Ben Franklin, one of the most insightful Americans who ever lived, observed in the 1700s, “In this world nothing can be said to be certain, except death and taxes.” About a century later, Will Rogers added the reassuring note that at least death doesn’t get worse. Anyone who has ever opened a tax envelope already knew that.
Fair warning: this column is about taxes. If that ranks just below slow play and repair your divot lectures on your list of interests, feel free to skip ahead to something more stimulating – like the weekly handicap adjustments. But if you’d like to understand the essentials of the Club’s tax situation, take a deep breath and soldier on. I promise no pop quizzes.
So, what about Heritage Palms? Are we a nonprofit, tax-exempt organization, or a taxable not-for-profit corporation? Does the Club file tax returns? Pay taxes? Receive cheery notes from the IRS or the Florida Department of Revenue?
To get the answers, I reviewed the tax disclosures in our most recent Audited Financial Statements and met with our Controller, Sherry Nowak. Sherry shared the Club’s latest tax filing with me, and I read the entire 30 plus page return –though at some point it began to feel longer than a five-hour round behind a foursome “just enjoying the day.”
I am not, nor have I ever been, a practitioner of the dark and ancient art of tax accounting. That said, under sufficient pressure and caffeine, I can prepare a tax return and get it mostly right. Think of me as a solid bogey golfer in the world of taxation – I know the rules well enough to keep things moving.
Here are the basics. Heritage Palms is a Florida not-for-profit corporation that is subject to federal income tax. Many members assume the Club is a nonprofit and tax-exempt organization. It is not. You file a Form 1040 every year; the Club files a Form 1120, which determines whether tax is owed or a refund is due.
Still with me? Excellent. Now for the good news – the part where everyone stops checking their watch. How much income tax did the Club pay last year (2024)? Zero. Zip. None. Nada. By following the tax rules very carefully, the Club has consistently reported expenses exceeding revenues for tax purposes – also known as losses. And we’ve been doing this with remarkable consistency for many years.
In a rare display of generosity, Congress and the IRS allow Clubs like ours to carry those losses forward and use them to offset future taxable income, should such a thing ever materialize. As of now, we have accumulated nearly $4.6 million in loss carryforwards dating back to 2004. That’s a lot of cushion – more than enough to soften even the occasional financial slice.
So, here’s the bottom line. While the Club is technically a taxable corporation that is not operated for profit, we have not paid material income taxes in our history. And given the size of our loss carryforwards, we are unlikely to do so anytime soon – or possibly ever.
In our case, death remains the only true certainty. And unless Congress decides to implement changes (and it can’t even enact a budget right now), taxes – at least at the Club – really can’t get much worse.
