Political coalition denied exemption under Section 501(c)(3)

Plain-English summary

The IRS denied tax-exempt status under IRC Section 501(c)(3) to an organization formed to unite political parties and oppose an incumbent president in upcoming elections. The organization planned to mobilize citizens and civil-society groups, but said its funds would be distributed to political party campaigns and related activities. The IRS concluded that the organization was an action organization because its sole objective was to contest an election, and that its activities served the private interests of partisan entities and candidates. The proposed adverse determination became final after the organization did not protest within 30 days.

Ruling snapshot

• Question: Did the proposed political coalition qualify for exemption under IRC Section 501(c)(3)?
• Outcome: Denied
• Key authorities: IRC §§ 170, 501(c)(3), 6104(c), 6110, 7428(b)(2); Treas. Reg. § 1.501(c)(3)-1; Rev. Rul. 66-256; Rev. Rul. 2007-41; American Campaign Academy v. Commissioner, 92 T.C. 1053 (1989)

Full text (IRS public release)

Department of the Treasury Date:
Internal Revenue Service 05/29/2026
Tax Exempt and Government Entities Employer ID number:

Form you must file:

Tax years:

Release Number: 202634016
Release Date: 8/21/26
ID number:

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

Date:
03/30/2026

Employer ID number:

Person to contact:

Name
ID number:
Telephone
Fax:
Legend: UIL:
B = Date 501.03-00
C = State 501.38-01
D = Country
E = Name
F = Country
G = Continent

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 formed on B in 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 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 IRC 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:

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

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

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• 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

You were created with the sole objective of bringing together political parties aligned with your aims and aspirations to contest against the incumbent president of D, E, in the upcoming presidential elections. You indicate that President E was elected previously with a similar arrangement.

You will facilitate a coalition of opposition political parties, stakeholders and aspiring presidential candidates to contest the upcoming elections. You intend to mobilize citizens, friends of D, and good governance advocacy groups across all sectors of civil society. Your goal is to encourage system change, institutional and constitutional reform, poverty alleviation, social justice, and anti-corruption measures.

You are solely focused on convincing political parties aligned with your mission to come together under one coalition. You will collaborate with various civil society groups to work with politicians and to protect your investment by ensuring your agenda is fulfilled. You have no political activities in F or G. All of your activities will be conducted in D, except for some interviews with online networks.

You currently have no revenue to report and have no estimate of how much you will raise in the next few months. Your members are all citizens of D. You will have an annual membership fee for all members of the organization. Your funds will wholly and solely be disbursed to political party campaigns and related activities in D.

Law

IRC Section 501(c)(3) provides for the exemption from federal income tax of organizations organized and operated exclusively for charitable purposes, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting to influence legislation, and which do not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office.

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(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 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(c)(3)(i) provides that an organization is not operated exclusively for one or more exempt purposes if it is an ‘action’ organization.

Treas. Reg. Section 1.501(c)(3)-1(c)(3)(iii) provides that an organization is an ‘action’ organization, and thus not operated exclusively for educational purposes, if it participates or intervenes, directly or indirectly, in any political campaign on behalf of or in opposition to any candidate for public office. Activities which constitute participation or intervention in a political campaign on behalf of or in opposition to a candidate include, but are not limited to, the publication or distribution of written or printed statements or the making of oral statements on behalf of or in opposition to such a candidate.

Revenue Ruling 66-256, 1966-2 C.B. 210, held that a nonprofit organization formed to conduct public forums at which lectures and debates on social, political, and international matters are presented qualified for exemption from federal income tax under IRC Section 501(c)(3).

Rev. Rul. 2007-41, 2007-1 C.B. 1421 (2007), provides twenty-one examples illustrating the application of the facts and circumstances to be considered to determine whether an organization exempt under IRC Section 501(c)(3) has participated in, or intervened in, any political campaign on behalf of (or in opposition to) any candidate for public office.

In American Campaign Academy v. Commissioner, 92 T.C. 1053 (1989), the Tax Court held that the organization conducted its activities to serve the private interests of partisan entities and candidates and therefore did not qualify for exemption under IRC Section 501(c)(3). The organization’s primary activity was to operate a school to train individuals for careers as political campaign professionals. The school was an outgrowth of a program separated by a partisan congressional committee to train candidates and subsequently place campaign professionals in partisan campaigns. The committee contributed physical assets to the school, faculty members, directors, and was exclusively funded by a partisan trust.

Application of law

IRC Section 501(c)(3) and Treas. Reg. Section 1.501(c)(3)-1(a)(1) set forth two main tests to qualify for exempt status. An organization must be both organized and operated exclusively for purposes described in Section 501(c)(3). Based on the information provided, you fail to meet the operational test.

You were created with the sole objective of bringing together political parties aligned with your aims and aspirations in to contest against the incumbent president of D, E. You will facilitate a coalition of opposition political parties, stakeholders and aspiring presidential candidates to contest the upcoming elections. Treas. Reg. Section 1.501(c)(3)-1(c)(3)(iii) defines an ‘action’ organization as an organization that participates or intervenes, directly or indirectly, in any political campaign on behalf of or in opposition to any candidate for public office. By operating solely to contest an election, you are an ‘action’ organization. As described in Treas. Reg. Section 1.501(c)(3)-1(c)(3)(i), an organization is not operated exclusively for one or more exempt purposes described in Treas. Reg. Section 1.501(c)(3)-1(c)(1) if it is an ‘action’ organization.

You are unlike the organization described in Rev. Rul. 66-256 because you are not conducting educational activities similar to public forums. Your sole purpose is contesting the incumbent president of D. You have not described any educational programs or activities associated with your sole purpose. Your sole intention is the removal of E from the presidency, which is not an exempt purposes.

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

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You are similar to the organizations described in Rev. Rul. 2007-41, Situations 4, 6, and 15. Your sole purpose and all of your activities are centered around contesting E in the upcoming elections in D. Your activities coincide with the election in which E is a candidate, are not part of an ongoing series of advocacy communications, are not timed to coincide with a non-election event such as a legislative vote or other major legislative action, and identify that your intent is to contest E in the upcoming election. Like the organization described in American Campaign Academy, these activities serve the private interests of those that oppose E and wish to contest him in the upcoming elections. Your partisan activities serve the private interests of the partisan entities and candidates running against E, and you have not established that these candidates and entities are non-select members of a charitable class.

Conclusion

You are not operated exclusively for exempt purposes within the meaning of IRC Section 501(c)(3). You were created with the sole objective of bringing together political parties aligned with your aims and aspirations in to contest against the incumbent president of D, E. Intervening in political campaigns on behalf of or opposition of any candidate is expressly prohibited under Section 501(c)(3). Therefore, you fail to 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