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IRS clarifies school booster club fines

U.S. Senator Mitch McCon nell has received a response from the IRS about its recent fines of Fayette County booster clubs, and the lawmaker is trying to determine what further action he might take, a spokeswoman for his office said.

"We are in the process of evaluating options right now," said Courtney Norris.

At the request of a constituent, McConnell, R-Kentucky, inquired in September about the fines and sent the IRS a copy of an August Herald-Leader article about them.

McConnell recently received a letter from Lois G. Lerner, Director of Exempt Organizations for the IRS, explaining that any booster club that raises money to benefit an individual student rather than a group is in violation of federal law and stands to lose its tax-exempt status.

The practice of parents receiving credits toward their children's extracurricular costs — through bingo and other efforts — had not resulted in penalties until recently. But in her letter, which McConnell's office provided to the Herald-Leader, Lerner said the practice was against federal law.

"The requirement that each parent/member of the club must participate in the fund-raising activities in direct proportion to the benefits they expect to receive toward their children's expenses directly benefits specific individuals and the parents instead of the class of children as a whole," she wrote.

Lerner's letter did not mention any group by name. So far, the Bryan Station baseball team booster club has been fined $61,000; the Henry Clay band boosters paid a $30,000 fine and the Lafayette band boosters has been fined $9,000. Officials in the IRS regional office have said they are prohibited by federal law from providing information about the cases.

Earlier this month, a spokesman for U.S. Rep. Ben Chandler said Chandler had also inquired about the penalties at the request of constituents. His office could not immediately be reached for comment on Tuesday.

Meanwhile, Lerner's letter said that the IRS does not prohibit booster clubs from conducting fund-raising activities.

"In fact," the IRS official said, "such organizations may raise funds in many ways" as long as the group as a whole benefits.