Local optometrist/charter school runner/real estate hustler Steven J. Ingersoll recently got some bad news from Uncle Sugar.
The 501(c)(3) federal tax exemption for his formerly non-profit, tax exempt Smart Schools Foundation (run out of his Traverse City home) was automatically revoked for its failure to file required its required financial disclosure Form 990 for three consecutive years.
So, you ask, what's the impact of that decision? Well, according to the IRS here's what will happen:
It means that Smart Schools Foundation is no longer exempt from federal income tax and will have to pay corporate income tax on annual revenue.
It may mean that any state tax exemption Smart Schools Foundation received that is dependent on federal tax-exempt status is also now revoked.
It means that the Smart Schools Foundation will not be listed in IRS Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986, which is a list of organizations eligible to receive tax-deductible charitable contributions.
It means that private foundations are unlikely to give a grant directly to your nonprofit that has lost its tax-exempt status, because federal tax law imposes an excise tax on grants made to organizations that are not tax-exempt.
And here's the kicker:
If your nonprofit’s 501(c)(3) tax-exempt status has been revoked, donors will not receive a tax-deduction for their contributions.
Donations received after official notification of revocation of your tax-exempt status as a 501(c)(3) are no longer tax-deductible.Let's hope Stevie's not carrying on any fundraising efforts.
But why would he keep the "Smart Schools Foundation" Michigan business entity active if he's lost the federal tax exemption?
Hmmm? Looks like due diligence is advised.
Here's the official IRS information:
| Revocation Date (effective date on which organization's tax exemption was automatically revoked): 15-May-2012 |
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| Employer Identification Number (EIN): 38-3496728 |
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| Legal Name: SMART SCHOOLS FOUNDATION |
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| Doing Business As: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mailing Address: 1725 CARLISLE FARMS DR TRAVERSE CITY, MI 49686-7906 United States |
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| Exemption Type: 501(c)(3) |
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| Revocation Posting Date (date on which IRS posted notice of automatic revocation on IRS.gov): 11-Feb-2013 And here's the domestic non-profit corporation filing information from the State of Michigan. Notice how the most recent six years of annual reports were filed AFTER the IRS revocation.
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Does this (lack of) status effect Grand Traverse Academy?
ReplyDeleteNo, the Grand Traverse Academy (GTA) is a discrete entity.
ReplyDeleteThe GTA is registered with the State of Michigan as a domestic nonprofit corporation, and is not been granted exemption an from Federal income tax under the Internal Revenue Code section 501(c)(3).
Nonprofit corporations are those formed in which members may not receive any profits of the corporation. A nonprofit corporation is formed under the Michigan Nonprofit Corporation Act. Some purposes for which nonprofit corporations are commonly formed are those involving religious, educational and charitable activities.
Aaaahhhhh - Got it. Thanks.
ReplyDelete