attorney, certified public accountant, or other individual enrolled to practice before the
IRS) must file a Form 2848, Power of Attorney and Declaration of Representative, with us if they haven’t
already done so. You can find more information about representation in Publication 947, Practice Before the
IRS and Power of Attorney.

We'll review your protest statement and decide if you gave us a basis to reconsider our determination. If so,
we’ll continue to process your case considering the information you provided. If you haven’t given us a basis
for reconsideration, we’ll send your case to the Appeals Office and notify you. You can find more information
in Publication 892, How to Appeal an IRS Determination on Tax-Exempt Status.

If you don’t file a protest within 30 days, you can’t seek a declaratory judgment in court later because the
law requires that you use the IRC administrative process first (IRC Section 7428(b)(2)).

Where to send your protest
Send your protest, Form 2848, if applicable, and any supporting documents to the applicable address:

U.S. mail: Street address for delivery service:
Internal Revenue Service Internal Revenue Service

EO Determinations Quality Assurance EO Determinations Quality Assurance
Mail Stop 6403 550 Main Street, Mail Stop 6403

PO Box 2508 Cincinnati, OH 45202

Cincinnati, OH 45201

Letter 4034 (Rev. 01-2021)
Catalog Number 47628K

5

You can also fax your protest and supporting documents to the fax number listed at the top of this letter. If you
fax your statement, please contact the person listed at the top of this letter to confirm that they received it.

You can get the forms and publications mentioned in this letter by visiting our website at www.irs.gov/forms-
pubs or by calling 800-TAX-FORM (800-829-3676). If you have questions, you can contact the person listed at
the top of this letter.

Contacting the Taxpayer Advocate Service

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that can help protect your
taxpayer rights. TAS can offer you help if your tax problem is causing a hardship, or if you’ve tried but haven’t
been able to resolve your problem with the IRS. If you qualify for TAS assistance, which is always free, TAS
will do everything possible to help you. Visit www.taxpayeradvocate.irs.gov or call 877-777-4778.

Sincerely,

Stephen A. Martin

Director, Exempt Organizations
Rulings and Agreements

Letter 4034 (Rev. 01-2021)
Catalog Number 47628K