Social Clubs

Letter 4034 (Rev. 11-2018)
Catalog Number 47628K
Department of the Treasury
Internal Revenue Service
P.O. Box 2508
Cincinnati, OH 45201
Date:
02/02/2021
Employer ID number:
Contact person/ID number:
Contact telephone number:
Contact fax number:
Legend: UIL:
B = State 501.00-00
Y = Date 501.07-00
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)(7).
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)(7)? No, for the reasons stated below.

# Facts

You were incorporated in the state of B on C. You are incorporated as a mutual benefit corporation for the purpose of pleasure, recreation, and other similar nonprofitable purposes, in the context of a social and recreational club as those terms are used in IRC Section 501(c) (7). Your Articles of Incorporation state that your members are residents of a particular neighborhood. You collect annual road fees from your members which are used to maintain the roads and electric gate.
According to your Bylaws you have an annual meeting to elect a committee of members for the following year, to determine and approve the work necessary to properly maintain the road, gate, light, and signs, to determine and approve the per parcel assessment, and to discuss and act upon any other pertinent matters presented by members.
In your application, you described your activities as:
A. Provide and maintain a private paved road for the members for their exclusive use, and for the enhancement of property value.
B. To provide and maintain a locked gate and thereby restrict the use of the private roads to members.
C. To provide and maintain a light at the intersection for adequate night visibility.
D. To provide for general maintenance and overall safety of the road.
E. To provide liability insurance for all roads within the Association boundaries. Liability insurance also must cover the electric gate and all members of the elected board.