UPDATE
As per expected.
- 501c3 status has been re-granted.
- IRS has retroactively restored status of non-profit status. So no time has Minnesota Furs has not been a non profit. Including any donations between Nov 15th 2015 and Jan 17th 2016
- IRS has put no penalty on Minnesota Furs
- IRS has relooked at our status and changed our status to a PUBLIC CHARITY organization
- No changes to Minnesota Furs or Furry Migration was necessary to get this.
We will have more details on this soon. Below is left for historical reasons.
TL;DR: Nothing has changed; we are temporarily back to being a Minnesota Non-profit but we will still be a 501c3 non-profit once some paperwork has been straightened out. If you made any donations between 2012 and 2015 they are still tax deductible.
Long version (+ Q&A):
Hello,
There have been some recent rumors about our non-profit status and I would like to set the record straight.
While we have been operating as a non-profit since 2012, we were certified as 501c3 Private Operating Foundation(POF) non-profit in May of 2015. For those unfamiliar, there are multiple types of 501c3 – the most-desirable of which is a 501c3 Charity. When we completed the paperwork for the 501c3 filing we were very forward thinking – perhaps too forward. Stating our ultimate long-term goals made us appear more like a Private Operating Foundation that can live off investments and more direct giving to other charities, not just using the money for the con. (Imagine something like the Carnegie Endowment for International Peace or the Getty Trust, where annual revenue can exceed $1 million. I don’t think we have that kind of income!)
To be honest we could have left it at that; while it did limit how much money we are allowed to have on hand it really did not affect our mission statement. We decided to start talking to the IRS and try to change our status while keeping the 501c3 POF in play.
Receiving the POF status invalidates any previous filings of 990s that are not 990-PF which is for Private Foundations and Private Operating Foundations. We were preparing the 990-N (for non profits making less than $50K) since this was expected and our tax filing was due in August. While we put our best effort into completing the 990-PF by August 15th (https://www.irs.gov/pub/irs-pdf/f990pf.pdf), we ended up asking for a delay due to the impending convention later that month. This request was sent a week before the due date and is assumed to be automatic.
After the con we spent the next two months filling out the 990-PF form (a monstrous undertaking) and sent it in. All set, we went back to working on moving back to our work on adjusting our status to 501c3 Charity.
In December we received a letter from a sleazy lawyer out of Florida offering to “fix your IRS problems”. I was shocked when I visited the IRS page for non-profits (https://apps.irs.gov/app/eos/ ) and found that our status was an Automatic Revocation (info at https://www.irs.gov/Charities-&-Non-Profits/Automatic-Revocation-of-Exemption). Automatic revocation is a process that is automatic by law, for which there is no appeal. It’s considered a non-profit wake up call, and was created in 2000s to keep smaller non-profits more honest. Previously, organizations with income under $50K didn’t even need to submit a postcard. Now they want at least some acknowledgement of continued existence. Hundreds of thousands of non-profits get hit with this every year. THIS IS LESS UNCOMMON THAN YOU THINK AND MANY GROUPS (INCLUDING OTHER CONS!) HAVE RUN INTO SIMILAR SITUATION.
It’s possible to receive a Retroactive Reinstatement, and to do so we have to not only resubmit the most recent 990-PF, but redo our taxes for 2012 and 2013, and update our 1023 to better reflect our current tax submissions and our charitable statuses. So with the help of volunteers both within and outside of the board we completed and submitted the paperwork to IRS in January *phew*.
After we got that sent out a few days later we get a letter from the IRS telling that our status was revoked and the process as listed above. Because, well, the IRS takes that long to send out letters.
So there we are – at this point we’re essentially waiting for IRS approval of the paperwork; this should also allow us to update our status to a 501c3 Charity, which is a very good thing.
And now for Q&A:
Q: Are you a tax accountant?
A: No, the information provided here is based on talking to the IRS, talking to other non-profits, accountants, and websites. If you have ANY questions or concerns always get a second opinion.
Q: So what is your status right now?
A: We are a Minnesota Non-Profit awaiting reinstatement from the IRS.
Q) How long will reinstatement take?
A) I hope that we’ll get word back from the IRS in March or April, but we are asking for retroactively so there will have been no lapse in our 501c3 status.
Q) Does this happen often?
A) About 10% of non-profits experience this. In 2011 alone 18% of non profits went into automatic revocations. It’s a common procedure for the IRS.
Q) How does this effect your donations?
A) For 2015 taxes, anything donated before November 10, 2015 is tax deductible without any skin off your nose. We actually did not receive any donations from Nov 10th – Dec 31st, and are filing to receive a retroactive non-profit reinstatement so once the paper work comes back it will be tax deductible, and your taxes for 2016 will be completely unaffected. If you are planning for a 2016 donation to write off on taxes for Minnesota Furs I would wait till after we have full confirmation from the IRS.
Q) So… anything from Furry Migration?
A) Yes, assuming it qualifies as being deductible (unfortunately, your Furry Migration membership and merchandise doesn’t count)
Q) So really it doesn’t affect anything right now we are doing
A) Exactly. Like I said, it’s really just going through the motions and making sure the IRS gets what they want.
Q) So is there anything we can do right now?
A) Have patience! (And yes that’s annoying to me too!)
Q) How can I check on the non-profit status?
A) Visit https://apps.irs.gov/app/eos/
Q) How do you make sure this never happens again?
A) Honestly, we just have to file whichever tax form is appropriate for our income – 990-N, 990-EZ, 990, or 990-PF. These need to be submitted by August 15 because of our end of fiscal year is March 31st. That date was chosen due to the timing of our convention.
Q) How can I help out the group to make sure this doesn’t happen again?
A) Any volunteer frees up people to work on the day to day work. If you volunteer, whether to run an event or help in other ways, you’re helping to keep everyone focused.
Q) Why didn’t you do a public statement before?
A) We felt that in this situation it was best to address and solve the problem. Since there is very little operating impact to the organization and no recent donations to Minnesota Furs I didn’t feel we needed a widespread public announcement. However, know that some members of our community are concerned about the organization and I want to make sure they have the facts and the ability to ask questions.
As I told the board of directors – I am fully for blame for any problems and confusion that resulted from this. I understand that I let some people down and no excuses can make up for that. I care deeply for MNFurs and would never purposely take action to harm the group or its reputation, which is why this has been difficult to write.
I have previously stated that I am looking for someone to replace me as treasurer and I hope that we are able to find someone talented, generous, and equally passionate about MNFurs and its continued success.
If you have any further questions feel free to talk to me @Kurst or contact the board at directors@mnfurs.org.
Thank you for your time and understanding,
Brian Mogged
Kurst
Kurst@mnfurs.org
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Tagged: Announcement, Information, Status, Taxes