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Nonprofit Law/disbanding gymnastics booster club

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Question
I am the board member of a gymnastics club.  We have a booster club which operates under the clubs 501C(3) status, does NOT have its own ID number and reports its activity on the form 990 along with the gyms activities.  We are considering disbanding the booster club (BC)due to lack of interest and having parents fulfill the activities currently performed by BC members (essentially the same parents as the gym parents).  For example currently the BC would stock the vending machines on the premises of the gymnastics club (GC) and their time would offset fees due the BC.  Once the BC is disbanded these same parents (anyone can sign up to do this) would perform that same function but now their time would offset fees due to the GC.  Do you think this change would affect the GC 501C(3) status?  Also under what circumstances would the BC NOT fall under the jurisdiction of the GC?

Answer
In August, 2013 the U.S. Tax Court supported the revocation of
501(c)(3) organization status of a formerly exempt organization and
noted that a parent's fundraising was earmarked to reduce what
otherwise could be a $1,400 payment the parent would have to pay
out of his/her pocket. The direct linkage of a parent's fundraising
resulted with paying expenses for that parent's child and was a
very specific benefit obtained by the insider.  While the parent
may not have been paid cash, the parent nevertheless ended up
escaping having to write a check for the amount of the benefit.
Families who did not fundraise did not receive any benefits from
the purported a 501(c)(3) organization.  http://goo.gl/F2dZws

Therefore, as the club allows such an arrangement, they are jeopardizing their 501(c)(3) organization status with the IRS.

If a booster organization sets itself up separately then it would not fall under the jurisdiction of the Gymnastics Club.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmai.com

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

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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 Harvey108@hotmail.com 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 "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

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.

Education/Credentials

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

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


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