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Nonprofit Law/Preventing revocation of 501(c)(3) Exemption

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Question
Dear Mr. Mechanic:

I serve on a non-profit Interim board.  When all board members were recently removed after years of mismanagement , as we now review the records and begin auditing the finances, we have uncovered troubling issues.  Some of the problems,, namely the use of donated assets for private benefit (not a significant amount, but troubling just the same), intentional failure to disclose on the 990 form of payments for services to a board member, and abysmal record keeping, appear to be so serious we fear they could cause a revocation of our exemption.  At a minimum, we appear to be facing significant fines.  We want to fix the problems but once we file our amended tax returns, we are concerned that the IRS may summarily revolk our exemption.  What do you recommend as the best way forward?

Answer
Sometimes, when a new board and management comes in, I advise them to act correctly in the future and not deal proactively with past issues, but sometimes I would advise otherwise. I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations. If I am to give you a good answer I would need to analyze the details of the past issues and that would be beyond my offer of free services and I would need to spend a substantial amount of time on that.  If you want to hire me for a written opinion, 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

Expertise

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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