501(c)(3) exemption denied to an off-road motorsport event organization

Plain-English summary

An organization applied for tax-exempt charitable status under Section 501(c)(3), but the IRS denied it. The group's sole activity was an annual off-road vehicle event: a multi-day gathering of enthusiasts with a mixer, trail ride, races, a raffle, a parade, and an awards ceremony. It raised money through the event and gave some proceeds to the local township. To be exempt, an organization must be operated exclusively for charitable, educational, or other exempt purposes, and having even one substantial non-exempt purpose defeats exemption. The IRS found this group failed the operational test because nearly all of its activities were recreational and social. It also did not qualify as a "qualified amateur sports organization" under § 501(j), because it was not operated primarily to foster or develop athletes for national or international competition; participants were riding and racing for their own enjoyment, and it was open to all ages with no educational programming. This is the final adverse determination: the applicant did not protest the earlier proposed denial within 30 days, so the denial became final. As a result, donors generally cannot deduct contributions to the organization under § 170. The document reproduces both the final adverse letter (Letter 4038) and the enclosed proposed adverse letter (Letter 4034) that lays out the full reasoning.

Ruling snapshot

• Question: Does an organization whose sole activity is an annual off-road motorsport event qualify for exemption under § 501(c)(3)?
• Outcome: Denied (fails the operational test; not a qualified amateur sports organization under § 501(j)); final adverse determination.
• Key authorities: IRC § 501(c)(3), § 501(j); IRC § 170; Treas. Reg. § 1.501(c)(3)-1(a)(1) and (c)(1); Rev. Rul. 70-4; Rev. Rul. 80-215; Better Business Bureau of Washington, D.C. v. United States, 326 U.S. 279 (1945); The Schoger Foundation v. Commissioner, 76 T.C. 380 (1981); St. Louis Science Fiction, Ltd. v. Commissioner, 49 TCM 1126 (1985).

Full text (IRS public release)

Department of the Treasury Date:
Internal Revenue Service 11/12/2025
IRS Tax Exempt and Government Entities Employer ID number:

Form you must file:

Tax years:
Release Number: 202606007
Person to contact:
Release Date: 2/6/2026 Name:
UIL Code: 501.03-00, 501.03-30 ID number:
Telephone:
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 476328

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 476328

Department of the Treasury
Internal Revenue Service

Date:
09/17/2025
Employer ID number:

Person to contact:

Name:
ID number:
Telephone:
Fax
Legend: UIL:
B = Date 501.03-00
C = State 501.03-30
D = Vehicle
E = Event
F = Holiday
G = Vehicle

H = Location

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 incorporated on B, in the state of C. 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

e 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)

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

You state you raise money through an annual off-road D event. You use those funds to help further the sport by
helping young and new riders. Also, using the funds to help the local and D community when needed.

Detailed information was subsequently requested. You currently hold one event each year called E. It is held the
weekend after F each year and is a large gathering of G enthusiasts held in H each year. Your E includes a
mixer, a trail ride, races, a raffle, a parade, and an awards ceremony for G enthusiasts. Proceeds from your raffle
are used to put on the event the following year and are donated to the local township. Your E is your sole
activity.

You have provided no evidence that your activities further educational purposes or foster national or
international amateur sports competition.

Law

IRC Section 501(c)(3) provides for the recognition of exemption of organizations that are organized and
operated exclusively for charitable, educational, or other enumerated 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) provides that an organization which fosters national or international amateur sports
competition, but whose activities also involve the provision of athletic facilities or equipment, may still qualify
for exemption under Section 501(c)(3) if the organization is considered a "qualified amateur sports
organization" under Section 501(j)(2). For purposes of this subsection, the term "qualified amateur sports
organization" means any organization organized and operated exclusively to foster national or international
amateur sports competition if such organization is also organized and operated primarily to conduct national or
international competition in sports or to support and develop amateur athletes for national or international
competition in sports.

Treasury Regulation Section 1.501(c)(3)-1(a)(1) provides that, 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(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 which accomplish one or more of

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

3

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 70-4, 1970-1 C.B. 126, describes an organization engaged in promoting and regulating a sport
for amateurs. The organization's purposes were to promote the health of the general public by encouraging all
persons to improve their physical condition and fostering public interest in a particular sport. Its activities were
directed toward promoting sport tournaments, exhibitions and holding instructive clinics. The organization did
not qualify for exemption under IRC Section 501(c)(3).

Rev. Rul. 80-215, 1980-2 C.B. 174, held that an otherwise qualifying organization that is formed to develop,
promote, and regulate a sport for individuals under 18 years of age by organizing local and statewide
competitions, promulgating rules, organizing officials, presenting seminars, distributing a newsletter, and
otherwise encouraging growth of the sport qualifies 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 a claim for

exemption regardless of the number of important truly exempt purposes.

In The Schoger Foundation v. Commissioner, 76 T.C. 380 (1981), the court held that an organization operating
a religious retreat facility that made available to its guests extensive religious, social, and recreational activities
didn't qualify for exemption under IRC Section 501(c)(3) because it failed to show that the retreat facility was
operated exclusively for religious purposes. The record didn't show the extent to which the guests participated
in any of the activities, religious or otherwise.

In St. Louis Science Fiction, Ltd. v. Commissioner, 49 TCM 1126, 1985-162, the Tax Court considered the
annual convention of a science fiction organization. It held that while the conventions may have provided some
educational benefit to some of the individuals involved, its overall agenda was not exclusively educational. A
substantial portion of convention affairs were social and recreational in nature, and exemption under IRC
Section 501(c)(3) wasn't warranted.

Application of law

An organization can be recognized as exempt under IRC Section 501(c)(3) only if it shows that it is both
organized and operated exclusively for charitable, educational, or other exempt purposes. If an organization
fails to meet either the organizational test or the operational test, it is not exempt as stated in Treas. Reg. Section
1.501(c)(3)-1(a)(1). You do not meet the requirements for recognition of tax exemption under Section 501(c)(3)
because you do not meet the operational test for exemption.

You are not a qualified amateur sports organization, as described in IRC Section 501(j)(2), because you are not
operated primarily to foster national or international amateur sports competition, or support and develop
amateur athletes for national or international competition in sports. Rather, the persons involved in your
activities are participating in a races and rides for their own enjoyment and recreation. You do not have any
special requirements to participate in your activities, and have not described any educational programming at
your E. Thus, you are not an amateur sports organization as described in Section 501(j).

You are not operated exclusively for one or more exempt purposes as required by Treas. Reg. Section
1.501(c)(3)-1(c)(1), because substantially all of your activities are recreational and social in nature. While you

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

4

state that you intend to raise funds for charitable purposes, you have a substantial social purpose which
precludes exemption under IRC Section 501(c)(3).

You are like the organization described in Rev. Rul. 70-4 because you conduct recreational activities for the
general public rather than providing education with the goal of improving and developing the capabilities of
amateur G participants. You are also unlike the organization described in Rev. Rul. 80-215 because your G
activities are open to all ages rather than limited to those under the age of 18.

Similar to the organizations described in Schoger Foundation and St. Louis Science Fiction, while a portion of
your activities are charitable in nature, nearly all of your activities further non-exempt social and recreational
purposes. Like the organization in Better Business Bureau, you have a substantial non-exempt purpose and are
therefore not operating exclusively for exempt purposes under Section 501(c)(3).

Conclusion

Based on the information submitted, you do not meet the requirements for tax exemption under IRC Section
501(c)(3). You do not meet the operational test because you operate for substantial non-exempt recreational and
social purposes. Therefore, 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.

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

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

5

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.

Sincerely,

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements

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