AboutHarvey Mechanic Expertise US Federal tax issues of nonprofit 501(c)(3) public charities only. Establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation.
To search my previous answers you can do a Google search: site:allexperts.com/q/nonprofit [with your other search terms appended].
Experience I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar.
Education/Credentials B.S. Columbia University in New York City, 1970
J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude
Question I have been reading info on the IRS website and it seems that our summer swim team (which receives dues from swimmers and income from small fund raisers and pays the coaches) would be a 501(c)7 organization. I was ready to apply with the NC SOS and applying for the tax exempt EIN but was stumped by the choice of "social/savings club" or "sports team". The sports team is explained as just needing an TIN for banking purposes. Could we actually only be set up for banking purposes or do we need to incorporate and choose the social club option? Thank you so much for your help.
Answer You mentioned "fund raisers". By "fund-raisers" it appears that you are referring to sales. Unless the organization receives nonprofit status the net on the sales will be taxable like for an ordinary business. Even if the organization is an IRS approved nonprofit, it may still need to pay taxes on the sales. See www.irs.gov/pub/irs-pdf/p598.pdf
IRS Publication 598 "Tax on Unrelated Business Income of Exempt
Organizations"
and there you will see that such activities are generally
taxable.
The "social/savings" club is not applicable for an organization that engages in sales business.
Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com
