Nonprofit Law/non profit status

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QUESTION: My son's football league has been around for the past 40 years, and was initially organized as a non profit, tax exempt group. We have continually asked them to produce by laws and financial reports, but they have failed to do so after 7 months and counting. After much research, it appears that their non profit and tax exempt status have been suspended within the last 3 years, by the secretary of state and attorney general's office. It also does not appear that they have taken the appropriate measures to dissolve their organization, and continue to promote themselves as a non profit group. Can they still call themselves a non profit organization? Do they still have to furnish by laws and finances? What legal or financial ramifications do they face? If we put a new board in place, will we inherit all their legal and financial liabilities, or would the creation of a new league be recommended or necessary?

ANSWER: A suspended California corporation may not engage in any activities, other than trying to reinstate their status with the Secretary of State's Office.

If you are a voting member, let me know and I will check on whether you have a right to the financial records and bylaws.

If they have filed form 990 with the IRS, then they would need to provide copies to anyone. http://goo.gl/CjGc3

Changing the board does not change the organization's responsibilities for reactivating, but the new board members, as individuals would not have any liability for past actions.

Usually it is not difficult to reinstate a California corporation as long as the Franchise Tax Board is not seeking taxes so it may not be necessary to establish a new league entity.

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.    



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

QUESTION: I am not a voting member of the board... just part of a group of concerned parents who are looking into the legitamacy of this organization. The board is mainly comprised of 6 members, who are either related or close friends of one another. Our suspicions were raised once they did not furnish their by laws or finances, even though they claim that they would do so when prompted. Our research shows that the last time they filed form 990 was in 2008. As of last year, their non profit status has been officially revoked with the state, IRS, and Franchise Tax Board. Yet they are continuing to operate under the same organization, and are currently accepting sign ups and registration fees to the 2014 football season which does not start until July. Is there any possible way they can be legally operating under a different entity? Does this mean they have not paid any taxes since 2008? Our end goal is to keep this 40 year old organization entact, since many of our coaches and parents have played in this league when they were young. What measures and rights do we as parents have to remove this seemingly corrupt board? Lastly, it is my understanding that we would be liable for past due taxes if we were to reactive our non profit status... but how are we to find out how much are owed in taxes if we cannot confirm the condition of finances?

Answer
Sadly, as not voting members you have little recourse.  Complaints could go to your State's Attorney General's Office as that office generally oversees charities within the state, but they have limited resources and usually only take up cases that they consider highly significant. http://oag.ca.gov/charities

The corporation would be liable for past due taxes, penalties and fines, but not the individuals. I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations, but I have tried to help you somewhat with the state issues.

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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