We are actively
involved, both professionally and personally, with a number of local high
school sports booster groups. Accordingly,
we pay attention to some of the actions taken by IRS with respect to those
groups.
In a recent Tax
Court ruling (Capital Gymnastics, TC Memo. 2013-193), a group lost their tax exempt status. This group permitted
the individual fundraising activities of its booster members to lower their individual
membership dues.
The gymnastics
club encouraged the parents of its student-athletes to form a Booster Group to
help pay for the Club’s entrance fees and coaches’ travel costs. Parents of the gymnasts could also lower their
dues by selling gift cards, cookie dough and gift wrap to raise funds for the
Boosters, and about half of the Booster members did so (and about half did not raise funds and they paid the full membership cost). The Club offset the fundraising parents’ dues,
in whole or in part, for each parent’s fundraising effort.
After an examination,
the IRS determined that the fundraising credits each parent received were an impermissible
private benefit. The Tax Court agreed
and the Booster Club’s tax exempt status was revoked.
So, Booster
Groups, don’t let your Boosters offset dues by selling Hoagies.
