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Nonprofit Law/BOOSTER CLUB IRS REVOCATION

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QUESTION: I HAVE BEEN LOOKING THROUGH SIMILAR ARTICLES AND HAVE NOT FOUND ONE QUITE SIMILAR. I RECENTLY BECAME AN OFFICER TO A BOOSTER CLUB WHICH OF COURSE IS A 501(C)(3). EVERYONE IS NEW, EVEN THE COACHES. OF COURSE ONLY RECENTLY DID WE FIND OUT OUR TAX ID HAS BEEN REVOKED SINCE 5/15/2010. I AM TRYING TO EITHER REINSTATE OR APPLY FOR A NEW TAX ID. HOWEVER, THEY HAVE ABSOLUTELY NO DOCUMENTATION FOR ANY PREVIOUS YEARS,NO BANK STATEMENTS..NADA! THEY HAVE TRIED CONTACTING PREVIOUS DIRECTORS ETC TO NO AVAIL. I AM CONCERNED ABOUT HOW THIS MAY AFFECT US. I HAVE DONE SO MUCH RESEARCH ITS RIDICULOUS. I READ SOMETHING WITH REGARDS TO A 27 MONTH PERIOD? WHAT IS THAT? AND WHAT KIND OF TAX LIABILITIES CAN WE BE POSSIBLY LOOKING AT BOTH STATE AND FEDERALLY? LASTLY, WOULD IT BE IN OUR BEST INTEREST TO JUST START ALL OVER AGAIN? WE KNOW NOTHING REGARDING THE BACKGROUND OF THIS BOOSTER CLUB.

ANSWER: I think that your tax id was not revoked, but, from what you wrote, it appears that your exemption was revoked.  Was it revoked because you had not made a required filing with the IRS for three years? The IRS has published, "If an organization has had its tax-exempt
status automatically revoked and wishes to have that status reinstated, it must file an application for exemption and pay the appropriate user fee even if it was not required to apply for exempt status initially."
http://goo.gl/R3bbS

--- Start of Excerpt ---
.01 Request for Retroactive Reinstatement

An organization... seeking to have its tax-exempt status reinstated effective from the date of automatic revocation pursuant to section 6033(j)(3) must submit a request for retroactive reinstatement with its application for reinstatement of tax-exempt status. The request for retroactive reinstatement must include the following:

(1) A written statement setting forth all of the facts that support its claim for reasonable cause for failing to file a required return or notice in each of the three consecutive years and over the entire consecutive three-year period, including a detailed description of all the facts and circumstances that led to each failure and the continuous failure, the discovery of the failures, and the steps taken to avoid or mitigate the failures;

(2) A written statement describing the safeguards the organization has put into place to ensure that the organization will not fail to file returns or notices in the future;
--- End of Excerpt ---
http://www.irs.gov/irb/2011-25_IRB/ar10.html (down at Section 5).

If your organization received revocation for violating IRS regulations for 501(c)(3) organizations then it would not receive any retroactive determination.

That 27 months that you referred to is only for a new organization, not for one that was revoked. http:// www.irs.gov/pub/irs-pdf/p557.pdf on page 24, right column.

If you form a new organization when you fill out the exemption application the IRS requires you to reveal that your organization is a successor to the other organization. See the Application for Exemption http://www.irs.gov/pub/irs-pdf/f1023.pdf (Schedule G for Successors to Other Organizations) starting on page 22 right column.  But we may be able to structure the new organization so it is not, under law, considered a successor. Considering that your organization does not have any financial records and you individually were not involved as a leader back at that time, I would think that you would want form a new organization, as there are just too many problems with the existing organization.

My summary of IRS regulations relating to 501c3 booster organizations is at:
http://goo.gl/ULw6f6
and you may be interested to read that.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.    

P.P.S. In the future, you may want to use Caps sparingly.
http://email.about.com/cs/netiquettetips/qt/et020801.htm




---------- FOLLOW-UP ----------

QUESTION: Yes it was from failure to file. However, I have been reading that we have to file 1120's and that if we are applying for retroactive reinstatement we have to file all the missed 990's and 990's from the date of revocation forward..is this true? As I said before we have no paperwork or accounting information at all. Would it even be possible to dissolve? It was revoked long before any of us came along.

Answer
With no paperwork, I don't see how you could file any tax returns.  You can dissolve with the State.  It is possible, though, that the IRS would go after the responsible person of the corporation.
The liability for tax evasion would go individually usually to any
person who is what the IRS calls a "responsible party".
--- Start of Excerpt ---
"responsible party" is  the person who has a level of control over,
or entitlement to, the funds or assets in the entity that, as a
practical matter, enables the individual, directly or indirectly,
to control, manage or direct the entity and the disposition of its
funds and assets.
---End of Excerpt---
http://goo.gl/3TJBB (4th paragraph).

I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations. As to specific advice on what you would want to do, that will depend upon balancing of different factors and are not, therefore, general questions. If you want to hire me, send me an email directly to my email address below and I will quote you my fees.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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