Clubs organized for pleasure, recreation, and other nonprofitable purposes, substantially all of the activities of which are for such purposes and no part of the net earnings of which inures to the benefit of any private shareholder.  
                                                                                                                                                                                 - Internal Revenue Code Section 501(c)(7)

Exemption Application

• Form 1024, including Schedule D (current form is dated 9/98).
• $600 (as of 1/11/18, new Form 8718 not yet available)
  
• Submit fee using Form 8718.
  
• There is no filing deadline for a 501(c)(7) application. 
  
• In late 2015, 501(c)(7) organizations were given the right to go to court to seek a Declaratory Judgment when the IRS denies an exemption application.
  

Annual filing

• Gross receipts normally less than $50,000 - file Form 990-N
• Gross receipts normally less than $200,000 - file Form 990-EZ
  
• Gross receipts normally more than $200,000 - file Form 990
  
• Check instructions: an organization's assets can also affect which form must be filed
  

Caution: An organization that fails to file a required return for three years in a row will have its exempt status automatically revoked.

Basic Rules

• 501(c)(7) social clubs must be organized for pleasure, recreation, and similar nonprofitable purposes
• Generally, social clubs are membership organizations primarily supported by dues, fees, charges or other funds paid by their members. 
  
• Unlike most other types of exempt organizations, social clubs are taxed on all income derived from outside their membership, including investment income
  
• Advertisements inviting the public to patronize a 501(c)(7)'s facilities are considered evidence of a business (rather than non-profit) purpose.
  
• 501(c)(7) organizations may not have any written policy which discriminates against any person because of race, color or religion
  
• Donations are not deductible as charitable contributions
  
• Larger organizations may be required to disclose that contributions are not deductible in their solicitation materials
  
• (c)(7)'s cannot qualify for the special low rate non-profit bulk mailing permit
  

Lobbying/Political

• Lobbying or political activity cannot be the primary purpose of a 501(c)(7) organization
• 501(c)(7)s are permitted to limit their membership based on membership in a political party
  
• Political expenditures will, in most cases, incur a penalty tax.
  

Examples

• Bowling leagues
• Hobby clubs
  
• Travel clubs
  
• Sports clubs
  
• Country clubs
  
• Dinner clubs
  
• At the end of fiscal year 2015, there were 47,956 501(c)(7) organizations, about 3.1% of all 501(c) organizations
  

Links:

• Social Clubs IRS webpage summarizing rules for 501(c)(7) organizations
  
• IRS Publication 557, Tax Exempt Status for Your Organization
  
• There are many Exempt Organizations Continuing Professional Education articles on social clubs.  The best way to access these is through the Exempt Organizations CPE Topical Index.
  
• Compliance Guide for Tax-Exempt Organizations (Other than 501(c)(3))  IRS Publication 4221-NC
  
• Section 7.25.7  of the Internal Revenue Manual
  ​

​​Return to Alternatives to 501(c)(3) Status

501(c)(7) Social Clubs