Do you want to help a local athletic organization that benefits your children? There’s a way you can claim a charitable tax deduction for your support.
Strategy: Join the booster club for an amateur sports program. If you meet the tax law requirements, you can write off the difference between the club dues and the value of the benefit received.
But be aware that the IRS is cracking down on inflated deductions. In a recent memo to field agents, the IRS Chief Counsel notes that the benefit value may actually exceed the amount of the contributions. (IRS Office of Chief Counsel Memorandum, PMTA 2011-04, 11/24/10)
Here’s the whole story: Traditionally, the IRS has recognized booster clubs that promote amateur athletics and instruct youths as tax-exempt organizations. A club often charges dues for participation and related reasons. For example, it might require each participant to pay $1,000 to cover registration and the cost of facilities, training equipment and travel.
The booster club may reduce this fee by amounts the family collects through fundraising.
Facts: An IRS agent examined the membership package for a tax-exempt booster club. Club participants practice and participate in competitions against other clubs. In exchange for the required dues, the club provides instruction and practice for youths of various age groups.
According to the membership materials, the club retains full-time and part-time coaches on staff for year-round instruction. The club provides all competition entry fees, team clothing and accessories to wear during competitions and registration fees with a national organization. The club also allows participants to use its athletic facilities throughout the year.
Based on these facts, the IRS Chief Counsel said it could not determine the value of the membership package. However, considering the substantial benefits provided by the organization, it seems unlikely the participants would qualify for a charitable deduction.
Tip: Another new IRS memo could spell trouble for booster clubs (see box below).