Reports pop up almost by the day now from different parts of the country where the question of why clubs and courses should benefit from tax breaks has been brought up for renewed debate.
The erosion of tax bases through job losses and declining real estate values has set off a real scramble among municipalities and public-funded organizations that are desperate to replace lost revenues. And nothing, or no one, appears to be immune from scrutiny, as officials look in every corner and under every couch cushion to find any means possible to avoid raising taxes to make up for the shortfalls.
In my local township, the school board was all set to make teachers who had earned Ph.D.s (and were being paid accordingly) take forced retirements or pay reductions, regardless of their tenure, positions or performance assessments. If you had too many letters after your name, you became a target simply for that reason. But this (understandably) set off a debate about what was being valued in our local education system, so the school board backed off and hit us all with a pretty significant tax hike.
As you might imagine, clubs and their properties are not escaping this scrutiny, either. Reports pop up almost by the day now from different parts of the country where the question of why golf courses and private clubs should benefit from tax breaks has been brought up for renewed debate. And they almost always include some suggestion that course operators and clubs aren’t pulling their weight.
One report from Washington state about a county’s open-space property tax exemption for enhancing scenic resources and recreational opportunities noted that “by taking advantage of this, golf courses have shifted more than $130,000 annually in taxes to other property owners.”
Sometimes, the “suggestion” isn’t very subtle—or unbiased. A recent report on LoHud.com, the website of The Journal News that covers the suburban New York City counties of Westchester, Rockland and Putnam, carried the headline, “(Loop)hole in one: 33 elite, private golf clubs do not pay federal taxes.”
And while this report might have been a little short on objectivity, it was certainly comprehensive—and intrusive. It included an interactive graphic with a map of the three counties on which the locations of 71 different golf courses and clubs, including private ones, were plotted. If you hovered your mouse over any of the locations, a popup box appeared with details on the club’s number of employees, membership dues and initiation fees, and end-of-year net assets on fund balances.
The LoHud.com report also provided links to tax forms filed by tax-exempt clubs in the three counties, and even a list of the Top 10 earners at those tax-exempt clubs.
Not surprisingly, the report also included this quote from an attorney who works with tax-exempt nonprofit organizations: “Any elitist group that’s gained a [tax] exemption without giving back to the community, I would say is not entitled to one. They’re getting a personal benefit.”
If you haven’t yet seen evidence of clubs in your area being put under the microscope, and characterized, in this fashion, you’d be wise to prepare for it and have your side of the story ready, if needed.