By JOSH NEWTON
Staff Writer
TAHLEQUAH —
Several dozen organizations with last-known mailing addresses in Cherokee County could soon lose their tax-exemption status, the Internal Revenue Service said this week.
It all boils down to what the IRS said is failure of the entities to file annual returns, a requirement since 2007.
Many non-profits appear to be inactive or defunct, according to online research and attempts by the Daily Press to track down board members or other organization officials. Few could be located, even for organizations known to still be active in the community.
Among the list of at-risk organizations: Illinois River BalloonFest Committee Inc., Order of Eastern Star of Oklahoma No. 148, Prodigy Foundation, Sequoyah Park Partners, Tahlequah Youth Basketball Inc., and both the Peggs and Woodall fire departments.
“To the best of my knowledge, we have not received any notification from the IRS regarding this matter; however, I will check into this further,” said Hamid Vahdatipour, this year’s president of the BalloonFest committee. “If there are any forms that need to be submitted to IRS, we will make sure they are done by the deadline of Oct. 15 in order to save our 501 C3 designation. We worked hard to get this tax-exempt designation and prefer not to lose it.”
Vahdatipour said it’s likely that some required IRS forms haven’t been filed, or weren’t filed properly, since the committee is made up of all volunteers, who often change each year.
“After the event is over, everyone rests a couple months and then we start the process all over again,” he said. “Several years ago, we filed with IRS to become a 501 C3 tax-exempt organization, and the tax-exempt designation was granted.”
Proceeds from the yearly BalloonFest are donated to children’s organizations, so being a non-profit entity encourages more businesses to sponsor the event.
This in turn gives IRBC more funds to contribute to local children’s organizations.
The committee does not solicit contributions from individuals for charitable purposes, Vahdatipour said, but instead sells sponsorships for balloons and other events to help pay the $55,000 cost of bringing the festival to Tahlequah.
IRS Commissioner Doug Shulman said in a news release that the organizations at risk of losing their tax-exempt status failed to file required returns for 2007, 2008 and 2009. They can preserve their status by filing returns by Oct. 15 under a one-time relief program.
“We are doing everything we can to help organizations comply with the law and keep their valuable tax exemption,” said Shulman. “So if you do not have your filings up to date, now’s the time to take action and get back on track.”
Other local non-profits that had a last-known address in Tahlequah, according to the IRS, include: Alpha Epsilon Delta, Alpha Sigma Alpha Sorority Tahlequah Alumnae Chapter, Cherokee Community Initiatives Inc., Cherokee County Hospice Association, Cherokee National Elders Service Inc., Cherokee Rodeo Club Inc., Cherokee United Way Inc., Coastal Bend Quality of Life Center, Community Service Council of Cherokee County, Indian Tribes Community Development Association, Kiwanis International Muskogee, Lakewood Property Owners Association, National Indian Adult Education Association, Native Americans for a Clean Environment, Oklahoma Knife Group Association Inc., Oklahoma Native Education Institute Inc., Phi Sigma Kappa Epsilon Epsilon, Redmen Promenadors, Sequoyah Indian Weavers Association, Sparrow Hawk Academy, Sparrow Hawk Village Rural Water District No. 12, Tahlequah Soccer Association, Tau Kappa Epsilon Fraternity Inc. 519 Sigma-Lambda Chapter, and White Oak Cemetery Perpetual Care Fund.
Those with Hulbert addresses include Golden Years Club and Hulbert Arts & Crafts Club.
Welling non-profits are Ecolaw Institute Inc. and Kings Remnant Ministry Inc.
Ray Kirk, secretary-treasurer of Knife Group Association of Oklahoma, said the organization is more like a group of guys who get together to educate the public about knives. It was formed in 2003.
“I’m not sure why we’re even considered a tax-exempt organization,” said Kirk, who added that the entity doesn’t use its status for tax breaks on any purchases.
Kirk said the knife group isn’t set up to allow donations to be written off by donors, so he isn’t sure how the IRS warning impacts his group. He did say he planned to investigate the issue so appropriate action can be taken, if necessary.
“We’re just a group of guys who want to teach others,” said Kirk.
Tahlequah Soccer Association is re-establishing itself as a non-profit, according to Anne Davey. Some records had been lost, she said, and officials didn’t know its status, so they opted to start over to reorganize under a new name: Tahlequah Recreational Soccer Club.
Shulman said two types of relief are available for small, exempt organizations: a filing extension for the smallest organizations required to file Form 990-N, Electronic Notice; and a voluntary compliance program for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt from Income Tax.
Small organizations required to file Form 990-N can go to the IRS website, supply eight items of information called for on the form, and electronically file it by Oct. 15. That will bring them back into compliance, he said.
Under the VCP, tax-exempt organizations eligible to file Form 990-EZ must file their delinquent annual information returns by Oct. 15 and pay a compliance fee. Information is available at irs.gov for that.
Relief offered by the IRS is not available to larger organizations required to file the Form 990, or to private foundations that file Form 990-PF.
“Organizations that have not filed the required information returns by [Oct. 15] will have their tax-exempt status revoked, and the IRS will publish a list of these revoked organizations in early 2011,” said Shulman. “Donors who contribute to at-risk organizations are protected until the final revocation list is published.”
Non-profits that lose their exemption will have to reapply with the IRS to get that tax-exempt status back.
Any income received between the revocation date and renewed exemption may be taxable, Shulman said.
The issues may relate to what the IRS calls two “important changes” that affected tax-exempt organizations under the Pension Protection Act of 2006, which were effective at the beginning of 2007.
First, all tax-exempt organizations - other than churches and church-related organizations - must file an annual return with the IRS. The Form 990-N was created for small, tax-exempt organizations that had not previously had a filing requirement.
Also, the law requires any tax-exempt organization that fails to file for three consecutive years automatically lose its federal tax-exempt status. Shulman said the IRS conducted an “extensive outreach effort about this new legal requirement,” but many organizations did not file returns on time.
In Oklahoma, 4,425 organizations are on the list of at-risk non-profits. Around 325,000 organizations across the country could lose their status if corrective action isn’t taken by Oct. 15, the IRS said.
Learn more
If your organization is on the list provided by the IRS, visit www.irs.gov for more information,or watch the IRS Youtube video at www.youtube.com/user/irsvideos.
