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Litchfield: Beautification group finds nonprofit request never filed
By Jason Lesley
Donations made to the Litchfield Corridor Beautification Committee cannot be considered tax-exempt charitable contributions, members were told Monday at the group’s annual meeting.
The organization never obtained 501(c)(3) tax status, as its board members thought.
“On behalf of the Litchfield Corridor Beautification Committee board,” said Tom Leis, president, in a letter to members, “I would like to extend an apology to all of the wonderful supporters whose donations have made our corridor a source of pride. It was never our intent to mislead anyone concerning the tax status of LCBC, and we hope that you will understand, forgive our error and continue to support this very worthwhile organization.”
Leis told people attending the group’s annual meeting that the board had agreed to reimburse any fines levied by the Internal Revenue Service for claiming a charitable contribution.
“It wouldn’t be much,” Leis said Tuesday, “but we want to make it right if there’s a problem.”
The organization, which collects donations in order to manage the landscaping along the median of Highway 17 through Litchfield, filed for incorporation as a non-profit with the state in 2007.
“At the same time, we believed that the necessary steps to obtain 501(c)(3) status from the IRS had been taken,” Leis said in his letter to members.
Auditors found that the organization did not have tax-exempt status in 2011, and board members reviewed the organizational structure and status with the IRS. Once confirming that an application for a 501(c)(3) status had not been filed, the organization filed an application in October 2011.
After six months, the IRS concluded the organization did not qualify but should resubmit an application for 501(c)(4) status. The board rejected that idea because donors to a 501(c)(4) are not allowed to claim a charitable deduction for contributions.
The group sought help from U.S. Sen. Lindsey Graham’s office and from the IRS Tax Advocacy Group to no avail.
“At this point,” the letter to members said, “it does not look like we will be able to obtain 501(c)(3) status. We do have until Dec. 26, 2012, to submit additional information and to request another review of our application. However, we have been advised by legal counsel that it is unlikely that the IRS agent handling this matter will change her position, and the next step would be for an appeal — which would be costly.”
The group has removed references to its tax status from its website and is reprinting its brochures.
The group’s website said it collected $82,500 in donations in 2011 with just 16 percent coming from individuals. The remainder was donated by property owner associations and businesses with Georgetown County approving $25,000 in accommodations tax to make up its deficit.
Officers were all re-elected for another term Monday. They include:
Leis, president; Lewis Bowers, vice president; Mark Gilles, secretary; Ken Dewell, treasurer; Vic Figlar, operations director; Ragan Ormand, information officer; Kathy MacSorley, public relations director; Bill McElroy, director of the advisory board and board members Joseph Muffolett, Bill Hoyle, Rhea Carter and Nina Bryant.