IRS Published Taxpayer Determination Letter 202640007

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

Date:
07/10/2026
Employer ID number:

Form you must file:

Tax years:

Person to contact:

Release Number: 202640007

Release Date: 10/2/26

UIL Code: 501.04-00, 501.04-07

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:
05/21/2026

Employer ID number:

Person to contact:

Name:

ID number:

Telephone:

Fax:

Legend:

B = Date

C = State

D = County

E = Number

F = Locale

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 are a corporation formed on B under the laws of the state of C. Your Articles of Incorporation state
you are organized exclusively for the use of its members and for the purposes of managing shared
roadway maintenance. Your Articles of Incorporation also state you will also:

· Conduct activities that aid your members to improve the development of the properties in F.

· Prevent nuisances and the impairment of the attractiveness of the property to secure to each
individual owner the full benefit and enjoyment of a member's home or property.

· Control the appearance of F and all matters pertaining to the access of its properties.

You will act as a homeowner's association and management body for the preservation, maintenance
and improvement of the common area of F to ensure the lasting beauty and investment values of F.
You consist of E members in F.

Your Bylaws state the qualifications for membership as every owner of a residential lot in F shall be
members. It also states that your membership is connected to and may not be separated from ownership

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of any lot, and a member must be the owner of at least one lot. Your membership cannot be transferred,
pledged, or alienated in any way, except upon the sale of the residential lot to which it is connected, and
then only to the purchaser.

In your application, you stated the following:

. The only designated common areas are the shared private roads and that homeowners'
associations annual dues will go to funding the necessary maintenance and upkeep of the private
roads.

· No homeowners' association dues will not be used for maintenance of public roads used to
access these private roads. The financial information provided supports that funds will be used to
support improvements to property within F.

· The primary activity of maintaining the private roads ensures access for all homeowners, which
is a benefit for a large number of people that otherwise may not be able to afford the costs on
their own.

. Neither the state of C nor D will cover the costs because it is a private road.

# 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. Further, exemption
shall not apply to an entity unless no part of the net earnings of such entity inures to the benefit of any
private shareholder or individual.

Treas. Reg. 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 this section is one,
which is operated primarily for the purpose of bringing about civic betterments and social
improvements.

Revenue Ruling 74-99, 1974-1 C.B. 131, 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 homeowner's 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). However, the ruling goes on to state that a homeowner's association may in
certain circumstances overcome the presumption and qualify for recognition of exemption under
Section 501(c)(4) by (1) serving 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.

In Lake Petersburg Assn. v. Commissioner, 33 T.C.M. (CCH) 259 (1974), the Tax Court held that an
organization formed to construct a lake and develop lakeshore property, including recreational areas
was not exempt under IRC Section 501(c)(4). The reason for this decision was that the organization
benefitted its members only, as the members were the only ones who could enjoy the facilities and the
lake environment. The original public benefit idea was determined to be indirect and remote.

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In Flat Top Lake Association v. United States. (1989 4th Circuit), 868 F.2d 108, 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.

In Mira Vista Homeowners Association, Inc. v. Commissioner of Internal Revenue, T.C. Memo. 2025-102
(U.S. Tax Ct., 2025), the court held a homeowners association was not described as an IRC Section 501(c)(4)
social welfare organization because the non-member activities were incidental and otherwise insubstantial to
qualify as benefiting the community as a whole.

## Application of law

You do not meet IRC Section 501(c)(4) because the activities you conduct do not exclusively promote
social welfare. You are formed to benefit the property owners of F, and not the general public. While the
roadways are not private to a particular owner's residence, the roadway structure themselves are within the
common area that benefits only the community of homeowners that reside within the subdivision property
map. The roadways are only accessible to the general public to access the private residence of your
members, therefore the activity of roadway improvement and maintenance is for private benefit to the
association's members and not the public as a whole.

You do not meet the provisions of Treas. Reg. Section I.501(c)(4)-1(a)(2)(i) because 1) you have a
defined limited membership consisting of only D homeowners, 2) your membership is required to pay
dues and assessments and 3) your members receive a benefit for said fees. These facts show that you
do not promote the common good and general welfare of the people of the community but operate for
the private benefit for a limited group of individuals.

You are not a "community" as described in Rev. Rul. 74-99 because the general public is not
significantly benefitting from your operations. You have a small membership of D. The area you
maintain does not bear a recognizable relationship to an area ordinarily identified as a governmental
subdivision. In addition, your covenants, conditions, and restrictions state that you were formed for the
purposes of enhancing and protecting the desirability, value, and attractiveness of F as well as for the
purpose of enhancing the quality of lives for the owners and occupants of F.

Like the organization in Lake Petersburg Association, your activities of maintaining the common areas
of F are designed to benefit your members and are for the convenience of your members. You are also
similar to the organization described in Flat Top Lake Association. You are formed to provide a
benefit to your dues paying members rather than the community at large, as your activity of
maintaining a shared private access roadway does not confer a broad public benefit as established with
the regulations and precedent. You also serve the interests of your members in a similar fashion to the
organization described in Mira Vista. Thus, whatever rights or privileges that you may afford to persons
other than members, we find these activities to be incidental and otherwise insubstantial to qualify as
benefiting the community as a whole. Only the homeowners will serve to primarily benefit from
construction and maintenance of the private roadways. You are not primarily promoting the common
good and general welfare of the people of a community as Treas. Reg. Sec. 1.501(c)(4)-1 requires and

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do not qualify for exemption under IRC Section 501(c)(4).

## Conclusion

Based on the facts presented above, you do not meet the requirements for tax exemption under IRC
Section 501(c)(4) because you are not primarily promoting the general welfare and common good of the
community. You are not a "community" within the meaning of the regulations because the general public is
not significantly benefitting from your operations. You are operating for the benefit of your members, who
are lot owners in F. There is little benefit conferred to the general public. Therefore, you fail to qualify
under 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
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

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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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