On Nov 23, 2004, at 6:10 PM, Jim Hardesty wrote:
>> David rather belligerently said:
>> Citation please? I have never heard this before in any other forum
>> (and I deal with a number of not-for-profit groups.)
>> Not to mention that your comment is absurd on its face; are charities
>> going to find their non-profit tax status in jeopardy because their
>> income comes from 'non-members'??
> I can't cite the code, but I talked to the regional IRS office a few
> years
> ago when our local Triumph club started building up a balance in their
> account.
> Point is that charities are different from not-for-profit participatory
> organizations. Charities raise money to give it away. not-for-profits
> simply
> engage in a common activity using their own money.
> In order to be tax exempt the purpose of the not-for-profit
> participatory
> organization must be to engage in some common activity as members.
> Essentially the idea is that point of your organization is to do
> something
> together at YOUR OWN COST. When you allow non-members to participate
> you
> are essentially charging them to underwrite your activity. If you get
> significant amounts of revenue from outside your membership then you
> are not
> following the rules. If you are providing a service to non-members and
> charging money doing it then you are taxable.
> jim
First of all, apologies to Eric and everyone else. I confess I can
have a short fuse when it comes to postings that assert a 'fact'
without support when it makes things look slanted; a practice all too
common on the net (and web, and, hell, in public in general it seems.)
I was certainly too terse in my challenge to Eric's assertion. I know
how to ask questions like that politely, but failed to do so. My bad.
I did a little research. The SCCA's bylaws
(at
http://www.scca.org/Inside/Index.asp?IdS=00EED9-50EC710&x=080%7C060&~=
(took more work than it should have to find them too)) state that it is
incorporated as tax-exempt organization under section 501(c)(4) of the
IRS code. The text of the Internal Revenue Code is online, section 501
is found at
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?
dbname=browse_usc&docid=Cite:+26USC501
501(c)(4) groups are defined as:
(4)(A) Civic leagues or organizations not organized for profit
but operated exclusively for the promotion of social welfare, or
local associations of employees, the membership of which is limited
to the employees of a designated person or persons in a particular
municipality, and the net earnings of which are devoted exclusively
to charitable, educational, or recreational purposes.
(B) Subparagraph (A) shall not apply to an entity unless no part
of the net earnings of such entity inures to the benefit of any
private shareholder or individual.
While that reads to me like the SCCA doesn't fit, certainly the IRS
has treated as if it does. That trumps a simple reading ability in
English. I would have thought that the SCCA fit under section
501(c)(7).
But, at over 2000 lines I don't think I am up to checking this out
this morning. And it is even possible that the ruling that people are
referring to isn't in the code itself, but a administrative detail
buried in the IRS's documentation and produced only on sacrifice of
certain creative impulses.
It is, however, one of those wonderful cases of doing the public a
disservice (encourage groups chartered for the social welfare to
exclude people; great example of 'promoting social welfare') through
overly restrictive interpretation of the law. The kind of thing that
elected representatives love to find and fix; it makes them look good
in serving the public against the faceless bureaucracy.
David
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