Rev. Rul. 80-21

                       Internal Revenue Service
                                 Revenue Ruling

      EXEMPTION; EDUCATIONAL ORGANIZATION; WILDERNESS CAMPING PROGRAM FOR
                                  ADOLESCENTS

                          Published: January 21, 1980

26 CFR 48.4041-13: Tax-free retail sales to certain nonprofit educational organizations

(Also Section 4221; 48.4221-6.)

  Exemption; educational organization; wilderness camping program for adolescents. A nonprofit corporation that operates a wilderness camping program to rehabilitate and provide counseling to adolescents who have emotional and behavioral problems is not a nonprofit educational organization for purposes of sections 4041(g)(4) and 4221(a)(5) of the Code.

ISSUE

  Whether the organization described below is a 'nonprofit educational organization' for purposes of the exemptions from the special fuels excise taxes and the manufacturers excise taxes provided by section 4041(g)(4) and 4221(a)(5), respectively, of the Internal Revenue Code.

FACTS

  A nonprofit corporation, formed for educational and charitable purposes, operates a wilderness camping program to rehabilitate adolescents having various emotional and behavioral problems.  Such problems include poor self image, excessive aggression, drug experimentation, inability to relate to peers or adults, and the inability to face or solve problems in general.

  The adolescents are referred to the organization by the local public school district, social service agencies, juvenile authorities and various religious organizations.

  The organization's program, operated 10 months a year, provides supervised 26 day hiking and camping trips through wilderness areas.  Each trip is attended by 10 or more adolescents, and is conducted by three of the organization's counselors.  The counselors are selected for their maturity and ability to relate to adolescents, previous work experience, and their academic credentials in the social sciences and mental health fields.  Some counselors are certified teachers with degrees in education, psychology or sociology.

  The organization's program is designed to develop self confidence, and positive attitudes through group living in a survival atmosphere.  It consists of daily demonstrations, and practical exercises in coping, adjustment, and problem solving skills or capabilities necessary for survival in a wilderness setting.  In addition, the adolescents participate in informal group counseling sessions and are instructed in the necessary hiking and camping skills for wilderness terrain.

  The organization is exempt from income tax under section 501(a) of the Code as an organization described in section 501(c)(3).

LAW AND REGULATIONS

  Under sections 4041(g)(4) and 4221(a)(5) of the Code, exemptions from the retailers and manufacturers excise taxes are provided for fuels and articles sold to a nonprofit educational organization for its exclusive use.

  Under the provisions of sections 4041(g) and 4221(d)(5) of the Code, the term 'nonprofit educational organization' means an educational organization described in section 170(b)(1)(A)(ii) that is exempt from income tax under section 501(a).  Section 170(b)(1)(A)(ii) describes an educational organization as an organization that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.  Section 1.170A-9(b)(1) of the Income Tax Regulations provides that such nonprofit educational organization must have as its primary function the presentation of formal instruction.

ANALYSIS

  The fact that an organization may have been granted exemption from federal income tax as an organization described in section 501(c)(3) of the Code does not, of itself, determine the applicability of the exemptions from the aforementioned excise taxes.  In order for these exemptions to apply, the organization must meet the prescribed requirements of section170(b)(1)(A)(ii) and the regulations as a 'nonprofit educational organization.'

  In this case, the organization's primary function is the rehabilitation of adolescents who have behavioral problems and the

counseling of those adolescents through peer group encounter sessions and counselor intervention. There is no formal education in the instructive sense and there is no purposeful effort at a systematic and detailed transfer of knowledge. Therefore, the organization does not provide a curriculum.  See Rev. Rul. 62- 23, 1962-1 C.B. 200, superseded by Rev. Rul. 79-167, 1979-2 C.B. 335, which holds that diffuse instruction in a variety of fields does not constitute a curriculum.

HOLDING

  Since the organization's primary purpose is not the presentation of formal instruction and since its program is not a curriculum within the meaning of the statute, the organization is not a 'nonprofit educational organization.' Accordingly, the organization does not come within the exemptions from the special fuels and manufacturers excise taxes.

Rev. Rul. 80-21, 1980-1 C.B. 233, 1980-3 I.R.B. 12.