Norwich bulletin., 1918-02-21
COLLECTOR RULES ON
 STATE LODGES DUES
Those Which Pay Benefits Declared Exempt From Income Tax
 Provisions

How the revenue laws apply to social and other clubs was explained to-day by Collector James J. Walsh, who ruled that fraternaI organizations are brought within the scope of the act and are assessable. A benefit or ganization whose benefits are on a fixed scale is, however, exempted und- CT the collectors interpretation of the act. In statement on the subject, issued by the collector to-day, MT. Walsh says:
 Section 701 of the act of October 5. 1917, provides that there shall be levied, assessed, collected and paid a tax equivalent to 10 per centum of membership fees (inciuding initiation fees) to any social, athletic or sporting club or organization, where such dues or fees are in excess of SIP per year; such taxes to be paid by the person paying such dues or fees. Provided that there shall be exempted from the provisions of this section all amounts paid as dues or fees to a fraternal beneficiary society, order or associa- tion, operating under the lodge sys- tenn or for the exclusive benefit of the members of a fraternity itself operating under the lodge system, and l providing for the payment of life, sick accident or other benefits to the mem
 bers of such society, order or associa- ] tion or their dependents.
 In connection with this section of the law there seems to be some mis- understanding on the part of frater- nal organizations as to whether or not they are subject to the tax under 1 the above named section.
 In regard to. the question raised, ] this office rules that sfraternal societ- 1 leS, orders or associations are social organizations within the meaning of Section 701, and their dues are tax able unless exempted by the proviso of the section.
 For the exemption to apply the so- | clety, order or association must not 1 only be 'fraternaT and operating
 under, the lodge system" but also ] beneficiary, that is, it must make provisions for the payment of pecun- ] iary benefits to it's members or their ] dependents, this being the very es-
 sence of 8 beneficiary organization l Something more than charity, relief
 or occasional giving of money is nec- l essary. A distribution in accordance with a fixed and definite plan is con- l templated. It must actually pay life,
 accident or other benefits or make a
 practice of providing for its members 1 or their dependents financial aid simi-
 lar. in character to such benefits. If a fraternaI order pays any pecun- iary benefits to its, members or their dependents, and provides for sick. accident ortdeath benefits whether in the form of payment of money hoSpi-
 tai treatment, burial or care for de-
 pendents either in homes or elsewhere, the dues would be exempt. This fact should be determined by the charter ritual, bylaws or rules of the organi- zation operating under the lodge sys-
 tenn.
 Section TOO of the act of October 3, i 1917, provides that there shall be
 levied, assessed, collected and paid
 a tax of 1 cent for each 10 cents or
 fraction thereof of the amount paid
 for admission to any place, includ
 ing admission by season ticket or : subscription, to be paid by the per-
 son paying for such admission.
 In connection with this section of , the law there seems to be some mis- understanding as to whether or not | fraternal societies, orders or associa- tions conducting entertainments. the entire proceeds being turned into the lodge treasuries. are required to col lect the. admission tax imposed under l this section. In regard to the question raised
 this office rules as follows:
 To be exempt all the proceeds mus , insure exclusively to some specific
 religious, educational or charitable in l.stitution organized for these purposes
 Charity organizations must be broad
 enough to include all persons. It is not regarded as charity where a cer. , tain organization, such as a lodge fol
 example, holds entertainments, tn,
 proceeds of which are placed in, tht . lodge treasury. to be distributed only ! to members of the lodge or their de.
 pendents.