Social clubs have long served as a defining characteristic of American society. While the nature of the hobbies, recreational interests, and other ties that inspire people to bond together continues to change significantly, the social club itself remains. For people wishing to join with others and carry out shared interests in an organized way, the group should understand the tax benefits afforded social clubs. Specifically, Section 501(c)(7) of the Internal Revenue Code provides an exemption from federal income tax if certain requirements are met.
A fun thing about practicing law is to observe changes to governmental agencies. The last few years at the IRS’ EO Division- the section of the federal government responsible for overseeing tax-exempt organizations- has been quite a rollercoaster. The IRS’ EO Division came under intense congressional and public scrutiny in 2013, under allegations that the agency intentionally discriminated against conservative, pro-life, and pro-Israel organizations.
The scandal’s effect on the IRS’ EO Division was monumental. The Service today is different on so many levels from 2013. Moreover, 2017 brings a new sheriff to 1600 Pennsylvania, and the IRS is certain to undergo further changes under Trump’s administration. How have these changes impacted nonprofits, and what’s in store for 2017? Here are some selected observations on audits, the Form 1023-EZ, and what might be ahead for the IRS under President Trump’s administration.
Nonprofit corporations are creatures of state law for corporate status and operations, while also subject to federal law for tax-exempt purposes. Under which state law should a nonprofit incorporate, and what other state corporate requirements should be considered? The following questions and answers provide guidance in both areas for nonprofit leaders seeking successful development, compliance with related IRS tax-exemption aspects, and long-term organizational vitality.