Welcome to the Social Clubs Resource Webpage overview. Part of our mission at IRS Exempt Organizations is to provide our customers top quality service by helping you understand and comply with applicable tax laws. This webpage provides helpful information for organizations exempt or seeking exemption under Internal Revenue Code, or “IRC” section 501(c)(7).

The information contained in this presentation is not official guidance.

Let’s start by going to IRS.gov/socialclubs on your personal computer or mobile device. You can also find the Social Clubs resource page by going to IRS.gov and typing “social clubs” in the search box.

The Social Clubs resource page provides seven categories of useful information that address a variety of topics for social clubs.

Let’s take a closer look at each of these.

The first category is “Exemption Requirements." Here you will find a discussion about the requirements social clubs must meet to be exempt from federal income taxation under IRC Section 501(c)(7). Follow the links provided for an in-depth look at each of these requirements. For example, an essential requirement of an exempt social club is personal contact among members. If you click on the link “personal contact” it will take you to this page where you will find further explanation of just what it takes to meet this requirement. Next, let’s look at the “Effects of Nonmember Income on Exempt Status” category.

Here we provide guidelines on nonmember income limitations. For instance, did you know that generally a social club’s nonmember income, including investment income, cannot exceed 35% of its gross income or it runs the risk of losing its tax-exempt status? Take a look at the resource page and dive further into this topic to ensure your club is following the specific requirements.

The next category of information found on the resource page is “Unrelated Business Taxable Income." Although social clubs are generally exempt from tax, they are subject to tax on their unrelated business income, which includes income from nonmembers. Information found under this category can help you learn what “unrelated business taxable income” is and whether your organization is liable for reporting this income on Form 990-T, Exempt Organization Business Income Tax Return. “Recordkeeping Requirements” is the fourth category found on the resource page. Here we address the importance of properly maintaining a recordkeeping system; one that distinguishes one type of income from another as well as one type of expense from another.

You will also find a link to Revenue Procedure 71-17 which provides explicit details on recordkeeping for social clubs that conduct activities with nonmembers.

Our next category, “Required Filings,” provides information on various types of returns you may be required to file.

Even though IRC Section 501(c)(7) social clubs are exempt from federal income taxation, they are generally required to file annual information returns of income and expenses. They may also be required to file and pay employment taxes.

Follow the links provided here to ensure your organization is meeting its filing requirements.

The sixth categories found on the resource page is “Additional Information." Here you will find links to resources that provide additional information on topics of interest to social clubs.

For example, the link for EO Continuing Professional Education Articles – IRC 501(c)(7) Social Clubs takes you to numerous articles that provide in-depth information specific to IRC Section 501(c)(7) organizations.

The Issue Snapshot: Relevance of Rev. Proc. 71-17 on IRC Section 501(c)(7) Organizations link will take you to an Issue Snapshot written about Revenue Procedure 71-17. Issue Snapshots are employee job aids that provide analysis and resources for a given technical tax issue. You will find these and other invaluable resources under the “additional information” category heading.

And our final category on the Social Club Resource webpage is “Publications." Here we provide links to three publications you may find useful. Publication 557 discusses the rules and procedures for organizations that seek recognition of exemption from federal income tax under IRC section 501(a).

Publication 598, Tax on Unrelated Business Income of Exempt Organizations, covers the rules for the tax on unrelated business income of exempt organizations. It explains: Which organizations are subject to the tax; what the requirements are for filing a tax return; what an unrelated trade or business is; and how to figure unrelated business taxable income.

And finally, Publication 4221-NC, Compliance Guide for Tax-Exempt Organizations (other than charities). This publication discusses: Activities that may jeopardize your exempt status; federal information, tax returns or notices that must be filed; The “why, what, and when” on recordkeeping; required public disclosure; and resources for tax-exempt organizations.

We encourage you to visit the Social Clubs resource webpage for valuable information that will help you apply for and maintain IRC Section 501(c)(7) tax-exempt status. Thank you for watching.