Motorcycle club primarily served social and recreational purposes

Plain-English summary

A motorcycle club applied for recognition as a charity under IRC § 501(c)(3). Members paid dues for a clubhouse and utilities, met for motorcycle rides, held picnics, played horseshoes, and invited bands to events. The club also held an annual chili cookoff and divided the proceeds among section 501(c)(3) organizations selected by its members. The IRS found that the recurring social and recreational activities occupied substantially all of the club's work, while the annual fundraiser did not change its primary purpose. A substantial nonexempt recreational purpose prevented the club from operating exclusively for charitable purposes. The IRS denied exemption, and the determination became final after no timely protest.

Ruling snapshot

• Question: Does a motorcycle social club qualify under IRC § 501(c)(3) because its annual fundraiser benefits charities?
• Outcome: Denied
• Key authorities: IRC § 501(c)(3); Treas. Reg. § 1.501(c)(3)-1(a), (c); Rev. Rul. 77-366; St. Louis Science Fiction, Ltd. v. Commissioner; Better Business Bureau v. United States

Full text (IRS public release)

Department of the Treasury Date:
Internal Revenue Service 07/11/2025
IRS Tax Exempt and Government Entities Employer ID number:

Form you must file:

Person to contact:

Release Number: 202540010
Release Date: 10/3/2025
UIL Code: 501.00-00, 501.03-00, 501.03-05, 501.03-30

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
Letter 4038

Letter 4038 (Rev. 11-2021)
Catalog Number 47632S

Department of the Treasury
Internal Revenue Service

Date:

05/20/2025
Employer ID number:

Person to contact:

Name
ID number
Telephone
Fax:
Legend: UIL:
B = Date 501.00-00
C = State 501.03-00
d percent = percentage 501.03-05
e percent = percentage 501.03-30

j dollars = dollar amount
k dollars = dollar amount

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 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

2

• 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

During review of your Form 1023-EZ, detailed information was requested supplemental to your attestations.

You stated you are a social club for motorcycle riders. Members pay j dollars per month for their membership to
pay for your clubhouse and utilities. You have meetings and get together to ride motorcycles. Family and
friends of members are also invited to join the rides. You have picnics about once per month weather
permitting. You also play horseshoes and invite local bands to play at your events. You spend d percent of your
time on these recreational activities.

Once a year you have a chili cookoff. A fee of k dollars is charged per plate and all funds collected are divided
equally between organizations exempt under Section 501(c)(3). You select the organizations by taking
nominations from the members and taking a vote. You spend e percent of your time on this chili cookoff
fundraising event.

Law

IRC Section 501(c)(3) provides for the recognition of exemption of organizations that are organized and
operated exclusively for religious, charitable or other purposes as specified in the statute. No part of the net
earnings may inure to the benefit of any private shareholder or individual.

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.

Revenue Ruling 77-366, 1977-2 C.B. 192 held that an organization formed to conduct winter-time ocean cruises
that included activities to further religious and educational purposes in addition to substantial social and
recreational activities didn’t qualify for exemption under IRC Section 501(c)(3). “[T]he extensive amount of
time, energy, and other resources which are regularly devoted to the conduct of social and recreational
activities, together with the manner in which such activities are scheduled in relation to other cruise programs...
demonstrate that the organization's conduct of such social and recreational activities serve substantial
independent purposes of a noncharitable nature.”

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

In St. Louis Science Fiction, Ltd. v. Commissioner, T.C. Memo 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, social and recreational activities (e.g., pool party,
masquerade party, gaming rooms) and private benefit (art sales) predominated and exemption under IRC
Section 501(c)(3) wasn't warranted.

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.

Application of law

A ruling on exempt status is based solely on facts and representations in the administrative file. You have not
provided supporting documentation to establish you meet the requirements of IRC Section 501(c)(3). As stated
in Treas. Reg. 1.501(c)(3)-1(a)(1), an organization must be both organized and operated exclusively for
purposes described in Section 501(c)(3). 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,

Treas. Reg. Section 1.501(c)(3)-1(c)(1) provides that an organization will not qualify under IRC Section
501(c)(3) if more than an insubstantial part of its activities is not in furtherance of an exempt purpose. You
engage in activities that are primarily social and recreational. These activities are organizing motorcycle rides,
picnics, playing horseshoes, and inviting bands to play at your event. You spend d percent of your time on these
social and recreational activities.

You are similar to Rev. Rul. 77-366 in that you further a substantial nonexempt purpose. Namely, your picnics,
motorcycle rides, and other recreational activities further a substantial social and recreational purpose.

You are like the organization in St. Louis Science Fiction, Ltd. You are not operating exclusively for exempt
purposes under IRC Section 501(c)(3) because substantially 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 IRC 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 are not operated exclusively for charitable purposes within the meaning of Section 501(c)(3) of
the Code. You engage in a substantial amount of social and recreational activities that are not in furtherance of
an exempt purpose within the meaning of 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.

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

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
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.

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

5

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