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NOT FOR PROFIT, ATA & IRS

Discussion in 'Uncategorized Threads' started by break25, Apr 11, 2007.

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  1. break25

    break25 TS Member

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    We were advised that a Not For Profit (NFP) 501 C 7 Club that holds a ATA registered shoot with NON CLUB MEMBERS shooting, must report their NCM shooting fees minus the ATA,prizes etc are subject to TAX and counted into the 15/35% limits. Also we could not include in their fee a one day membership, as I am told some BOTTLE CLUBS do.

    Without identifyiing your CLUB, can you shed some light on this?
     
  2. Beancounter

    Beancounter TS Member

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    Wow - I have read and studied the 990 instructions many many times and I have never seen a gun club used as an example. The rules for non business related income are not defined in the narrow scope as in the advise you got. Thus I have no idea how someone could have such great insight into the IRS to come up with the advise you got. A fraternal org that exists to shoot shotguns has to declare as income the monies paid to shoot if the funds came from a non member?? I would love to know the pub number and paragraph that is being interpreted here.
     
  3. phirel

    phirel TS Member

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    The IRS question requires advice from a much more knowledgeable person than me. The sales tax question is simple. All gun clubs are required to pay a sales tax on the direct cost of the targets but not on the shooter services required to put the targets into the air. Many clubs fail to do this

    Pat Ireland
     
  4. C1

    C1 Member

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    Pat, that may be the sales tax requirement in your state BUT not in all. Nebraska sales tax law requires the payment of sales taxes on the charges for targets including the service of putting them in the air. We do not pay sales taxes on the collection of fees (state and ATA) or p/o monies.

    Our club was informed by the IRS that less than 90 percent of our income must come from club members to meet the 501c7 requirement. BTW charging a small daily fee to let a non member shooter become a member for a day don't cut the mustard.

    Non-payment of taxes are going to be used in shutting down gun clubs now and in the future if they can't do it any other way. My advice is be squeaky clean on the payment of taxes be it state, local, federal, unemployment, ss, Workman's comp or any others your legislatures determine necessary.

    Gary Riecke
     
  5. gary0920

    gary0920 Member

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    Our club pays state of Florida sales tax (7%) when we purchase the birds from the distributor. Our BOD then were advised by a tax attorney that we must also collect sales tax on the $3.00 per round target fees of the members. I have been arguing for a year now (to no avail) that the state is collecting sales taxes twice on the same birds - once when we buy them and again when we shoot them. Any advice from other clubs on this would be greatly appreciated.

    Gary Rickard, TPRC
     
  6. break25

    break25 TS Member

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    Pat & c1, I agree with the SALES TAX and that is what we do. IT is the NON MEMBER monies that are an issue with the IRS.IF you have non members shooting, that goes to the 15/35%. .


    HaveGunWillTravel, do these reference numbers mean anything to you. This what someone gave us. Don't know if they are State or IRS, but pretty sure it's IRS.
    Id,s.rpt.No94-1318 (1976)-2CB.597,ltr Rul.8812006 (12/01/87), SRept. No.94-1318.

    Our concerns are not with the Sate Sales Taxes, but being squeaky clean with the IRS and not lose the NFP.
     
  7. N. J. BOB

    N. J. BOB Active Member

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    In order to shoot reg. targets you MUST be a member, or so I thought ????
     
  8. N. J. BOB

    N. J. BOB Active Member

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    A 990-T is the unrelated business tax form not the 990.
     
  9. BigM-Perazzi

    BigM-Perazzi Well-Known Member

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    well its in the regs about non-member income being considered 'bad' income. Ive been asking our board about this for several years with no response.
     
  10. K-80 Jim

    K-80 Jim TS Member

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    N. J. BOB, I think he said non club members who are ATA members shooting ATA events. Can't you sell $1 dollar a day temporary memberships or something like that. After all doesn't the state sell 3 day fishing licenses :)

    Shoot well & pay your taxes,

    Jim
     
  11. 870

    870 Well-Known Member

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    HGWT:

    As has been posted,the UBIT which is the subject of the thread is reported on a 990-T, not a 990. The references you asked for (for a 501(c)(7) club, as the thread refers to) are: IRC Sec. 512(a)(3)(A) and 512(a)(3)(B).
     
  12. phirel

    phirel TS Member

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    Gary Rickard- Sounds to me as if your club is paying sales tax on labor. If you get your car repaired the bill should show parts in one column with the sales tax applied and the labor in another column with no sales tax. At a gun club, the targets are the parts, the rest is labor.

    Pat Ireland
     
  13. break25

    break25 TS Member

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    Gentlemen, The issue are, ATA non club members and non members who come to shoot practice and it not the STATE it is the IRS.


    HGWT. Thanks I forgot to mention that it is UBIT.


    I thought for sure that some of the CLUBS that host large shoots and the ATA would nhave some answers. I see that the ATA is now a 501(c)(3). Don't know what status it was before.

    I can see that this thread is making some READER shooters aware of their TAX consequence. As stated above, the Clubs must be well aware of their tax responsibilities as all it takes is one phone call by a irrate, member, non member or anyone wanting to shut a Range down.
     
  14. spitter

    spitter Well-Known Member TS Supporters

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    In our situation, we supervise a range for our Parks Department and are not involved with the income issues facing other clubs as our entire income stream is from membership dues. However, other area clubs have changed their operations recently.

    Due to "farm" income, many clubs have stopped offering public access and eliminated long-standing "reciprocal" privileges with other area clubs, due to these very issues brought up.

    Jay Spitz
     
  15. mobear

    mobear Member

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    I also believe that it is in the rules of the ata that you cant charge a non member of your club a fee to shoot registered targets.

    Maybe Pat or Neil can be more specific on this one.

    Dan
     
  16. break25

    break25 TS Member

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    Mobear, I did not mean to write a extra fee for non members. What I ment that included in the shooting fees which would be the same for all the event shooters, was a ONE DAY MEMBERSHIP for NON CLUB MEMBERS.
    As you have read, this is a NO NO for the TAX people.
     
  17. phirel

    phirel TS Member

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    Dan- At an ATA shoot, everyone must be charged the same amount now. At one time, actually a long time ago, it was not uncommon for clubs to charge ladies and juniors a higher fee. The low entries in these categories and the cost of trophies was the justification for this practice. In todays political climate, such a practice would not be appreciated by all.

    Pat Ireland
     
  18. JBrooks

    JBrooks TS Member

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    A good way around this issue and a good method for running profitable programs, such as ATA shoots, and bringing "the public" into the facility for membership recruitment is to set up a second for-profit corporation. An LLC may work well for this purpose. Let the for-profit corporation collect all non-member shoot fees. The not-for-profit corp can charge the for-profit corp a nominal use/rental fee for the facility but split the cost of targets at the time of ordering so that no money passes from the for-profit to the not-for-profit except the nominal use/rental fees. By having the for-profit corp pay a higher price to the distributor for its share of the targets, it may show a very small taxable profit.
     
  19. GunDr

    GunDr Well-Known Member

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    Unless it has changed in the last 4 yrs....WI charges sales tax on labor.

    When I set up shop here in MN, I got confused by the state's mumble-jumble,with regards to their sales tax.

    Parts are taxed. Labor is not taxed. But...if the invoice shows both labor and parts, it all gets taxed.

    I called the state and questioned this. They said "yes?". I asked, to avoid the tax for the labor, would I have to make two invoices..one for labor and one for parts? their answer was "yes?".

    I charge tax for parts, and for parts and labor. None for labor only.


    With regards to the original post, does this pertain only to ATA shoots, or does it pertain to a non-member rate for targets vs member rates for targets when shot for practice or league?

    Doug
     
  20. front242

    front242 Member

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    Break25,

    Those numbers you put up are citations of a letter ruling and some other report, they are not regs. A Letter ruling can be the IRS making an exeption to a reg due to whole bunch of circumstances. They are made for the taxpayers in question only. Letter rulings can be used as examples of precedent when arguing a case in tax court but it is usually very risky to use them for much else. Letter rulings are not to be used as regs when preparing a tax return. The IRS can and often will stomp on you if you try to do that. If the letter ruling goes against what they believe to be true, they are often salivating to show the world they were right and the ruling was an anomaly.

    Be careful to go by existing regs, not court case results or letter rulings.

    Tim
    (Front242)
     
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