Avatan Members: You Could Be Looking at a Massive Tax Bill

If the IRS decides to take action against Avatan Nudist Club, the financial consequences could be severe — and members will likely feel the pain.

Avatan has been consistently reporting $36,000 to $45,000 per year in income from non-members (day passes, guest fees, rentals, and events). This is known as Unrelated Business Taxable Income, or UBTI.

What This Means for Avatan

Because Avatan is a 501(c)(7) social club, it is only supposed to be supported “substantially all” by member dues. When non-member income becomes too large, the club risks losing its tax-exempt status entirely.

Realistic Tax Scenarios:

- Annual UBTI Tax: Avatan could owe $7,500 – $9,500 per year in federal taxes on its non-member income.

- Over 5 years: Roughly $40,000 – $60,000 plus penalties and interest.

- Worst Case – Full Revocation: If the IRS revokes Avatan’s 501(c)(7) status, the club could face $200,000 to $500,000+ in back taxes, penalties, and interest.

This is not a small problem. It’s a potentially club-ending problem.

What This Means for You as a Member

If Avatan is hit with a large tax bill:

- The club may demand special assessments from members to cover the debt.

- They could be forced to sell assets or even the entire property.

- You may receive very short notice to remove your RV, park model, cabin, or other personal property.

- Board members and long-term members could see their names appear in public tax liens and court documents.

Avatan has operated for over 60 years, but longevity does not protect them from federal tax law. The club’s heavy reliance on non-member revenue has put it in a very dangerous position.

Bottom Line:  

The IRS does not have to shut Avatan down tomorrow for this to become a crisis. Years of operating too close to (or over) the legal limits can suddenly catch up with massive consequences.

Current members should be asking serious questions right now:

- How much non-member income is the club really generating?

- What is the board doing to protect the club’s tax status?

- Do you want to be financially and legally tied to a club heading into potential tax trouble?

The warning signs are clear.  

The financial risk is real.