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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Question. Our school district used to do a point system with band students. Parents/studen

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Question. Our school district used to do a point system with band students. Parents/students worked fish fries and earned points that got converted to a dollar amount and deducted from trip balances so we had to pay less on trips. We started booster club and stopped points cause we were told its illegal. Now school wants booster club dissolved and points system started back (students would have individual accounts and earn points). IRS (print out friend got from site) and tax lawyer still say its illegal. Is this correct?

LEV :

Hi and welcome to Just Answer!
What exactly your tax lawyer thinks - is illegal?
Can you provide a reference to the IRS site you mentioned?

Customer:

I don't have that in front of me. A friend found info on their site. Tax lawyer says its illegal I guess because of earning points and it getting turned into a dollar amount.

Customer:

We were told other schools have got in trouble for this same thing and IRS fined them.

Customer:

Our booster club is a 501c3 organization.

Customer:

School wants to dissolve it.

LEV :

So far - I do not see anything illegal.
However I am not clear what exact action is considered illegal and why - if you could get some explanation from the attorney I will examine it.
There might be other reasons why the school board wants to dissolve the booster club.

Customer:

They say former band director started it without their approval but I'm just trying to find out why points are illegal. Do parents have to show as income maybe?

Customer:

Thanks for your time.

Customer:

Booster club was going on its 3rd year so its hard for us to believe they knew nothing about booster club.

Customer:

501c3 that is.

LEV :

Even if parents have to report these amounts as taxable income - that doesn't mean payments themselves are illegal. That is not an issue.
The issue likely is a conflict between the band director and the school board (or at least some members)

Customer:

thanks for your time.

Customer:

We do not get the money. The points they earn get converted into a dollar amount then when it come time to pay on a trip that amount gets deducted from trip balance student owes.

Customer:

Its all confusing to me also. Guess we see what else the tax lawyer says. I need to get off here and fix supper. Thank you.

LEV :

So far _ there is nothing illegal as I see.
What exactly your attorney called illegal - is not clear - that we need to verify.
You may come back any time.

LEV :

Please be sure to come back with additional information.

Lev and 2 other Tax Specialists are ready to help you

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