How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Robin D. Your Own Question

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7363
Experience:  15years with H & R Block. Divisional leader, Instructor
14155347
Type Your Tax Question Here...
Robin D. is online now
A new question is answered every 9 seconds

We are starting a volleyball club in PA. The parents are billed

Customer Question

We are starting a volleyball club in PA. The parents are billed a season fee. Most of the costs are pass through (they are billed for exactly what the cost is)such as court rental, tournament registrations, uniforms etc. We do charge a administration fee which pays our directors and hopefully some profit for us. In the state of PA do I need to set up the club as a business and are we required to pay sales tax on the club fees?
Submitted: 3 years ago.
Category: Tax
Expert:  Robin D. replied 3 years ago.

Robin D :

Hello and thank you for using Just Answer

Robin D :

The sales and use tax is imposed on the retail sale, consumption, rental or use of tangible personal property in Pennsylvania. The tax is also imposed on certain services relating to such property and on the charge for specific business services. Major items exempt from the tax include food (not ready-to-eat); candy and gum; most clothing; textbooks; computer services; pharmaceutical drugs; sales for resale; and residential heating fuels such as oil, electricity, gas, coal and firewood.
Club dues are not a taxable item for sales tax in PA.

Customer: So, I guess my question is :can I just set up a bank account for the club and not have to worry about reporting anything to the IRS?
Robin D :

Well you may wish to organize your club under the non-profit umbrella. Let me get you some more info on that. One minute

Robin D :

Organizations that may be exempt under Internal Revenue Code section 501(c)(7), if they meet the requirements for exemption, include--



  • College fraternities and sororities

  • Country clubs

  • Amateur hunting, fishing, tennis, swimming and other sport clubs

  • Dinner clubs that provide a meeting place library, and dining room for members

  • Variety clubs

  • Hobby clubs

  • Homeowners or community associations whose primary function is to own and maintain recreational areas and facilities

Robin D :

To be exempt, a social club must meet the following requirements—



  • The club must be organized for exempt purposes .

  • Substantially all of its activities must further exempt purpose


    • If the club exceeds safe harbor guidelines for nonmember and investment income, the facts and circumstances must show that it is organized substantially for exempt purposes.

    • The club has de minimis income from nontraditional sources (i.e., from investments or from activities that, if conducted with members, would further the club's tax-exempt purposes).

    • For a discussion of the effect of nonmember and "nontraditional" income on the tax-exempt status of social clubs under section 501(c)(7), see Nonmember Income.



  • The club must provide an opportunity for personal contact among members, and membership must be limited.

  • The club must be supported by membership fees, dues, and assessments.

  • The organization’s net earnings may not inure to the benefit of any person having a personal and private interest in its activities.

  • The club's governing instrument may not contain a provision that provides for discrimination against any person on the basis of race, color, or religion.

  • The club may not hold itself out as providing goods and services to the general public.

Robin D :

Although they are exempt from income taxation, social clubs are generally required to file annual returns of their income and expenses with the Internal Revenue Service. If a club has unrelated business income , it must file an unrelated business income tax return. In addition to filing an annual exempt organization return, social clubs may be required to file other returns and pay employment taxes. Some clubs may be required to file certain returns electronically. The club can have employees and they work a lot like a for profit business but have advantages. You will need to speak with an attorney in your area about organizing as a non profit club and then apply for your exempt status.

Robin D :

I know the above is alot to think about but you should be better prepared to speak with an attorney now since you know you have another option.

Customer:

Thanks

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7363
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 4 other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.