Internal Revenue Service
Revenue Ruling
Rev. Rul. 67-6
1967-1 C.B. 135
Sec. 501
Caution: Modified by Rev. Rul. 76-147
IRS Headnote
An association whose activities are primarily devoted to preserving the
traditions, architecture, and appearance of a community by means of
individual and group action before the local legislature and administrative
agencies with respect to zoning, traffic, and parking regulations may be
exempt from Federal income tax under section 501(c)(4) of the Internal
Revenue Code of 1954. It is not exempt under section 501(c)(3) of the Code.
Full Text
Rev. Rul. 67-6
Advice has been requested whether an association organized and operated as
described below qualifies for exemption from Federal income tax under
section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1954.
The association was formed to preserve the traditions, architectural style,
and scenic appearance of an historic community. The association's voting
membership is restricted to owners of real estate in the community.
Associate membership is open to all persons interested in its objectives.
The primary activity of the association consists of reviewing zoning
matters affecting the community, and opposing applications for changes or
variances considered detrimental to the traditions of the community. The
association opposes such changes through appearances before the local
council, administrative boards, and commissions. It also sponsors the
enactment of traffic and parking regulations, seeks better lighting and
sanitation facilities, and assists in crime-prevention and anti-litter
campaigns within the community. It implements these activities by
encouraging members of the community to contact local legislative
representatives in support of the association's programs. This constitutes
a substantial part of the association's activities.
Section 501(c)(4) of the Code provides for the exemption from Federal
income tax of civic organizations not organized for profit but operated
exclusively for the promotion of social welfare.
Section 1.501(c)(4)-1(a)(2) of the Income Tax Regulations states 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 coming
within the scope of this section is one which is operated to bring about
civic betterment and social improvements.
The preservation of the traditions, architecture, and appearance of a
community through the enforcement of zoning regulations, the enactment of
favorable traffic and parking regulations, and the improvement of lighting,
sanitation, and crime-prevention facilities benefit all members of the
community. The association is thus promoting the common good and general
welfare of the people of the community within the meaning of section
501(c)(4).
Section 501(c)(3) of the Code provides for the exemption from Federal
income tax of organizations which are organized and operated exclusively
for charitable purposes, no part of the net earnings of which inures to the
benefit of any private shareholder or individual, no substantial part of
the activities of which is carrying on propaganda, or otherwise attempting,
to influence legislation, and which does not participate in, or intervene
in (including the publishing or distributing of statements), any political
campaign on behalf of any candidate for public office.
A `social welfare' organization may qualify for exemption as a charitable
organization under section 501(c)(3) of the Code if it falls within the
definition of `charitable' set forth in section 1.501(c)(3)-1(d)(2) of the
regulations and is not an `action' organization as defined in section
1.501(c)(3)-1(c)(3) of the regulations. Failure to satisfy either of these
requirements will disqualify an organization from exemption under section
501(c)(3) of the Code. See section 1.501(c)(4)-1(a)(2) of the regulations.
Section 1.501(c)(3)-1(d)(2) of the regulations defines the term
`charitable' to include the advancement of education and the promotion of
social welfare by organizations designed to combat community deterioration.
Section 1.501(c)(3)-1(c)(3) of the regulations defines an organization as
an `action' organization if a substantial part of its activities is
attempting to influence legislation. The term legislation is defined as
including actions by any local council or similar governing body, or by the
public in a referendum.
Combating community deterioration through remedial action leading to the
elimination of the physical, economic, and social causes of such
deterioration is `charitable.' Preserving and maintaining a historic or
scenic area for the benefit and education of the general public also is
`charitable.' However, preserving the traditions, architecture, and
appearance of a community for the benefit solely of residents of the
community (as distinguished from the general public both within and without
the community involved) is not `charitable.' While such activities promote
the common good and general welfare of the people of the community under
section 501(c)(4) of the Code, they are not the promotion of social welfare
within the scope of `charitable' under section 501(c)(3) as defined in the
applicable regulations.
Furthermore, since the association as a substantial part of its activities
is engaged in attempts to influence local legislative representatives with
respect to the association's programs, it is an `action' organization
within the contemplation of section 1.501(c)(3)-1(c)(3)(ii) of the
regulations.
In view of the above, the association is exempt under section 501(c)(4) of
the Code as an organization operated exclusively for the promotion of
social welfare, but is not exempt under section 501(c)(3) of the Code.
An organization which considers itself within the scope of this Revenue
Ruling must, in order to establish an exemption under section 501(c)(4) of
the Code, file an application on Form 1024, Exemption Application, with the
District Director of Internal Revenue for the internal revenue district in
which is located the principal place of business or principal office of the
organization. See section 1.501(a)-1 of the regulations.
