Adult recreational soccer league denied exemption

Plain-English summary

An adult soccer league applied for exemption under IRC § 501(c)(3). It charged local teams registration fees and used the money to secure fields, referees, and other items needed for recreational games. The league provided no educational coaching, did not develop athletes for national or international competition, and limited participation to member teams of adult men. The IRS also found that the league's constitution did not adequately limit its purposes or dedicate its remaining assets to exempt purposes. Because the league failed both the organizational and operational tests, the IRS denied exemption.

Ruling snapshot

• Question: Does a local adult recreational soccer league with no coaching or national or international competition qualify under IRC § 501(c)(3)?
• Outcome: Denied because the league failed the organizational test and operated for a substantial recreational purpose
• Key authorities: IRC §§ 170, 501(c)(3), 501(j), 6104(c), 6110, 7428(b)(2); Treas. Reg. §§ 1.501(c)(3)-1(a)(1), 1.501(c)(3)-1(b)(1)(i), 1.501(c)(3)-1(c)(1); Rev. Ruls. 64-275, 65-2, 77-365, 80-215; Media Sports League, Inc. v. Commissioner

Full text (IRS public release)

Department of the Treasury Date:

Internal Revenue Service 05/13/2025

Tax Exempt and Government Entities Employer ID number:
P.O. Box 2508

Cincinnati, OH 45201 Person to contact:

Release Number: 202532015
Release Date: 8/8/2025
UIL Code: 501.03-00, 501.03-04

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
Letter 4038

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

Department of the Treasury
Internal Revenue Service
PO Box 2508
Cincinnati, OH 45201

Date:

02/27/2025
Employer ID number:

Person to contact:

Name:
ID number:
Telephone:
Fax:

Legend: UIL:
X = Date 501.03-00
Y = State 501.03-04
Z = sport league
S = Date
V = Months

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, Streamlined Application for Recognition of Exemption Under Section 501(c)(3)
of the Internal Revenue Code.

You attest that you were formed on X, in the state of Y. 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 the IRC 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 IRC Section 501(c)(3). Specifically, you
attest you will:

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

2

• 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

• 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

On your Form 1023-EZ, you stated that you are a Z that organizes games in your community.

Detailed information was subsequently requested. Your Constitution shows you adopted it on S. Your
Constitution states you are formed as a charitable organization with the objective to foster brotherhood and
community through the game of soccer. Moreover, your Constitution states upon dissolution of your
organization the remaining assets shall be turned over to any charity as approved by your Advisory Board.

You facilitate friendly soccer games between V every year. Local soccer teams pay your organization a
registration fee. With the registration fee your organization secures fields, referees and other items required for
local soccer teams to play recreational soccer. You merely require teams to be local, males over the age of 18,
and pay the registration fee. You attest you do not foster national or international amateur sports and are
intended for local teams for recreational soccer. Also, you attest you provide no educational coaching, and only
member teams are eligible to participate.

Law

Internal Revenue Code Section 501(c)(3) provides for the recognition of exemption of organizations that are
organized and operated exclusively for charitable, educational, religious, or other purposes as specified in the
statute. No part of the net earnings may inure to the benefit of any private shareholder or individual.

IRC Section 501(j)(1) provides generally that a “qualified amateur sports organization” that otherwise satisfies
the requirements of Section 501(c)(3) will qualify as exempt regardless of whether it provides athletic facilities
or equipment and regardless of whether its membership is local or regional in nature.

IRC Section 501(j)(2) defines a “qualified amateur sports organization” as an organization organized and
operated primarily to conduct or to support and develop amateur athletes for national or international
competition in sports.

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

Treas. Reg. Section 1.501(c)(3)-1(b)(1)(i) states an organization is organized exclusively for one or more

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

3

exempt purposes. The organization's purposes, as stated in its organizational document, may be as broad as, or
more specific than, the purposes stated in IRC Section 501(c)(3).

Treas. Reg. Section 1.501(c)(3)-1(c)(1) states 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.

Revenue Ruling 64-275, 1964-2 C.B. 142 held that an organization formed for the purpose of training gifted
adults in the techniques of racing sailboats, and thereby improving the caliber of athletes representing the
United States in Olympic and Pan-American games, qualifies for exemption as educational under IRC Section
501(c)(3).

Rev. Rul. 65-2, 1965-1 C.B. 227 describe an organization that is organized for the purpose of teaching sport to
children under the age of 18. This organization held clinics by qualified instructions. This organization was
recognized as exempt under IRC 501(c)(3) as exclusively charitable and educational.

Rev. Rul. 77-365, 1977-2 C.B. 192 held that an organization formed to conduct clinics, workshops, lessons and
seminars at local parks and other recreational areas to instruct and educate individuals in a sport may qualify for
exemption under IRC Section 501(c)(3).

Rev. Rul. 80-215, 1980-2 C.B. 174 describe an organization formed to develop, promote, and regulate a sport
for youth under the ages of 18. Additionally, it promulgated rules, organized officials, and presented seminars
for players and coaches. This organization was deemed to combat juvenile delinquency by providing
recreational activities to young people, a charitable purpose described in IRC Section 501(c)(3).

In Media Sports League, Inc. v. Commissioner, T.C. Memo 1986-568 (1986), the court ruled that an
organization that sponsored sports competitions for adults in the community was not exempt under IRC Section
501(c)(3). The court determined that the organization had a substantial nonexempt purpose of promoting social
and recreational activities.

Application of law

IRC Section 501(c)(3) sets forth two main tests for an organization to be recognized as exempt. An organization
must be both organized and operated exclusively for purposes described in Section 501(c)(3) as specified in
Treas. Reg. Section 1.501(c)(3)-1(a)(1). You fail both tests.

Your Constitution states you formed as a charitable, non-profit organization with the objective of fostering
brotherhood and community through the game of soccer. Because your Articles of Incorporation do not limit
your purposes to those described in Treas. Reg. Section 1.501(c)(3)-1(b)(1)(i), you fail the organizational test
under IRC Section 501(c)(3).

You do not meet the operational test under IRC 501(c)(3) because you are not operated exclusively for exempt
purposes as required by Treas. Reg. Section 1.501(c)(3)-1(c)(1) as explained below.

An organization conducting a sport for adults may qualify for exemption under IRC Section 501(c)(3) if its
activities are directed towards the instruction of teaching of a sport as in Rev. Rul. 64-275 and Rev. Rul. 77-

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

4

365. But unlike those organizations you are not providing training to prepare individuals for national or
     international competitions. You only provide a place to play, referee and other miscellaneous services required
     to play recreational soccer. You provide no instructional training to any individuals.

An organization directing its activities to youth participants under the age of 18 may qualify for exemption
under IRC Section 501(c)(3). You are unlike the organizations describe in Rev. Rul. 65-2 and Rev. Rul. 80-215
because you direct 100% of your activities to adults over the age of 18. You are similar to the organization in
Media Sports League, Inc. v. Commissioner that focused its recreational activities towards adults and was
denied exemption under Section 501(c)(3).

Finally, you are not participating in any national or international competitions or developing athletes to
participate in these amateur competitions. Only organizations whose primary purpose is to support the
development of amateur athletes qualifies for exemption under IRC Section 501(j). You do not train athletes,
and those individuals participating in the soccer games are not required to have a certain skill level. Your
primary purpose is to provide an environment for individuals to play recreation soccer. Therefore, because your
league play is local and primarily recreational in nature you do not meet the requirements for

an amateur athletic organization that would qualify under Section 501(j)(1) or 501(j)(2)

Conclusion

You do not meet the organizational test because your organizing document does not limit your purposes to
those in IRC Section 501(c)(3) or dedicate remaining assets upon dissolution to one or more exempt purposes
described in Section 501(c)(3). You also do not meet the operational test because your social activities are not
described in Section 501(c)(3). Accordingly, you do not qualify for exemption under Section 501(c)(3).

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.

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

5

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

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.

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

6

Sincerely,

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements

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