Sales Tax Exemption

Laws vary from state to state regarding whether a club may use the Association’s tax-exempt status in order to be exempt from paying sales tax. Several of our clubs/affiliate reside in states that do not provide this exemption, so please consult your professional advisors for the rules in your state.
 
In Michigan, clubs/affiliates eligible to use the Association’s tax-exempt status need not pay sales tax on purchases and vendor-provided services (e.g., meals in a country club). For sales tax to be waived, you should be prepared to provide the vendor or merchant (1) your letter of Association affiliation and (2) the Association’s exemption letter from the IRS.
 

Filing Tax Returns

Laws regarding the filing of tax returns and annual reports vary from state to state and you should consult your professional advisors for the rules in your state.

In Michigan, all nonprofit corporations must file an Annual Report with the state ($20 fee; read more here). Michigan law does not, however, require clubs/affiliates to file an annual state income tax return unless the club offers goods for sale.

 All clubs/affiliates earning “unrelated business income” of $1,000 or more must file IRS Form 990T (.pdf) annually. “Unrelated business income” is defined as income from a trade or business, regularly carried on, that is not substantially related to the performance by the organization of its exempt purpose or function (e.g., selling ads in a regularly published magazine). For more information, visit the IRS’s website.