CAGW Report Examines Tax Status of YMCA Fitness Facilities

9/17/2003

From: Mark Carpenter or Tom Finnigan of Citizens Against Government Waste, 202-467-5300; Web: http://www.cagw.org

WASHINGTON, Sept. 17 -- Citizens Against Government Waste (CAGW), the nation's largest taxpayer watchdog group, today released its latest Through the Looking Glass Report: YMCAs: From Community Service to Community Disservice. The report, the third in a series that identify how certain nonprofit organizations jeopardize tax dollars, is a tale of two failures - the failure of some chapters of the Young Men's Christian Association (YMCA) to adhere to their charitable purpose, and the failure of the federal government to enforce the tax laws.

When a local YMCA decides to build a state-of-the-art fitness center in affluent communities instead of providing programs for underserved individuals and families, the organization is deserting the very elements of the entire community that it is legally bound to serve. When the federal government, in particular the Internal Revenue Service (IRS), does not impose unrelated business income tax (UBIT) on such YMCAs, it forces hardworking Americans to pay more than their fair share of taxes. These YMCAs are free to compete unfairly with for-profit fitness facilities, taking away customers and driving them into financial distress.

The CAGW report recommends:

-- The IRS should clarify its "community accessibility" standard, which simply says that all nonprofit recreational facilities must be made available to either a charitable class or the entire community;

-- The IRS should compel YMCAs that do not meet the appropriate standards to pay UBIT;

-- The IRS should form a taxpayer compliance review committee to monitor YMCAs and other nonprofit organizations; and,

-- The IRS should formalize a procedure for reporting abuse, so small businesses can inform the agency of violations.

"The IRS must begin to collect UBIT from the noncompliant YMCAs and require that each YMCA facility adhere to its nonprofit mission," CAGW President Tom Schatz said. "Otherwise, YMCAs will continue to flock to affluent residential areas, low-income communities will fail to be served, unfair competition in the fitness market will go unchecked, and hardworking taxpayers will continue to pay more than their fair share of taxes."

"From Community Service to Community Disservice" was written by CAGW Research Associate John Middleton. For more information and a copy of the full report, please contact Mark Carpenter at 202-467-5300 or visit http://www.cagw.org/site/PageServer?pagename=reports _ymca.

Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.