IRS Form 990 Filing Requirements for Sports Clubs- Updated May 12, 2020 - 8.00 AM - Admin, ExpressTaxExempt
IRS recognizes the Sports clubs under the section 501(c)(3) as tax-exempt. This type of Organization does not pay income tax on its earnings or on the donations it receives. But the Organizations need to file the activities of the Organization with the IRS.
This article further explores the requirements for activities of the Sports club, applying for a tax-exempt status, filing requirements, and more.
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Table of Content
1. What is a sports club?
Sports club usually consists of a group of members who come together to form an association to play sports. A sports club will be considered as a non-profit organization if the organization operates exclusively for the welfare and the development of a sport rather than profits.
A sports club has to participate in national or international sporting events for the promotion of the game to gain a section 501(c)(3) tax-exempt status. The organizations can also gain a tax-exempt status if the activities of the organization are mainly to develop the youngsters in a sport.
2. Examples of Sports club
These sports clubs can play more than just one sport. As far as the primary purpose of the sports club is the development of the sport, it can also conduct multiple sports activities. These clubs are classified as Single sports clubs and multi-sport clubs.
They are also classified based on the members of this club playing within the club or playing with members or teams of another club.
3. Unique Non-Profit activities
Like every other section 501(c)(3) organization, the primary purpose of a sports club should also be for the welfare of the people to be considered as a public charity. The sports clubs have to develop and promote one or more sports for them to be recognized as a section 501(c)(3) organization.
A sports club or a sports league can broadcast the sport on television and use it as their primary source of income and still qualify as a tax-exempt organization. This is because broadcasting sports is also considered as a development of the game.
These clubs are considered public charities and therefore cannot actively participate in political activities. The lobbying activities of this organization should not be considered as its primary purpose and only a limited amount of funds should be allocated for these activities.
4. 990 Filing requirements for Sports Clubs
A Sports club is considered as a public charity and needs to be approved by the IRS under section 501(c)(3) to file the Form 990 series. The sports club has to file Form 1023 with the IRS for it to be eligible for the tax-exempt status. The sports club will receive a determination letter from the IRS which recognizes its tax-exempt status.
The filing of Form 990 depends upon the gross receipts of the sports club:
Sports clubs that have gross receipts of $50,000 or less can file a Form 990-N (e-Postcard) if they choose not to file Form 990 or Form 990-EZ. Sports clubs whose gross receipts vary from year to year can file a Form 990-N if the average of their gross receipts is $50,000 or less for the previous three consecutive years.
Sports clubs whose gross receipts are equal to or higher than $200,000 and total assets equal to or greater than $500,000 at the end of the taxable year are supposed to file Form 990. The Sports clubs are required to attach a Schedule A along with their Form 990 to describe their public charity status.
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