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Takeout is a Solution to Public Safety, Not a Tax Problem

One thing that the novel coronavirus (Covid-19) has produced is lively debate within the industry. Other than 1) wear a mask, 2) wash your hands, 3) don’t touch your face and 4) social distance six feet away from others, there is strong debate on everything else in our daily lives and everyone has an opinion.

Even with the record levels of golf being played at every private and public golf course nationwide, other amenities, areas and activities within the clubhouse remain areas of concern with regard to social distancing and adherence to mandated capacity issues.

Early in the pandemic takeout food became, and continues to be an absolute life saver for clubs nationwide. Many clubs would have not survived without offering and providing food and beverage as a takeout option. The ability of takeout continues to be an extraordinary solution for a virus that doesn’t seem to be a temporary problem. However, food & beverage is, by the letter of private club tax laws, “non-traditional revenue in clubs with a 501(C)7 tax status.”

In the recent issue of the Private Club Advisor, club tax firm PBMares states, “clubs need to communicate to their members that takeout food may not be able to continue after the pandemic and such be viewed as a temporary solution.” Additionally, PBMares warns, “the IRS may be less forgiving after the pandemic.”

Why shouldn’t private clubs be able to keep their food and beverage sales strong by offering take home food to golfers who are completing their rounds of golf rather than not offering that as a benefit to membership? Clubs that offer takeout food & beverage are helping to sustain their viability as a business and contributing to the promotion of public health by not allowing for congestion of clubhouse facilities and reducing the occurrence of Covid-19 transmissions.

Are we to believe that the cornerstone of a tax exempt club – organized for pleasure, recreation and other non-profit purposes – is being violated because members consumed food & beverage at home rather than on premises? Consuming food & beverage at home may be more comfortable for members than if they ate at the club even in a socially distanced clubhouse.

Clubs that attempt to operate for the pleasure, recreation other non-profitable purposes while attempting to further the public health of their community might just seethe IRS modify their non-traditional revenue policies rather than pursue a private club’s tax status. Wouldn’t that be novel?


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