Legal Issue for non-profit Chartering Organizations

[fred johnson]

Totally agree, @@Hedgehog and I think that is why the IRS hasn't gotten to the BSA....yet. 

 

The smaller size of fundraising is probably the main reason each scouting unit is not audited by the IRS.  But there are other key differences too.  Scouting units often buy equipment that will outlast individual members and help subsidize the registration and expenses of the volunteers that help keep the program running.  but I agree the main difference is size.

 

BUT ... I've also looked at my scouting units.  If you just look at the bank account, you will often see $40,000 or $50,000 going through the checking account each year.  $20,000 gross fundraiser sales.  $10,000 for summer camp.  $2,000 per person for high adventures.  It quickly adds up.  Most of the money is pass thru.  But it adds up.  And I bet most active troops that are 30+ members have $20,000 going through checking each year.  

Edited January 19, 2017 by fred johnson

[Eagledad]

OK, here is what my CPA says about this, "it's not worth anybody's time to worry about it because so little is gained, especially the IRS. The IRS doesn't have the time to review, adjust, and teach, every violating unit because the benefit for them is A LOT less than the cost of their time. Since she has worked with a few scout units (boy scouts and girl scouts), she would guess that 95 percent of them don't have a clue what they are doing. If the adults don't know they are doing it wrong, how would the boys?  

 

Barry

[Stosh]

I don't see that as a valid excuse for not teaching the boys to do it right.  I think the phrase goes something like this, "Ignorance of the law is no excuse."  A Scout is Thrifty he pays his own way...  I don't want my boys thinking the popcorn money is free money for them to use, which in my former units was the assumed stance.

 

I earned my way to camp by getting charity from strangers and in return they got over-priced popcorn and I got to go to camp.  On the other hand are they employed by the CO to sell popcorn to pay for the program?  If that be the case the $20 cash they get for mowing the neighbor's yard?  Is that indicated on their taxes?

 

For me this whole issue isn't what says the tax code, it's all about being an honest Scout/Scouter.  If one doesn't know what constitutes honesty, it might bode well to find out.  Thus the reason for the thread.

Edited January 19, 2017 by Stosh

[Eagledad]

I don't see that as a valid excuse for not teaching the boys to do it right.  I think the phrase goes something like this, "Ignorance of the law is no excuse." 

 

Maybe, but we are taking about how a youths mind is swayed from observing a role models action. "Ignorance of the Law" is an man-made judicial guideline in the justice system. Learning by observing is human behavior that isn't set by man's rules or expectations. 

 

My reasoning is pragmatic. We learn by watching, if we don't know the action is wrong, then human nature assumes that the action is right. 

 

"Ignorance of the Law" is an  attempt to sway acceptance of an opinion by using gilt. I'm an engineer, emotion doesn't come into play for me. I need logical reasoning to change my mind. Drives my wife crazy.

 

Barry

Edited January 19, 2017 by Eagledad

[TAHAWK]

And it gets even messier because of these "sales" even if for non-profits should be collected sales tax in many cases.

If they have a fixed place of business per Norm Sugarman.

[DuctTape]

If they have a fixed place of business per Norm Sugarman.

I am not sure what you mean here. I am especially wary of an absolutist criteria since sales tax is governed by state and local law which can and do differ greatly.

[qwazse]

If the IRS went after athletic booster clubs for stretching the limits on such fundraising for individuals, what's to stop them from going after BSA units especially those associated with private for-profits?  With the raising money for individual members, doesn't that also jeopardize a non-profit's exemption?  One might not see it a big deal for a single unit, but with the amounts of $$'s on the table, it could be a rather lucrative audit situation.

Senator Ryan must have been reading these blogs, thus his desire to lower corporate income tax.

 

The booster club illustration is out of context ... The fundraising for one member was on the scale of $10,000+ annually -- required for membership. Thus the IRS declared that to be an individual benefit.

 

So, it would be disingenuous to rule one youth organization's fees as an individual benefit and another a corporate benefit.

 

Scale matters. It matters a lot.

[Stosh]

If one steals $.01 or one steals $1,000,000, to a scout the issue isn't scale, the issue is honesty.

 

"Scale" is arbitrary and subject to "fuzzy logic".  If a penny doesn't matter, but $1,000,000 does, at what point was/is the tipping point.  Theoretically there could be a million answers to that question.

 

For Scouters teaching boys honesty, citizenship, and morality in their dealings with others, using a scale might not be a choice in the matter.  At least not for me.  Your mileage may vary. 

[TAHAWK]

I am not sure what you mean here. I am especially wary of an absolutist criteria since sales tax is governed by state and local law which can and do differ greatly.

Really good point.  Whether you are a non-profit, whether your sales are subject to sales tax, and even the rate you collect vary by state (lower rate in LA).  As of 2016, sales of Girl Scout cookies are subject to sales tax in three states.

[scoutldr]

Wouldn't the Fair Tax make this a moot discussion?

[DuctTape]

Not really. The "fair tax" is basically a national sales tax which would mean scouts would likely need to collect it based on sales, as the proposed "fair tax" in the early 2000s included food.