Sung to the tune of "Mama's don't let your babies grow up to be Cowboys"

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  The Tax Court agreed and the Booster Club’s tax exempt status was revoked.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.