Originally published: June 10, 2011, 6:39 p.m.
Updated: June 11, 2011, 8:25 p.m.
See updated story from our June 25 print issue:
NC Pride’s tax-exempt status revoked; M.I.A. director responds
DURHAM, N.C. — The NC Pride Fest and Parade has had their federal tax-exempt status revoked by the Internal Revenue Service more than a year after it was first revealed the group was out of compliance with IRS rules governing annual non-profit tax filings.
The organization, officially the “Pride Committee of North Carolina,” is one of over 275,000 non-profit groups, commonly referred to as 501(c)(3) organizations, receiving an automatic revocation of their tax-exempt status under The Pension Protection Act of 2006. The federal law requires the IRS to automatically revoke the tax-exempt status of any non-profit group required to file the appropriate Form 990 but has failed to do so for three consecutive years. Forms 990 are the annual returns non-profit organizations with incomes over $25,000 must submit to the IRS each year; other groups, such as those with less that $25,000 annual revenue, file a variety of alternative Form 990 versions.
The automatic revocations were made on June 8.
John Short has directed the more than 25-year-old event under its current legal entity for the past decade. He and Pride spokesperson Keith Hayes were not immediately available for comment.
Last May, qnotes reported that NC Pride was currently out of compliance as it had failed to file the appropriate annual returns for several years. The discovery was made during qnotes‘ first annual Community Assessment Survey and 990 requests to 22 LGBT non-profits and AIDS service organizations across the Carolinas.
After receiving the 990 request last March, Short called qnotes and said the organization did not have the necessary documents to disclose.
“Your email caused me to realize that I’ve made some oversights and we are technically out of compliance with our IRS filings,” Short said before the May 15, 2010, publication of the survey results and 990 information. He declined to say how many years his organization had missed filing their annual returns.
Short told qnotes that he had hired a certified public accountant to work on the missing 990s and said he would be willing to send qnotes any of the 990 forms once they were completed. He also said his accountant would be filing an extension for the current year’s filings.
“I feel confident that everything will be in tip-top shape,” he said. “I feel like I’ve let myself and others down by having to go through this, but we are going to get it solved and get it fixed and take care of.”
Two weeks later, Short said the group continued to work on getting its paperwork and IRS filing up-to-date. Hayes also filled out and returned qnotes‘ Community Assessment Survey. The organization self-reported an expected budget and expenses of $65,000. The group’s revenue comes from the sale of advertising in their annual Pride Guide.
It is not immediately clear how NC Pride’s tax-exempt status revocation will affect its ability to mount a successful festival and parade this year. The group’s events are usually slated for the last weekend in September and primarily occur in Durham.
Organizations that received an automatic revocation must re-apply for tax-exempt status and pay the normally-required fees. The IRS has also established special procedures for some of the groups affected by the law. Groups like NC Pride, with annual revenues of $50,000 or more, can apply for retroactive reinstatement of their tax-exempt status, though the group must show reasonable cause for their failure to file annual returns. The IRS has also established processes for groups who believe their automatic tax-exempt revocation was made in error.
Other LGBT organizations in North Carolina also received automatic revocation of their tax-exempt status. Those groups seem to be defunct and include Charlotte Pride, Inc., which hosted Pride festivities in Charlotte in the early 2000s and is separate from the current LGBT Community Center’s Pride Charlotte; Greenville’s Down East Pride; Outright Triangle Area Gay Lesbian & Bisexual Youth; Durham’s Lesbian Thesbians; and Winston-Salem’s North Carolina Coalition for Gay and Lesbian Equality. More than 6,300 other formerly tax-exempt organizations in North Carolina received similar automatic revocations this week. : :
more: Stay tuned to goqnotes.com for more on this developing story.