Re: Flying Silos; Rendering unto IRS
May 27, 1997 08:20 PM
by M K Ramadoss
At 04:35 PM 5/27/97 -0400, firstname.lastname@example.org wrote:
>In the passionate exchange inst. on the subject of when it is
>proper for money to change hands, I note an extraordinary image
>has been employed: someone has been accused of "firing the first
I am the guilty one to start the topic. (I sure am glad I did it.)
When I saw that the Los Angeles Lodge does not charge anything and admission
is free, it made my day and posted it here. All the discussions followed.
>I am new to the list, and certainly not theosophicalier than
>anyone, but did the author truly mean to convey an image
>evocative of Sherman's progress through the South? Or, stranger
>yet, an agricultural version of Star Wars? Or did the gentleman
>simply mean to write "salvo"?
You may be new to the list. You are as much important as everyone else
here no matter how long they have been on the list. Welcome aboard!
>Presumably, he meant the latter. Odd that, having been taken to
>task on so many other matters, he was not taken to task on this
>one as well.
>It is my understanding of the current tax code that, should an
>organization "charge" for a function, the funds collected become
>taxable. If the same function is financed by "donations," no
>tax liability accrues. In the former case, the organization's
>tax-exempt status might come up for investigation; in the latter,
>the question does not arise, nor would it arise if the function
>were gratis. If my understanding is incorrect, I welcome
The issues are very simple. There are several kinds of tax exempt
organization. We will address only those which are in the category of
"churches" and other spiritual organizations.
Tax exempt organizations are allowed to charge for anything in
furtherance of their objectives they stated when the tax exemption was
applied for. There is another principle that you are allowed to charge so
that the cost of providing the service is recouped. This is to prevent tax
exempt funds benefitting its members or the followers. If tax exempt
organizations involve in activities that are unrelated to its tax exempt
purpose, then any net income from such activities will be taxed like any
other business corporation. For example a church or temple gets into say
convenience store business.
Coming to donation, there is no problem with any amount of donation
being received by a tax exempt organization. But for the donors to deduct it
in their tax returns, the issue is simply does the donor get any tangible
benefit in return. For example there may be a fund raising dinner in which
the donation is $100 per plate. The cost of food may be $15. The donor can
only deduct $85 in the tax return.
All income - (stock) investment and interest is tax exempt. The
organization may have some surplus funds which they may want to invest.
However, if the main activity of tax exempt organization is investment, then
even their tax exempt status may be in trouble.
One issue that I would like to bring up. That is the issue of
control. If a tax exempt organization is indirectly controlled by another
"theoretically" unrelated organization, then such indirect or secret control
can cause serious problems. This is more serious if the control is exercised
from outside the country.
>It would seem to me that those who running the various Lodges
>might wish to be reminded of this legal peculiarity from time to
>time, and have a care that they are keeping it in mind.
Glad you brought it up. When you remind the legal issues, especially the
older organizations become very complacent and ignor them until the whole
thing blows up.
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