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. Efforts to reach the director of the NC Pride Fest and Parade had proven more than difficult for qnotes and other community members, even as the organization and its signature Pride event faces an uncertain future.

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 that is 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. qnotes reached out to Short, though he declined for over a week to return our requests for comment. He finally emailed the newspaper a statement just hours before press time. Other community members have said they, too, had problems getting in touch with Short.

Keith Hayes, who acted as the group’s media spokesperson, told qnotes on June 14 that he had also not been able to speak with Short regarding the IRS’ revocation. That same day, he resigned from his volunteer position with the organization.

“I am proud of the important contribution NC Pride makes for our community, not just in the Triangle and but across the state,” Hayes said. “I am especially proud of the number of young and rural LGBT community members whom the event attracts every year. However, I cannot continue as a spokesperson for an organization when I am not kept aware of the public issues it is facing.”

Short’s brief, four-sentence statement, emailed to qnotes on June 19, attempted to lay some uncertainties to rest, though news staff never had the opportunity to pose in-depth questions directly to Short.

“At the present time, we are still in talks with the IRS about our 501(c)(3) status and the correct completion of all forms required to bring us back to full compliance,” Short said in the email. “However in that process, we have also learned that since we receive no grants or private donations, and that all of our funding is from advertising revenue, we will not be affected in our yearly projects and operations of our websites while this process continues.”

Short continued, “It is also important to remember that the Pride Committee of NC, Inc. is a group of part-time non-paid volunteers that assemble once each year in the summer to organize and direct the NC Pride Parade and Festival in September that has become the largest and most successful GLBT [event] in our state, and in its success encouraged at least eight other local Pride events around North Carolina. It is also important to note that all of our NC Pride events are always free to the public.”

Why Short never completed the proper IRS forms when he was first made aware of the problem last year is a question, among others, that remains unanswered.

Short knew about IRS rules

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 the paper’s 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 said 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.

“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 the Community Assessment Survey. The organization self-reported an expected budget and expenses of $65,000.

Group’s future, Short’s leadership in question

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. Though Short insists the event will go on as planned, the organization’s lack of oversight on such an important financial matter has raised questions about the nature and quality of the group’s leadership.

Community members, however, continue to be supportive. Bobby Hilburn, executive director of the LGBT Center of Raleigh, said his organization is aware of NC Pride’s situation and is eager to assist.

“The LGBT Center is aware of the situation and will be looking for ways to assist NC Pride in its endeavors this fall,” Hilburn said. “The Center stands behind the event and will work tirelessly to ensure that it continues as it is a huge service and outlet to our LGBTQ Community. It would be irresponsible for us not to work to ensure its continuance.”

NC Pride does have the opportunity to reapply for their tax-exempt status. 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. : :

more: This is a developing story. Stay tuned to goqnotes-launch2.newspackstaging.com for the most up-to-date news.