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Booster Club Charging Late Fees

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Booster Club Charging Late Fees

Postby Nygel » Wed Mar 15, 2017 10:12 am

My son is a gymnast who trains and competes for a private for-profit facility.  The competitive team gymnasts are members of boosterclub which says they are in the process of obtaining 501(c)3 status and thus are behaving as such we are told.  We hold numerous fund-raising through out the year to assist in the costs of the sport.  In addition, all gymnast have an account which they must make payments to in amounts determined by their USAG level.  For example, the boosterclub budgets all Level 6 gymnasts to pay $200 a month into their account for 7 months.  The final payment is required 2 months before the first meet for those gymnasts.  Each payment which is late(according to the boosterclubs fee schedule) incurs a $10 late fee.

My question is whether these late fees are legal for such an organization.  All money paid out of pocket is placed in the gymnast account to be used exclusively for him/her.  Fund raising money is allocated to all gymnasts at the end of the season.  

I fully expect and plan to pay all my childs expenses prior to them being incurred, however, I am not willing to give this boosterclub $1400 of my money to sit in their bank account months before it is needed.  We have been told that if we do not satisfy all our invoices along with all the late fees our gymnast will not be allowed to compete.

I appreciate any advise you might provide.

ANSWER: The for-profit gym may not conspire with a 501(c)(3) booster organization to require payments going through the 501(c)(3) organization.  See www.irs.gov/pub/irs-tege/eotopica93.pdf

starting on pages 11 "Private Facility Owners" which discusses

prohibited private benefit and excessive control of the booster

organization by such private facility owners.

Therefore, those late fees are not legal for the organization if it wants to be approved for 501(c)(3) organization status by the IRS. My summary of IRS regulations relating to 501(c)(3) booster organizations is at:http://snipurl.com/boosterinf

and you may be interested to read that. Harvey Mechanic, Attorney at Law - [email protected]

---------- FOLLOW-UP ----------

My son attends the same Gymnastics academy as Mr. Goolby's son.  The same booster club that is trying to obtain a 501(c)(3) status also charges a mandatory non-refundable $90.00 Administration fee to all members.  which is stated to include of course administration costs, tax filing fees, website design and maintenance fees, as well as a "Christmas Party"  I question the legality of such a fee, as well other practices that they have instituted since they took office in the early spring.  Could you in addition to answering my question point me in a direction to read something a little more decipherable than tax law on this subject?
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Booster Club Charging Late Fees

Postby West » Wed Mar 15, 2017 3:07 pm

No one is required to join a 501(c)(3) booster organization. If there were such a requirement in able for a family member to be funded, then the organization would be a cooperative and not a charitable organization. In denying exemption to a purported 501(c)(3) organization

booster organization, in 1992 the IRS athttp://viewer.zoho.com/docs/s2ca6g

on page 6 stated "The reason you were created and your method of

operation indicate that you are made up of a group of parents who

have joined together to work cooperatively to provide funds to

pay for the participation of their children in athletic events.

The expenses incurred by these children would otherwise have been

paid by the parents.  All parents of competitive team members are

automatically members of your organization.  Accordingly, members

expect to receive a benefit in return for their membership.  You

pay no benefits to non-members.

Another, similar denial of exemption was issued by the IRS in

1990 and may be viewed athttp://viewer.zoho.com/docs/a4vd3

Such an operation would be what the IRS calls a cooperative.  A

cooperative is not qualified as a 501(c)(3) organization.  A

501(c)(3) booster organization is to be a charitable, not

cooperative, organization. Harvey Mechanic, Attorney at Law - [email protected]

P.S. The point is that a corporation may legally require members to pay fees or dues of whatever they want to call them as part of the membership agreement.  However, a 501(c)(3) organization may not require persons to join their group. IRS Complaints regarding Exempt Organizations are discussed at

www.irs.gov/charities/article/0,,id=131651,00.html which has

mailing address and then the details are in a pdf that is linked

on that page as "Fact sheet 2002-10 and is:

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