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Nonprofit Law/Service Credits for Soccer Fees


I am currently assisting a 501(c)3 Soccer Club with modifying current business practices to be in compliance with IRS Regulations.  Our Board has voted to give Board members, coaches and volunteers service credits to offset their child's fees.  I understand that if the service fees exceed $600 a 1099 would be issued for volunteers or Board members who are not employees and would be included on the w-2 for employees.

A question was raised as to whether you could split the service credits between the parents and keep them under $600 for each parent to avoid a 1099 being issued?  Can the service credits be given to the player instead of the parents and if so is there an age restriction?

In Davis v. United States, 495 U.S. 472 (1990), the Supreme Court explained, "Unless there is a
specific statutory provision to the contrary, a taxpayer ordinarily reports his own income and takes his own deductions. See, e. g.,Commissioner v. Culbertson, 337 U.S. 733, 739 -740 (1949) ("[T]he first principle of income taxation [is] that income must be taxed
to him who earns it");
---End of Excerpt--

The IRS explains the "assignment of income doctrine" starting on
the bottom of the middle column on page 2 of their Publication 525
--- Start of Excerpt ---
Assignment of income. Income received
by an agent for you is income you constructively
received in the year the agent received it. If you
agree by contract that a third party is to receive
income for you, you must include the amount in
your income when the third party receives it.
Example. You and your employer agree
that part of your salary is to be paid directly to
your former spouse. You must include that
amount in your income when your former
spouse receives it.
---End of Excerpt---

Also note

---Start of Excerpt--
The assignment of income doctrine, first articulated in Lucas v.
Earl, 281 U.S. 111 (1930), holds that a taxpayer who possesses a
current or future right to receive income cannot shift the tax on
such income by transferring the right to receive income to another
taxpayer.  Thus, income is taxable to the taxpayer who earns and
controls it.  Id.  The choice of the proper taxpayer revolves
around the question of which person or entity in fact controls the
earning of income rather than who ultimately receives the income.
See Vercio v. Commissioner, 73 T.C. 1246 (1980).
---End of Excerpt--

Therefore, the 1099-Misc would go to the worker, not to someone else, even to the player who is given the benefits.

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic


I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about 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 possible 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. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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