Friday, November 8, 2013

Charlotte Running Club’s Nonprofit Status.

Dear CRC Members,

I received feedback that the nonprofit status in my October President’s letter contained limited details. I want to assure everyone that the board is very much aware and continuing to work through this issue.  However, it is complicated and we are working to gain clarity on some of the next steps at this stage of the research.  We are taking the matter very seriously but at the same time, do not want to cause unnecessary alarm. We feel confident that all current and prior actions have been taken based on what we thought were the right rules and regulations.  No actions were taken at anytime with any intent to defraud or circumvent law.

What I can share at this point is history and facts as to how the club arrived in this situation.  What we do not know yet is how the IRS agent assigned to the case will ultimately decide.

Here’s what I know.

In a letter sent to the club in 2012, our nonprofit status was revoked for the year ending 2012 because the club did not file tax returns in 2009, 2010, and 2011.

The reason why we did not file anything for ’09 and ’10 was because there was no official entity known as the “Charlotte Running Club”.  We were not yet members of RRCA, we did not have bylaws and we had not officially applied for nonprofit status.

In 2011, the club took what we believed to be the right steps to complete federal paperwork for non-profit status and tax id number on advisement from RRCA (instructions on their website).  Our club joined RRCA, approved our bylaws, and had board of director elections.

After additional club research was performed upon receipt of the revoke of non-profit status letter, it was determined that IRS Form 1023 needed to be submitted for nonprofit status to be re-instated. The form was submitted in mid August.

As part of the submission the club had to research our records going back to the beginning of the club, document our tax situation, update our bylaws, and provide copies of letters from RRCA about our tax status. 

We also had to send an application fee of $450.

We checked the status of our form submission in September and again in October, and both times, we were told that our application is still in the queue. Once an IRS agent is assigned to our case, they would be contacting us.

I have also talked with several CPAs that handle the tax filings for clubs to solicit their advice. Based their feedback, I am confident that we are headed in right direction.

It is the position of the board that the IRS has our original filing dates incorrectly listed which has put us in this situation. I also feel that we have a strong case with the IRS  Our records demonstrate the dates of our RRCA filings, bank statements, when we created our club’s bylaws, and when we elected our first club officers.

While we await our IRS case to be assigned, we are making every effort to gather all of the necessary information and support. We are also proactively researching what impacts this has to the club if we need to file for 2013 while our status is under investigation. 

It is our objective to close out the IRS issue as quickly as possible.  We are, however, at the mercy of the IRS until an agent is assigned to our case.  As our club has grown the good is we are bigger, the bad is we are taking our lessons learned “lumps” from this event but as we move forward, we will tighten up club controls for handling our nonprofit status and our tax filings. 

Please if anyone has any concerns about this topic, email I would be happy to have any one off conversations needed.

Best in Running,

Bill Shires
CRC President

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