Tax write off

[Oak Tree]

The links that AlFansome posts are so identical in nature that it seems they must all originate from a common source.

 

The quote "Units may use the tax ID number of their chartering organization, if given permission. This may

be especially useful for the unit if that organization is tax-exempt" occurs there, and also on the page of the Potawatomi Council, which is interestingly enough a subpage of the national website, scouting.org.

 

This certainly contrasts with what BadenP says is the official policy of the IRS. Not that I have any good way to tell which is more "correct".

[Vicki]

The truth is closer to what BadenP says than what Beavah posts, but the topic is one that gets complicated fast because very specific language and terms are involved that are not completely understood by those using them (no offense intended, other professions have their language which I don't understand). However, tax court is the only place where disputes are definitively settled and accountants are a lot like lawyers - you can find conservative ones and liberal ones, it's all in your tolerance for risk. I tend to lean to the conservative side.

 

Tax deductibility of donations should not be confused with using the CO's EIN for a bank account. The former is something in which the IRS may take an intense interest, but they could care less about the latter (unless and until there is fraud or other chicanery, then all bets are off, obviously).

 

When I was the troop's treasurer, I always recommended to the potential donor that they write the check to the church and designate it to the Boy Scouts.

 

For Eagle project purposes, any donations should be donated to the entity that will benefit from the project in order to preserve the deductibility of the donation. Letters acknowledging the donation should come from that entity on its own letterhead.

 

Vicki, with her accountant's hat on.(This message has been edited by Vicki)

[BadenP]

Whoa there people, to answer the questions posed to me, 1) a church choir is part of the internal church structure, all of their services directly benefit the church so there is no conflict there using the EIN of the church 2) Unless a troop has qualified for their own EIN number they are not a legal 501c3 nonprofit, they can not use the sponsoring organizations EIN because of legal tax laws that identify them as seperate entity from the church. Now if a troop sets up a bank account using a church EIN then technically and legally that is a church account and they have full control of how those funds are dispersed not the troop leaders, which is why that option is not usually advised in case of an internal conflict.

 

3) Beavah, a church youth ministry program by its defintion teaches and guides youth through religious training according to that particular denominations beliefs, the BSA by its very nature is a non denominational entity and does not formally teach religion, a scout is reverent refers the boy to their particular faith, so the BSA is at best a program that can be used to supplement a youth ministry program not take its place. The LDS units might be the only ones to qualify as a direct youth ministry program, even though their training goes beyond what happens within the unit. Now I am not a lawyer but I was fully trained in tax law and I am also an ordained minister so if your question is about a troop being a legal 501c3 entity by virtue of using a church EIN federal tax law says no. A scout unit is considered to be part of the BSA, the chartering partner agrees to use the scouting program according to the rules and standards set by the BSA, they DO NOT have the authority to alter that program into a religious conversion program of their own choosing as that would violate the charter with the BSA. Shields Up!

[Oak Tree]

BadenP, you say a unit "can not use the sponsoring organizations EIN "

 

But the BSA explicitly says "Units may use the tax ID number of their chartering organization, if given permission."

 

BadenP, you also say "A scout unit is considered to be part of the BSA"

 

While the BSA says "Scout units are not considered subordinate organizations of the BSA, they are not included within the BSA group exemption, and they are not entitled to use the BSA's Group Exemption Number ("GEN"). This is an IRS rule."

 

So if I understand you correctly, you are saying that BSA has interpreted the law incorrectly (or at least differently than the IRS has).

 

You also, if I'm reading you correctly, say that donations to the church that go to the troop would not be tax-deductible, because they do not benefit the church. Both Vicki and Beavah appear to argue otherwise. How would you advise making donations to the troop, so that they would be tax-deductible?

[NealOnWheels]

I am not a tax accountant nor an attorney.

 

I am confused to all this 501C3 business.

 

For the average citizen such as myself we rely on the IRS publications for guidance. We do not study tax law.

 

Publication 526 discusses eligable charitable organizations. Nowhere in that document does it mention 501C3.

 

If law does require an organization to be a 501C3 for a person to deduct a charitable contribution then the IRS has done a diservice to the average citizen by not mentioning that fact in publication 526.

 

So to you who get paid to do this tax stuff - what is the real story here?

[NealOnWheels]

In regards to the $100 camp fee and the deductability of room and board.

 

Publication 526 says that lodging and meals are considered "deductable travel expenses".

 

http://www.irs.gov/pub/irs-pdf/p526.pdf

 

[BadenP]

All I can tell you guys is call the IRS directly and make your inquiries, let it come straight from the horses mouth instead of this forum, and then you can make the correct and informed decisions instead of what is on a website. The IRS will not care what the BSA or any other website states as tax rules if you ever get audited, believe me.

[Oak Tree]

NealOnWheels,

 

Pub 526 may not mention 501c3, but it does say "You can deduct your contributions only if you make them to a qualified organization. To become a qualified organization, most organizations...must apply to the IRS." It also says, accurately, that organizations typically know if they are tax-exempt, and you should just ask them. In the [...] section of the quote, it says that churches don't have to apply to be 501©(3), but many of them do anyway, according to the instructions for form 1023.

 

And yes, I am now completely convinced that your Scout camp fee is completely deductible, as long as you are on duty.

 

From everything I can see, local Boy Scout councils are normally treated as subordinate to the National Council, but local Boy Scout units are subordinate to their chartered organization. This is consistent with the IRS documentation, which says that a central organization must exert control of the subordinate group, and I think we've pretty well established that is not the case with Boy Scout troops.

 

I understand that the IRS and the tax courts actually determine the meaning of the legislation, but I'd love to see any evidence that donations to Boy Scout troops are not actually tax-deductible, especially when made through their chartered organization. For now, I think I'll live with the assumption that you can still make a tax-deductible donation to my troop through the church.

[Beavah]

All I can tell you guys is call the IRS directly and make your inquiries

 

Yah, that's a laugh, eh? We all know da folks manning the taxpayer help lines are minimally trained low level staffers with very high error rates, and that consulting with them in advance is not a defense in an audit.

 

For good answers that can offer yeh some protection against penalties, it's a CPA. For real answers of a technical nature, it's an attorney specializin' in tax law for NFPs.

 

Some answers, though, are fairly straightforward. Sorry, but a scout unit is most definitely not considered to be part of da BSA. If they were, then they would partake of da BSA's tax exempt status, and the BSA wouldn't need to provide insurance for da COs. Yeh just aren't understandin' the law, BadenP. As for "legal tax laws that identify them as seperate entity from the church"... legal tax laws, eh? I'll assume that's a technical term . Sorry, I'll stand by my original statement. "Legal tax laws" don't get to rewrite da corpus of corporate law.

 

NealonWheels, to back up for a second, section 501©(3) of the Internal Revenue Code is what defines a not-for-profit charitable entity which qualifies a donor for a tax deduction. That's the U.S. law. Yes, to be deductible a donation must be made to an organization which qualifies under that section of the law. Besides the law itself, as a federal agency the IRS can promulgate regulations to define how it interprets and enforces the law. These constitute "administrative law" - the executive branch's approach to interpreting and enforcing the statutory law.

 

Sadly, booklets and information packets and other documents like Publication 526 that attempt to write in plain English really are only informal documents and generally have no legal force. So nope, yeh can't rely on 'em, just like yeh can't rely on an average IRS front-line employee to get stuff right when it's at all technical.

 

Odd system we have, eh?

 

Happily, for any of da issues or amounts we're typically talkin' about for scoutin', it just isn't a problem. Pick up Tom's most recent guidelines and approach things honestly and you'll be fine. But if you're doin' anything unusual with bigger dollar amounts, that's when an accountant or tax attorney are worth their wage, eh?

 

Beavah

 

[scoutldr]

I will just continue to do what allows me to sleep at night. I will read the IRS guidelines, and go with TurboTax and do what I think is the right thing. A Scout is Trustworthy. I have never deducted camp fees, because I would be eating anyway. I know for a fact, the Camp does not make a profit on camp fees. It's not worth it to consult a tax attorney to get the extra $3 refund on my taxes, or to pay a CPA $500 so his secretary can key-punch it into the professional version of TurboTax. My life is not that complicated. If I get audited (not yet), I will be honest about what I did and why I did it and take what comes. It's not going to break me either way, and there was no intent to defraud. I'm just an honest American trying to do the right thing.

[BadenP]

Beavah, as I said I am not a lawyer and FYI there is a speciality department in the IRS that deals exclusively with what we have been discussing, 501c3's and you can be transferred directly to them at any time, that department is manned by senior tax auditors who will make sure you understand the process to the last minute detail. Listen I left the IRS because I got tired of their strongarm attitude and their ideology that everyone out there will try to screw the government if given a chance. It is a bad system, but I also know what the IRS can and does to you if you get caught in an audit, it is not a pretty sight. I agree with you that a CPA/Attorney with a speciality in tax law is worth their weight in gold. So chill out already, lol.

 

As far as a scout unit being part of the BSA, I can tell you this for a fact they are NOT considered to be part of their sponsors 501c3 organization under Federal tax law. As far as their relationship to the BSA that seems to be addressed everytime there is a lawsuit filed against someone or group within the BSA and National is also a named party, but that is for the courts and lawyers to determine.

[John-in-KC]

Reading through all this, the common sense message to me is "If in doubt, visit with your COR and with your Chartered Partner's CPA/attorney."

 

I've successfully deducted trips to Philmont Training Center, including my mileage ... but I didn't claim EagleSon's Mountain Trek.

 

I've successfully deducted my mileage to and from work weekends at Scout Camp ... but not the hand-drill motor which sees as much use at home as at camp.

 

Dad WAS an IRS agent and a CPA. More than once, he's told me that the computer takes your numbers and audits them. Your return is scored. If the score is high enough or a particular area shows interest, you're going to be audited, either in whole or in part.

 

Vicki, good to see you. Will email you!

[hotair36]

In response to Vicki, "with her accountant's hat on", she wrote "Tax deductibility of donations should not be confused with using the CO's EIN for a bank account. The former is something in which the IRS may take an intense interest, but they could care less about the latter (unless and until there is fraud or other chicanery, then all bets are off, obviously)."

You are correct that the US Tax Court is the forum for resolving disputes and any advice from an attorney and/or account is just advice. The taxpayer signing the return is responsible for it's accuracy and truthfulness.

A clarification though needs to be made concerning the use of another entity EIN/TIN. IF and WHEN an IRP (Information Returns matching Program) run is made in a service center and checked against a filed return (either a 990, 990N, 1120 series or 1040 series return) and the amounts reported on all 1099's do not total the reported income that is when an audit issue arises. That is why a unit should obtain it's own EIN/TIN and most likely have no filing requirement or a diminimis tax liability.

The amount of a leaders fee at camp would not be an itemized deduction since something of value (food) is received for the payment.

 

OK, like BadenP, I admit to being a retired IRS agent.

 

[Beavah]

I can tell you this for a fact they are NOT considered to be part of their sponsors 501c3 organization under Federal tax law.

 

OK, I'll play

 

I'm sittin' here with da USC on da shelves, and my computer is all powered up to Lexis-Nexis. Perhaps yeh would be good enough to give me the citation where yeh think any federal statute says that, or any court of competent jurisdiction held that interpretation?

 

I know a lot of major CO's are goin' to be quite surprised that they have the liability for runnin' a troop, and they have mounds of materials and even national bodies dedicated to usin' scouting for their ministry work, but that the IRS suddenly feels that they are non-charitable, unregistered, unincorporated associations.

 

Yeh just aren't gettin' this right, mate. And if da IRS were really to take this position as a point of law with anyone who has da capacity to contest it, they'd lose.

 

But I'll be happy to take a look at your citation.

 

Beavah

 

[Beavah]

The amount of a leaders fee at camp would not be an itemized deduction since something of value (food) is received for the payment.

 

Yah, I don't think yeh got that one right, mate.

 

Cost of meals when travelin' overnight away from home for charitable work is deductible at 100%.

 

Ain't the same thing as a charitable banquet.

 

Beavah