Most booster clubs don’t qualify for tax-deductible contributions

by Grace

Most school booster clubs are not compliant with IRS regulations, potentially affecting parents and other donors who deduct contributions on their tax returns.

There are an estimated 100,000+ school, sports, band, and other booster clubs currently in existence in the United States …. Surprisingly, however, estimates indicate that less than 10% of these clubs are compliant with Internal Revenue Service Code regulations. Along with failure to register with the IRS, violation of the “inurement” prohibition under IRS Code Section 501(c)(3) is one of the most prevalent issues presently challenging local booster clubs.

This problem came to light at a local high school, where concerned parents hired a private investigator to look into their athletic booster club.

Run by parents and athletic officials in the Mount Pleasant school district, the booster club has been soliciting tax-deductible contributions for years after it was stripped of its federal tax-exempt status. In fact, the club has not filed an annual financial report with the IRS since 2009.

Contributors may face trouble with the IRS.

“I thought I was giving money to a tax-deductible charity,” said parent Mike Nicosia. “I was claiming it on my taxes. Everybody who did that, I would assume, now has to worry about an audit or a liability as far as interest and penalties.”

Even if the clubs don’t explicitly promote themselves as 501(c)3 nonprofits, many donors make that assumption.

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Jorge Fitz-Gibbon, “Westlake boosters under fire over tax-exempt status”, lohud.com, March 1, 2015.

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5 Comments to “Most booster clubs don’t qualify for tax-deductible contributions”

  1. Probably because most booster clubs are run by time pressed parents who know little about filing the forms to register as a tax exempt charity. I must admit, I never even considered claiming contributions to school-related charities.

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  2. I think many donors don’t prioritize claiming school contributions on their taxes. Sometimes they’re relatively small amounts, maybe not worth the bother.

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  3. Sometimes thinking about subtracting the fair market value of the benefit received is deterrence enough.

    http://www.irs.gov/uac/Eight-Tips-for-Deducting-Charitable-Contributions

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  4. The inurement issue is that a lot of these set up individual accounts where your kid gets all the money you raise. So Grandma can write a check to the booster club, deduct it on her taxes, and you use the money to pay for your kid’s uniforms etc. or you sell candy bars and all the money you raise goes to pay your kids expenses. Nothing charitable about it.

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  5. Thank you for pointing that out! Now that I think about it, most cases where I have donated have benefited my own kids, although not “all” the money I gave. However, I can see where this is a slippery slope. One time I was so fed up with having to buy crappy candy from one of my kid’s clubs that I told the club advisor that I would just write a check. But she said that was not allowed. Now I wonder if it had something to do with the inurement issue.

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