Quote:
Originally Posted by Titchou
That's what I said. The threshold for non member income is $1000. That includes any donations from non members, rental income from non members, investment income, etc. However, if the board votes to "set aside" that income for qualifying items such as mortgage principal payments, building repairs (future roof, boiler, etc)etc, then that income can be exempt from federal taxes. Since each state has varying requirements for such organizations, I am not addressing that...only federal, which really is the more testy mine field.
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Well, you did address state (and local) by noting that orgs have to pay sales tax. That's why I addressed that.
As for non-member income, I think the current IRS rules are that no more than 35% of income can come from non-member sources, and no more than 15% can come from non-member use of facilities. These are the "safe harbors" -- a 501(c)(7)'s tax-exempt status is safe if its non-member income doesn't exceed these percentages. Also, the safe harbor doesn't apply if the non-member income is unrelated to regular organization activities that further the organization's purpose (e.g., if the org basically has a business on the side).
The bottom line is that 501(c)(7) orgs are tax-exempt within the meaning of the Internal Revenue Code. As with any tax-exempt organization under any provision of the IRC, there may be limits or exceptions to that general tax exempt status.
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