Social and Recreation Clubs

General overview of Tax-exempt status under IRC Section 501(c)(7) -

Social and Recreation Clubs

(other criteria may apply):

The term non-profit is a state law concept. Under federal law the correct term is “tax-exempt”. These terms are generally used interchangeably although they are not truly interchangeable.

Here are some general requirements relating to 501(c)(7) organizations.

Discrimination prohibited

Private benefit prohibited

Fellowship must be a material part of the organization. Members must be bound together by a common objective of pleasure recreation, and other non-profitable purposes.

Membership must be limited, based on the character of the club.

Generally, the club should be supported solely by membership fees, dues, and assessments.

Facilities cannot be open to the general public. Admission should be for members and their guests, for the most part.

Non membership source of revenue – No more than 35% of club revenue (including interest income) can come from outside the membership.

Donations to exempt social and recreation clubs are not deductible as charitable contributions on the donor's federal income tax return.

Costs involved (not all-inclusive)

Incorporation

Application for tax-exempt status and Determination letter – minimum of $ 300.00 filing fee.

Filing of annual returns with the federal government and with the state. The state may impose additional fees.

Note: This information is not all-inclusive and may change at any time. Contact me for additional information.

Information was taken from IRS Publication # 557 and IRC Section 501(c)(7)