The IRS has fined the Bryan Station High School baseball booster group $61,000. It is the latest in a series of tax audits aimed at Fayette County parents who raise money for extracurricular activities.
With a 2008-2009 budget of $44,000, it is money the Bryan Station baseball group doesn't have, said club vice president Jimmy Boling: "It's a travesty."
The Henry Clay band boosters paid a $30,000 fine this year, and the Lafayette High School band boosters have appealed a $9,000 fine.
At issue is the longstanding practice of Fayette County booster clubs giving parents monetary credit for fund-raising, including working at bingo parlors and concession stands, car washes and candy sales. Often that credit is subtracted from the annual fees parents pay for extracurricular activities such as band and sports.
In the Bryan Station case, the IRS also cited the fact that the club allowed another booster club to work with it at a bingo hall.
"I think the IRS is shooting a gnat with a cannon," said Michael Reynolds, the Lexington attorney representing the Bryan Station baseball boosters.
He also represents the Henry Clay High School booster council — a separate group from the band boosters. The booster council supports activities such as drama, ROTC and athletics. The booster council also faces an IRS penalty, but Reynolds declined to say how much.
The Henry Clay booster council and the Bryan Station baseball boosters are appealing.
The Henry Clay band boosters club paid the $30,000 fine so the IRS would not go after individual families. There was a threat that the IRS would do so because the credits would be counted as income to the parents.
There has been no report of the IRS making individual parents pay in any of the cases.
"We have done some things that are technically wrong, but we dispute many of their findings," said Reynolds. "We are amenable to a reasonable settlement," but "this is absurd. There are going to be kids who won't be able to play and participate."
Reynolds said that he's talked to groups from all Fayette County public schools and he thinks at least one organization from each school faces audits and fines.
He said the fines are even more puzzling because the booster clubs in Fayette County have corrected the errors they made, including giving parents credit for work, and are now complying with IRS rules.
Boling said the IRS is also seeking to strip the Bryan Station baseball boosters of the 501(c)(3) tax status given all non-profit groups. They would lose the charitable gaming license for bingo they say they need to fund the baseball program.
Fayette County Schools pays for head coaches and band directors and some assistants, but most expenses for sports and extracurricular activities are left to the parents.
With the $44,000 in the current budget, Bryan Station's baseball booster parents hope to pay uniform expenses, field maintenance, baseball equipment, umpire fees, and travel and food for the players.
The IRS says it is prohibited by federal law from commenting on individual cases.
But IRS officials told attorneys and leaders with the Lafayette band boosters this year that the IRS is concerned about whether individual parents receive benefits or whether the fund-raising activities benefit the entire group of students.
Giving parents credit to work off fees for which they otherwise would have to write a check was widely accepted until the fines began.
Fayette County Schools spokeswoman Lisa Deffendall said that booster clubs had had fund-raisers for years without a problem, so they were surprised at the IRS's position. The district essentially has no authority over the private groups, but it provides booster-club training that includes instruction on IRS regulations.
Fund-raisers, particularly bingo, help booster clubs raise hundreds of thousands of dollars for uniforms, trips and equipment and athletic fields.
Booster club officials say that no child who wants to participate but can't afford the fees is turned away. But many of the groups that have been audited worry that students will avoid activities if their parents can't pay the bills through fund-raising.
"They are putting the booster clubs out of business and it's hurting the kids," said Reynolds.
He said that in terms of bingo as a fund-raiser, IRS officials are appearing at state charitable gaming seminars to help educate parent volunteers.
Some parents have contacted the offices of U.S. Sen. Mitch McConnell and U.S. Rep. Ben Chandler. Both lawmakers have made inquiries to find out what laws and policies have given rise to the audits.
Jennifer Krimm, a spokeswoman for Chandler, said that various booster clubs in Fayette County had contacted Chandler's office. "The office," said Krimm," has yet to hear back from the IRS."
Reach Valarie Honeycutt Spears at (859) 230-5209 or 1-800-950-6397.