Condominium landscaping primarily benefited unit owners

Plain-English summary

A condominium homeowners association applied for recognition as a charity under IRC § 501(c)(3). It collected monthly dues to maintain landscaping and pay expenses for common property next to a public road and golf course. The association argued that the area included access to a golf-course and utility easement, and that the public could access the golf course when it was closed. The IRS found that maintaining the condominium's common area primarily benefited the unit owners by preserving property they otherwise would have to maintain themselves. Any benefit to the general public was incidental to that private benefit. The IRS denied exemption, and the determination became final after no timely protest.

Ruling snapshot

• Question: Does maintaining condominium landscaping and access easements serve a public charitable interest under IRC § 501(c)(3)?
• Outcome: Denied
• Key authorities: IRC § 501(c)(3); Treas. Reg. § 1.501(c)(3)-1(a), (c), (d); Rev. Rul. 75-286; Better Business Bureau v. United States

Full text (IRS public release)

Department of the Treasury Date:
Internal Revenue Service 07/11/2025
IRS Tax Exempt and Government Entities Employer ID number:

Form you must file:
Tax years:

Person to contact:

Release Number: 202540009
Release Date: 10/3/2025
UIL Code: 501.00-00, 501.03-00, 501.33-00

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

Date:
05/13/2025

Employer ID number:

Person to contact:

Name
ID number
Telephone
Fax:
Legend: UIL:
B = Date 501.00-00
C = State 501.03-00
D = Address 501.33-00
E = Number
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 attested that you were formed as a corporation on B, in the state of C. You attested 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 attested that you are organized and operated exclusively to further charitable purposes. You attested that
you have not conducted and will not conduct prohibited activities under IRC Section 501(c)(3). Specifically,
you attested you will:

• Refrain from supporting or opposing candidates in political campaigns in any way

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

2

• 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.

Your mission on the Form 1023-EZ states that you maintain landscaping and public access of D as a public
easement.

During review of your Form 1023-EZ, detailed information was subsequently requested. You responded stating
that you are a homeowners association comprised of E units within a condominium. You provided a map that
shows that your common area is adjacent to a public road and golf course.

You are required by the country club POA, of which you are a part of, to provide landscaping to your common
area and access via your common area to the golf course and utility easement that runs between your common
area and the golf course. You included a picture of a sign that shows that the golf course is open for public
access when the golf course is not open.

Your activities consist of maintaining the landscaping of your area and reviewing legislation that might impact
you.

You are funded each month by membership dues while your expenses consist of paying for landscaping
services, incidentals and property taxes.

Law

IRC Section 501(c)(3) provides for the recognition of exemption of organizations that are organized and
operated exclusively for religious, charitable, 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.

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
operational test, it is not exempt.

Treas. Reg. Section 1.501(c)(3)-1(c)(1) provides that an organization will be regarded as operated exclusively
for one or more exempt purposes only if it engages primarily in activities that 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.

Treas. Reg. Section 1.501(c)(3)-1(d)(1)(ii) provides that an organization is not organized or operated exclusively
for one or more exempt purposes unless it serves a public rather than a private interest.

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

Revenue Ruling 75-286, 1975-2 C.B. 210, held that an organization formed by the residents of a city block to
beautify and preserve that block did not qualify for exemption under IRC Section 501(c)(3). The restricted
nature of the organization's membership and the limited area in which its improvements were made indicated
that the organization was organized and operated to serve private interests by enhancing the value of its
members’ property rights.

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 claim for
exemption regardless of the number or importance of truly exempt purposes.

Application of law
You are not described in IRC Section 501(c)(3) because you don't meet the operational test outlined in Treas.
Reg. Section 1.501(c)(3)-1(a)(1) as explained below.

You are not operating in accordance with Treas. Reg. Section 1.501(c)(3)-1(c)(1) because you are operated for a
substantial non-exempt purpose. You are operated to maintain your condominium landscaping and pay your
property tax. Operating a homeowners association does not further an exempt purpose described in Section
501(c)(3). Instead, your primary activity of collecting dues from owners to maintain the common areas provide
substantial benefits to private individuals instead of the general public. Therefore, you are not operating
exclusively for exempt purposes and fail the operational test.

You are similar to the organization in Revenue Ruling 75-286 in that you were formed to provide benefits to
your members. Your activity is to maintain the common area that your members share. Maintaining an area that
would otherwise have to be maintained by your individual members serves private interests. Treas. Reg. Section
1.501(c)(3)-1(d)(1)(ii) provides that an organization is not organized or operated exclusively for one or more
exempt purposes unless it serves a public rather than a private interest.

Like the organization in Better Business Bureau, you have a substantial non-exempt purpose to maintain the
common areas primarily enjoyed by your members. Therefore you are not operating exclusively for charitable
purposes under IRC Section 501(c)(3).

Your position
You submitted a copy of the first 6 pages of your Declaration of Condominium and of Covenants, Conditions
and Restrictions for G. The declaration details the easements placed on the common area that you maintain.

Our response to your position

The additional information provided does not change our position that you are not operated exclusively for
exempt purposes. The facts show that you operate to serve private interests. Any benefits to the general public
would be incidental to your private interests.

Conclusion

Based on the information submitted, you are not operated exclusively for charitable purposes described in IRC
Section 501(c)(3) because you are operated for a substantial non-exempt purpose. Specifically, your lawn
maintenance activities do not exclusively further a charitable purpose. You are primarily operated to further the

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

4

private interests of your members. Accordingly, you do not qualify for exemption as an organization described
in IRC 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.

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:

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

5

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.

Sincerely,

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements

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