Shooting range denied section 501(c)(3) status for recreational activity

Plain-English summary

An organization already exempt under section 501(c)(4) operated a shooting range open to members, the public, families, and law enforcement personnel. It offered firearms education and safety training, but it also provided facilities for recreational and social shooting by people of all ages and skill levels. The IRS found that those recreational activities were a substantial nonexempt purpose and that the organization did not primarily develop athletes for national or international competition. It therefore denied section 501(c)(3) status while leaving the existing section 501(c)(4) exemption in effect. The determination became final after the organization did not protest the proposed denial within 30 days.

Ruling snapshot

• Question: Did the shooting-range organization operate exclusively for charitable, educational, or qualified amateur-sports purposes under section 501(c)(3)?
• Outcome: denied
• Key authorities: IRC §§ 501(c)(3), 501(c)(4), and 501(j)(2); Treas. Reg. § 1.501(c)(3)-1

Full text (IRS public release)

Department of the Treasury                                      Date:
Internal Revenue Service                                        09/25/2023

Tax Exempt and Government Entities                              Employer ID number:
IRS PO Box 2508
Cincinnati, OH 45201                                            Tax years:
                                                                All

                                                                Person to contact:

Release Number: 202351016
Release Date: 12/22/2023
UIL Code: 501.03-00,
          501.03-19

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
IRS PO Box 2508
Cincinnati, OH 45201
                                                               Date: August 1, 2023

                                                               Employer ID number:

                                                               Person to contact:

                                                               Name:
                                                               ID number:
                                                               Telephone:
                                                               Fax:
Legend:                                                        UIL:
B = date 1                                                     501.03-00
C = date 2                                                     501.03-19
D = state
E = date 3
X = number 1
Y = number 2

r percent = number 3

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 are currently exempt under IRC Section 501(c)(4). You submitted Form 1023 on B to request exemption
under IRC Section 501(c)(3). You were formed as a corporation on C under the state law of D.

Your purposes in your Restated Articles of Incorporation are to foster national or international amateur
competition in shooting sports, develop and support amateur shooters for national or international competition
in the shooting sports, enhance the education and marksmanship skills of those who wish to participate in the
shooting sports, educate hunters about firearms and firearms safety, educate the public about firearms and
firearms safety, provide firearms training facilities to federal and state law enforcement officers and officials,
and conduct and promote all other charitable and educational shooting sports activities that are consistent with
the purposes as long as they are allowed by the federal and state law. Your Articles of Incorporation further
state that you are organized exclusively for charitable purposes.

You operate a shooting range for the benefit of the public and law enforcement personnel. Your facility is a

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

2

safe, inclusive, and friendly place for responsible gun owners, friends, families, and law enforcement officers to
learn, practice, and challenge marksmanship skills.

You are non-discriminatory and allow equal space and opportunity for all shooters despite their experience
level. Additionally, athletes of any caliber are allowed to train at your facility if they abide by all safety rules.
You are devoted to offering shooting ranges and training for the general public; you are not devoted to a small
number of elite athletes. You currently do not sponsor an Olympic youth team because it is not allowed by the
law of your state.

You indicated that law enforcement uses your facility r percent of the time and non-members/public uses your
facility r percent of the time. Your membership is open to any member of the public who is of good moral
character, has the legal ability to lawfully own, purchase, receive, possess, and use a firearm in the state of D,
and completes the prescribed range safety orientation. You offer family memberships, where the head of the
household can bring their spouse and children. Your facility is opened to the public X days per week, while
members have access Y days per week.

Your activities will be funded by revenue from dues, shooting fees, and the sale of ammunition. Your expenses
include salaries, facility expenses, and the cost of ammunition purchased for resale.

Law

IRC Section 501(c)(3) exempts from federal income tax “corporations, and any community chest, fund, or
foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety,
literary, or educational purposes, or to foster national or international amateur sports competition, or for the
prevention of cruelty to children or animals.” No part of the net earnings may inure to the benefit of any private
shareholder or individual.

IRC Section 501(j)(2) defines a “qualified amateur sports organization” as an organization organized and
operated exclusively to foster national or international amateur sports competition if it is also organized and
operated primarily to conduct 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, in order for an organization to be exempt under
IRC Section 501(c)(3), it 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 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 which accomplish one or more 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)(3) defines “educational” as instruction or training of the individual for the
purpose of improving or developing his capabilities and/or the instruction of the public on subjects useful to the
individual and beneficial to the community.

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

3

Revenue Ruling 64-275, 1964-2 C.B. 142 held that an organization formed to train suitable candidates in the
techniques of racing sailboats in national and international competition- thereby improving the caliber of
candidates representing the United States in Olympic and Pan-American games- may qualify for exemption
under IRC Section 501(c)(3).

Rev. Rul. 66-273, 1966-2 C.B. 222 held that a nonprofit organization may qualify for exemption from federal
income tax under IRC Section 501(c)(4) where it provides a community with facilities for rifle, pistol, and
shotgun practice and instructions in the safe handling and proper care of weapons.

Rev. Rul. 70-4 1970-1 C.B. 126 held that an organization was formed for the stated purposes of promoting the
health of the general public by encouraging all persons to improve their physical condition and of fostering by
educational means public interest in a particular sport for amateurs. The organization engaged in promoting and
regulating a sport for amateurs is not exempt under IRC Section 501(c)(3) but is exempt under IRC Section
501(c)(4).

Rev. Rul. 77-365, 1977-2 C.B. 192, held an otherwise qualifying nonprofit organization that conducts clinics,
workshops, lessons, and seminars at municipal parks and recreational areas to instruct and educate individuals in a
particular sport is operated exclusively for educational purposes and qualifies for exemption. The instant
organization's instruction program was open to anyone in the community for a nominal fee. The organization
did not establish rules, set standards for equipment, or sponsor league competition for the sport in which it
provided instruction. No compensation was paid to its directors or officers, and instructional activity was
performed by volunteers without pay. The organization's income is used principally for the purchase of
equipment necessary for the sport. Any difference between income and expenses is made up by contributions
from interested members of the community.

Rev. Rul. 80-215, 1980-2 C.B. 174 held that an organization 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 qualified 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 or importance of truly exempt purposes.

In Minnesota Kingsmen Chess Association Inc. v. Commissioner, T.C. Memo. 1983-495, the organization
sponsored chess tournaments, provided chess magazines and books to libraries, offered free chess lessons, and
published a newsletter that primarily contained reports of past tournaments and announcements of future ones.
The petitioner sought exemption under IRC Section 501(c)(3) because its purposes and activities were described
as educational. The court found that the promotion of chess tournaments furthers a substantial recreational
purpose, even though individual participants may have received some educational benefits.

In St. Louis Science Fiction Limited v. Commissioner, 49 TCM 1126, 1985-162, the Tax Court held that a
science fiction society failed to qualify for tax-exempt status under IRC Section 501(c)(3). Although many of
the organization's functions at its annual conventions (the organization's principal activity) were educational, its
overall agenda was not exclusively educational. A substantial portion of convention affairs were social and
recreational in nature.

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

4

Application of law
You are not described under IRC Section 501(c)(3) or Treas. Reg. Section 1.501(c)(3)-1(a)(1) because you fail
the operational test.

You do not meet the provisions in Treas. Reg. Section 1.501(c)(3)-1(c)(1). Although some of your activities are
educational in nature, your facility is used by the general public, including spouses and children, r percent of the
time. You provide shooting facilities to individuals for recreational and social shooting that does not involve
training, education or national or international sports competition. Such activities as described do not serve
exclusively charitable or educational purposes under Treas. Reg. Section 1.501(c)(3)-1(c)(1) or Treas. Reg.
Section 1.501(c)(3)-1(d)(3).

You are not a qualified amateur sports organization, as defined in IRC Section 501(j)(2) because you do not
foster national or international amateur sports competition or support and develop amateur athletes for national
or international competition in sports. Rather, you are organized and operated to offer persons of all ages and
skill levels an opportunity to learn, practice, and master the art of shooting. You are not like the organization
described in Rev. Rul. 64-275, you are more like the organization described in Rev. Rul. 66-273; you offer the
community a shooting range facility for practice and instruction in the safe handling and proper care of
weapons.

You are like the organization described in Rev. Rul. 70-4 that failed to qualify under IRC Section
501(c)(3). You operate a shooting facility for individuals of all ages of which r percent of the participants are
from the general public. This is conducted in a manner that neither exclusively improves nor develops the
capabilities of individuals within the meaning of Treas. Reg. Section 1.501(c)(3)-1(d)(3).

You are not like the organization described in Rev. Rul. 77-365 that was granted exemption under IRC Section
501(c)(3). Although you do provide some educational and training instructions to the participants, you also
facilitate and encourage recreational and social shooting activities. This precludes exemption under IRC Section
501(c)(3). Further, you are not like the organization described in Rev. Rul. 80-215 because your programs are
opened to all ages rather than limited to those under the age of 18.

Similar to St. Louis Science Fiction Limited v. Commissioner and Minnesota Kingsmen Chess Association v.
Commissioner, while a portion of your activities are educational in nature, your operation of a shooting range
furthers a substantial recreational and social purpose. Like the organization in Better Business Bureau, this is a
substantial non-exempt purpose that will destroy exemption regardless of the number and importance of any
truly exempt purposes.

Your position

In your response dated E, you referenced Rev. Rul. 70-4, and declared that it supports your position because the
ruling is premised on the absence of public instruction, and you provide public education and instruction in
firearms use and safety and public instruction for hunters. You also stated that despite the presence of
supporting members, your facility is open to the public. Additionally, you cited Rev. Rul. 80-215, and
maintained that it favors you because it modifies Rev. Rul. 70-4, and you provide firearms safety courses for
your members and the public, which are generally free of charge. Lastly, you indicated and submitted a letter
showing your state, D, approved your charitable status. You stated that your D tax-exempt charitable status
parallels the federal requirements for charitable status.

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

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Our response to your position

Rev. Rul. 70-4 held that an organization engaged in promoting and regulating a sport for amateurs is not exempt
under IRC Section 501(c)(3) but is exempt under IRC Section 501(c)(4). You are currently exempt under IRC
Section 501(c)(4). You do provide some amount of public education and instruction. However, as mentioned
above, you are operated for substantial non-exempt social and recreational purposes. The presence of these
substantial non-exempt purposes precludes exemption under IRC Section 501(c)(3).

Rev. Rul. 80-215 held that an organization that develops, promotes, and governs a sport for individuals under
the age of 18, under certain circumstances, qualify for exemption from federal income tax under IRC Section
501(c)(3). One critical component of Rev. Rul. 80-215 is that the individuals being served must be under the
age of 18. Your programs are opened to all ages rather than limited to those under the age of 18.

IRC Section 501(c)(3) federal exemption requirements are separate from C state requirements.

Conclusion

Based on the facts and information submitted, you are not operated exclusively for exempt purposes. Your
activities further substantial non-exempt social and recreational purposes. Therefore, you do not qualify for
exemption under 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.

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

6

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.

Your exemption under IRC Section 501(c)(4) remains in effect.

Sincerely,

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements

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