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Your gun clubs IRS tax code ?

Discussion in 'Shooting Related Threads' started by Klay_Buster, Aug 23, 2009.

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  1. Klay_Buster

    Klay_Buster TS Member

    Joined:
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    Can you share with me your clubs tax code? 501 C 3, C4, C6 ??
    Don't need to say the club name, or identify yourself. I'm taking a private poll. I presume your under one of the non profit codes. Thanks
     
  2. jagrdawger

    jagrdawger TS Member

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    I just went through 6 months of dealing with this issue for my club. Fortunately, a certain amount of ineptness on the part of past members saved the club from a disaster.

    BUF: we are a 501 (c)(4). This is the best option in my opinion after extensive research.

    Several members trie to get the club to be a 501 (c)(3) 7 years ago and had many members believing we were a c3. I contacted the IRS in the process of sorting this out and found several interesting facts. First, it is very difficult for a gun club to qualify as a c3 since they do not exist to fund charitable causes. Second, if a club were to loose their c3 status or disolve ALL assets must be given to another c3. You cannot just decide to change from a c3 to another status. C4's do not pay taxes so the only benefit is if the club recieves large donations that the donor wishes to write off. But, in that case there needs to be charitable actions with that money and running a trap range or paying a mortage on a trap house does not qualify.

    A GOOD tax consultant should be able to work donations in as tax deductable advertising for your club.

    The IRS is putting a lot of effort into investigating C3's since they allow many dollars to avaid taxation. My OPINION is that C3 status is not worth the riskto your club, especially with an anti-gun administration in place. A nearby club with a similar story to ours ended up with a $30K fine negotiated down to about $12K for claiming 501 (c)(3) status when they were actually granted c4 by the IRS.

    A thorough search of the IRS website will lead to a document or opinion by the IRS that sounds like c4 is a very good choice for many gun clubs.
     
  3. howie

    howie Member

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    Jan 29, 1998
    Messages:
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    Can't comment on best status, but I do know that 501(c)(3) is a public charity. I doubt that a gun club would qualify as a public charity. I'm sure that club is probably a not-for-profit organization and you need to consult a good tax authority to determine the best status for you. Don't run afoul of the IRS -- it can be no end of trouble,
     
  4. Smithy47

    Smithy47 Member

    Joined:
    Feb 5, 2008
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    612
    Location:
    Central Missouri
    We are a 501(c)7 (Social Club) We are members only and are not open to the public. Members CAN bring guests. We have 3 trap fields, 2 Skeet fields, several archery ranges, 4 pistol ranges, two rifle ranges, A black powder range, a nice sporting clays range and a fishing lake. We presently have about 1300 members. We got audited by the IRS several years ago, really got our eyes opened on the constraints of a 501(c)7 club. The IRS was pretty easy on us but we made the necessary changes to satisfy the audit findings. It is not really hard to do if you know and understand the rules. The club started 50 years ago and I guess we lost some of knowledge of the rules along the way. Our bylaws now helps keep us straight.
     
  5. jagrdawger

    jagrdawger TS Member

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    My club would not qualify for 501 (c)(7) base on the requirement that it be primarily supported by membership dues. Our dues help, but 100 bird shoots an other special events provide most of the funds.

    The exerpt from page 8 of the following IRS pubs fit our club in that we provide facilities to members and membership is not restricted, but used in part for liability insurance requirements.

    http://www.irs.gov/pub/irs-tege/eotopici03.pdf


    An organization may qualify for exemption from federal income tax under IRC 501(c)(4) where it provides a community with supervised facilities for rifle, pistol, and shotgun practice and instructions in the safe handling and proper care of weapons. Rev. Rul. 66-273, 1966-2 C.B. 222.

    an this decision:

    http://www.irs.ustreas.gov/pub/irs-tege/rr66-273.pdf

    Rev. Rul. 66-273, 1966-2 C.B. 222
    A nonprofit organization may qualify for exemption fromFederal income tax under section 501(c)(4) of the InternalRevenue Code of 1954 where it provides a community withfacilities for rifle, pistol, and shotgun practice andinstructions in the safe handling and proper care of weapons.
    Advice has been requested whether an organizationestablished and operated in the manner described below mayqualify for exemption from Federal income tax under section501(c)(4) of the Internal Revenue Code of 1954.
    The organization was formed to provide supervised facilitiesin a community for the development of good pistol, rifle, andshotgun marksmanship and for instruction in the safe handling andproper care of firearms. Membership is open to any citizen ofthe community of good moral character over 18 years old. Its receipts are derived from membership dues, range fees, andproceeds from the sale of ammunition and targets. Disbursements are made for the purchase of ammunition and targets, improvementsto the range ground and buildings, expenses of special events,and miscellaneous operating expenses. None of the organization'sincome inures to the benefit of private individuals.
    The organization's principal activity is the operation of arifle and pistol target range. The general public is permittedfull use of the organization's facilities. Qualified members of the organization conduct classes in safe gun handling andsupervise the firing on the ranges. The only cost to personsparticipating in these activities is a nominal fee to cover thecost of ammunition and targets. The facilities are also available free of charge to units of the armed services of theUnited States for their use in conducting required trainingcourses, to local law enforcement officers, and to junior rifleorganizations.
    The organization does not maintain a clubhouse. Social affairs are limited to an annual dinner for members, occasional picnics, and special events.
    Section 501(c)(4) of the Code provides for the exemptionfrom Federal income tax of civic leagues or organizations notorganized for profit but operated exclusively for the promotionof social welfare.
    An organization is operated exclusively for the promotion ofsocial welfare if it is primarily engaged in promoting in someway the common good and general welfare of the people of thecommunity. An organization embraced within this section is onewhich is operated primarily for the purpose of bringing aboutcivic betterments and social improvements. See section 1.501(c)(4)-1 of the Income Tax Regulations.
    Providing a community with supervised facilities for firearmshooting, giving instructions in the safe handling and propercare of guns, and teaching better marksmanship are considered tobe activities which promote the common good and general welfareof the community. Therefore, the organization is exempt fromFederal income tax under section 501(c)(4) of the Code.
    An organization which considers itself within the scope ofthis Revenue Ruling must, in order to establish exemption undersection 501(c)(4) of the Code, file an application on Form 1024,Exemption Application, with the District Director of InternalRevenue for the internal revenue district in which is located the principal place of business or principal office of theorganization. See section 1.501(a)-1 of the regulations
     
  6. BigM-Perazzi

    BigM-Perazzi Well-Known Member

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    Location:
    HELL, MICHIGAN
    501 c(7) social camping facility and Friday nite drinking club...
     
  7. Klay_Buster

    Klay_Buster TS Member

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    Thanks for the comments. The problem with C7 seems to be the requirement that 65% of your gross annual operating budget MUST come from dues. Activites that generate non member income, like registered shoots, or other public activity cannot exceed 35%. C4 doesn't have the same limitations.
     
  8. leadvail

    leadvail Member

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    Location:
    Colorado
    501c7. Tried 501c3, but impossible. Just another ALOOF Club. With free advice given, but still wouldn't qualify as a school, hospital or church. Came close as a Sunday worship service though...
     
  9. jagrdawger

    jagrdawger TS Member

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    I have done my share of praying on the line on Sunday morning.
     
  10. 870

    870 Well-Known Member

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    jagrdawger has the correct reasoning here. The problem issue for c4's is if you have bar/restaurant income to any great extent since that is not an exempt activity for a "social welfare organization". Still, better to look into c4 instead of c7 if possible. C7 is full of problems if you have registered shoots, leagues etc. Most clubs are C7 but probably would lose exempt status if really looked at.

    Klay Buster: You are on the right path, but there is no requirement that 65% of your income comes from member dues. The test is really no more than 15% of revenue can come from nonmembers. That is the major hurdle for C7. Lots of people trip over the 35% limit when looking at these rules, but that includes investment income, which isn't much of an issue for gun clubs, unfortunately. The nonmember safe-harbor limit is 15%.
     
  11. Nuts

    Nuts TS Member

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    we are 501c7

    870 is correct...no more than 15% of your income can come from non-members. Which can be a challenge for clubs that host registered shoots, and are open to the public.

    One legitmate way manage this is to keep the club dues low enough so that it is easily afforded. And to keep the non-member round fee high enough encourage membership, but not so high as to drive the non-member revenue past 15%.
     
  12. Klay_Buster

    Klay_Buster TS Member

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    870 please send me an Email with your phone number. Would like to discuss my clubs specific issues. klay_buster@msn.com
     
  13. Klay_Buster

    Klay_Buster TS Member

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  14. grunt

    grunt TS Supporters TS Supporters

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