IRS Published Taxpayer Determination Letter 202627018

Private letter rulings and published taxpayer determination letters. Native document type is retained separately; a determination letter is not labeled a private letter ruling. These taxpayer-specific releases cannot be used or cited as precedent under 26 USC 6110(k)(3); applicability and current legal force are not independently certified. Keep repeated UILC subjects attached to one actual numbered document. Native kind: determination letter; this is not a private letter ruling.

Department of the Treasury
Internal Revenue Service
Tax Exempt and Government Entities

IRS

Release Number: 202627018

Release Date: 7/2/26
UIL Code: 501.04-00. 501.04-07

Date:

04/08/2026

Employer ID number:

Form you must file:

1120

Tax years:
Ail

Person to contact:
Name:

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)(4). 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.

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.

Sincerely.

Enclosures:
Letter 437
Redacted Letter 4034
Redacted Letter 4038

Stephen A. Martin
Director. Exempt Organizations
Rulings and Agreements

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Department of the Treasury
Internal Revenue Service

IRS

Date:
02/17/2026

Employer ID number:

Person to contact:

Name:

ID number:

Telephone:

Fax:

Legend:

B = Date

C = State

D = Number

UIL:

501.04-00

501.04-07

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)(4).
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)(4)? No, for the reasons stated below.

# Facts

You formed as a trust on B, in the state of C. Your trust document states that you are formed as a Unit Owners
organization established to manage and regulate the condominium.

You state that you are a homeowners' association formed to collect fees to fund master insurance, snow
removal, and other community activities. You maintain a shared parking driveway, outside fences, exteriors of
buildings, and outside shared landscaping. You hire vendors to conduct these activities. You are entirely funded
by dues and assessments from homeowners in the condominium.

You enforce rules and regulations on the condominium You restrict your facilities and common areas from
public access and use. You do not allow any public events and state that this is private property accessible only
to the owners of the D townhomes and their guests.

# Law

IRC Section 501(c)(4) provides for the exemption from federal income tax of organizations not organized for
profit but operated exclusively for the promotion of social welfare.

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Treasury Regulation Section 1.501(c)(4)-1(a)(1) states that an organization may be exempt if it is not organized
or operated for profit and it is operated exclusively for the promotion of social welfare.

Treasury Regulation Section 1.501(c)(4)-1(a)(2)(i) provides that an organization is operated exclusively for the
promotion of social welfare if it is primarily engaged in promoting in some way the common good and general
welfare of the people of the community. An organization embraced within IRC Section 501(c)(4) is one that is
operated primarily for the purpose of bringing about civic betterments and social improvements.

Revenue Ruling 69-280, 1969-1 C.B. 152, held that a nonprofit organization formed to provide maintenance of
exterior walls and roofs of homes of members who own houses in a development is not exempt as a social
welfare organization under Section 501(c)(4). The organization in Rev. Rul. 69-280 was a nonprofit
membership corporation formed to provide services for the homeowners in a housing development. The
services consisted of painting exterior walls and repairing roofs. If a person purchased a unit in the housing
development, he was required to become a member of the organization. The organization was supported
entirely by annual dues charged to members. The dues were based on the estimated expenses of the organization
plus an amount for reserves to cover large expenditures, such as replacement of roofs. The Service concluded
that this organization was not exempt because it performed services that its members would otherwise have to
provide for themselves. Therefore, the organization was operated primarily for the private benefit of members
and not operated primarily for the common good and general welfare of the people of the community.

Rev. Rul. 72-102, 1972-1 C.B. 149, found that a nonprofit organization formed to preserve the appearance of a
housing development and to maintain streets, sidewalks, and common areas for use of the resident was exempt
under IRC Section 501(c)(4). It stated that by administering and enforcing covenants, and owning and
maintaining certain non-residential, non-commercial properties of the type normally owned and maintained by
municipal governments, the organization served the common good and the general welfare of the people of the
entire development.

Rev. Rul. 74-99, 1974-1 C.B. 131, modified Rev. Rul. 72-102 and clarifies the circumstances under which a
homeowners' organization may qualify for exemption under IRC Section 501(c)(4). Several factors lead to the
prima facie presumption that homeowners' associations are essentially and primarily formed and operated for
the individual business or personal benefit of their members, and, as such, do not qualify for exemption under
Section 501(c)(4). The ruling adds, in addition to otherwise qualifying for exemption under IRC Section
501(c)(4), the organization must satisfy the following requirements: (1) it must serve a "community" which
bears a reasonable recognizable relationship to an area ordinarily identified as governmental; (2) it must not
conduct activities directed to the exterior maintenance of private residences, and (3) the common areas or
facilities it owns and maintains must be for the use and enjoyment of the general public.

Rev. Rul. 80-63, 1980-1 C.B. 116, clarified Rev. Rul. 74-99 by providing answers to specific questions as to
whether the conduct of certain activities will affect the exempt status under IRC Section 501(c)(4) of otherwise
qualifying homeowners' associations. The ruling states, in relevant part, that: 1) the term 'community' does not
embrace a minimum area or a certain number of homeowners; and 2) a homeowners' association, which
represents an area that is not a community may not qualify for exemption if it restricts the use of its common
areas and recreational facilities to only members of the association.

In Lake Petersburg Association v. Commissioner, T.C. Memo 1974-55; 33 T.C.M. (CCH) 259 (T.C. 1974), an
organization constructed a man-made lake with funds received by it from its members. In return for a

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membership fee, each member became entitled to lease lots near the lake, for which each member was required
to pay a lot assessment plus an annual lot rental fee. The Tax Court concluded that the organization was
operated primarily to serve the interests of its members rather than serve the interest of the community, and thus
was not exempt from taxation. This conclusion was based on the finding that the organization "directly
benefited only those people who were members and who therefore could enjoy the facilities and environment
that the lake provided."

In Flat Top Lake Association v. U.S., 868 F.2d (4th Cir. 1989), the Court held that a homeowners association
did not qualify for exemption under IRC Section 501(c)(4) when it did not benefit a "community" bearing a
recognizable relationship to a governmental unit and when its common areas or facilities were not for the use
and enjoyment of the general public. The organization in Flat Top Lake Association had 375 lots in the
development with 80 families residing there. The organization did undertake certain quasi-governmental tasks
including constructing a bridge, maintaining common areas such as a road, a park, and a lake, and providing
waste disposal for residents. The organization also paid for a "conservator of the peace" to perform law
enforcement duties. Despite this, the court held that this was not a "community" because it is a private
environment for its members and cannot claim a tax exemption for benefitting itself.

In Rancho Santa Fe v. U.S., 589 F. Supp 54 (S.D. Cal. 1984), the court interpreted Rev. Rul. 74-99 and held that
a homeowners' association serving residents of a housing development of 3,000 homeowners constituted a
community and qualified for exemption under IRC Section 501(c)(4). Of the 600 acres of land within the
development, 465 acres, consisting of parks, hiking trails, open space, athletic fields, a public parking lot,
playgrounds, and a community club house, were available to the general public on an unrestricted basis. The
remaining 135 acres, consisting of a golf course and tennis courts, was restricted to only the members of the
association. The organization also loaned out its facilities free of charge to public service organizations and
schools. The court found that the homeowners' association performed the functions of a governmental entity
and brought about civic betterments and social improvements on an unrestricted basis that would be missed by
the community without the activities of the organization. Thus, the court concluded that the benefits to the
organization benefited the social welfare of the general public of the community thereby meeting the
requirements of IRC Section 501(c)(4).

## Application of law

You seek recognition of tax-exempt status under IRC Section 501(c)(4), which requires an organization to be
operated exclusively to promote social welfare. An organization seeking tax-exempt status under Section
501(c)(4) must be operated exclusively to promote social welfare within the meaning of Section 501(c)(4) based
on the facts. An organization is operated exclusively for the promotion of social welfare if it is primarily
engaged in promoting in some way the common good and general welfare of the people of the community.
Based on your Form 1024-A, you were formed and are operated to maintain a private condominium. You are
not operating exclusively for the promotion of social welfare within the meaning of Treas. Reg. Section
1.501(c)(4)-l(a)(2)(i) because you operate exclusively for the private benefit of your members rather than for the
benefit of the community as a whole.

You do not provide a community benefit as described in Revenue Rulings 69-280, 72-102, 74-99, and 80-63.
You do not promote the common good and general welfare of the people in the community but rather promote
the private interests of the homeowners in the area consisting of D townhouses. Your activities are aimed at the

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maintenance of areas that serve an exclusive, rather than broad, class of people. You do not qualify for
exemption under IRC Section 501(c)(4) because you serve the private interests of the condominium owners
rather than promoting the common good and general welfare of the people of the community. The function of
the homeowners' association is to service the small group of homeowners that are Unit Owners rather than the
interest of the community. See Lake Petersburg Association.

You are unlike the organization described in Rancho Santa Fe because you do not offer facilities or other
amenities to the general public on an unrestricted basis. You do not perform the functions of a governmental
entity, nor do you provide social benefit to the general public that may constitute social welfare activities within
the meaning of IRC Section 501(c)(4).

The Court in Flat Top Lake Association held that you must serve a "community" which bears a reasonable
recognizable relationship to an area ordinarily identified as governmental in order to qualify for exemption as a
homeowners association under IRC Section 501(c)(4). You are a condominium association of D units that has
no publicly accessible elements. Rather than serving a "community", you are serving the interests of the D unit
homeowners. Accordingly, you do not qualify for exemption under IRC Section 501(c)(4).

## Conclusion

Based on the information submitted, you are not operating exclusively for exempt purposes within the meaning
of IRC Section 501(c)(4). Rather, by providing a benefit to only those Unit Owners without a benefit to the
larger community, you are operating primarily for private interests of your members and you do not promote
social welfare of the community. Accordingly, you do not qualify for exemption under IRC Section 501(c)(4).

## 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

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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.

Sincerely,

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements

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