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IRS Clarifies Deductibility of Service Club Dues

August 12, 1994

WASHINGTON (AP) _ As long as their primary purpose is serving the public, dues to such clubs as the Lions, Rotary and Kiwanis would continue to be tax deductible under regulations proposed by the Internal Revenue Service.

The status of the dues was thrown into doubt last August when Congress passed a budget act that banned the deduction of dues to social clubs.

Most social club dues had been deductible as long as the taxpayer derived a business benefit, such as meeting clients, from membership. Contributions to strictly professional organizations, however, continued to be deductible.

Under regulations the IRS proposed Thursday, dues to clubs will continue to be deductible as long as the organization’s principal purpose is public service, not recreation or entertainment. Taxpayers would continue to have to show they derive a business benefit from their membership.

The proposed rules will be issued in final form after the IRS considers testimony from a public hearing scheduled for November.