IRS abuse against a small non-profit

The chronology below documents  the abuse and incompetence of the IRS against a very small non-profit  organization. I was one of the founders of the Arizona Economic Forum over  thirty years ago and have served as its treasurer for many of those years. Our  sole activity was to sponsor a two day seminar in Flagstaff Arizona and, in some  years, we took in less than $25,000 in revenue. In May of 2009 I attempted  to resolve a routine renewal of our tax exempt status. The following chain  of emails documents a portion of my interaction with the IRS.

Arizona Economic Forum  (AEF) EIN 86-0392507we

090513  (May 13, 2009) Our AEF accountant Dan Hasley told me  that our 990N was rejected on 090504. (When I attempted to file the 990N  myself at http://epostcard.form990.org the message I got was that  our return for 2008 had already been filed and that return could not be amended  until we filed our 2009 return.) When Dan called the IRS they verbally told him  we were revoked in Feb 2007 but could not tell him why because he was not an  officer. IRS said an officer needed to sign a form 2848 for Dan to use, which I  did. After Dan submitted it he said IRS still refused to talk to him. BTW, Dan  says there is no penalty for our failure to file the 990N (ePostcard) so our  status may be unchanged.

090513  I called IRS and got a representative (did not get the name but the ID  was #01-96249) who put me back on hold three times (apologizing each time that  she was researching our file) and then said she could not tell me why we were  revoked except that, sometimes, accountants check the block “final return” on  the 990. She said I would have to prove AEF was still in good standing with  copies of Arizona Corporation Commission annual reports, minutes of our  meetings, list of officers, and compensation.

090513  I called IRS and spoke to a Mr Kelly (ID#17-53859) who answered (after 20 minute  hold) and put me on hold “to do some research.” After being on hold more than 15  minutes he came back and apologized for keeping me on hold so long and said that  he could not tell me why we were revoked and that there was no one he had access  to who could explain. He suggested that I call the general customer service  number 800 829-1040 and try to talk to a specialist. Then he changed his mind  and suggested that I call the business number 800 829-4933. He seemed very  perplexed that he could not get this information for me and only offered the  suggestion that someone who submitted our 990 might have checked the “final  return” box.

090514  I called 800 829-4933 and got IRS rep Salina Stam (ID#01-44999). She put me on  hold for 10 minutes for “research” and when she got back to me she said she  could not see anything in our file that suggested we were revoked. She said we  were granted exemption in October 1980 and there was no indication of  revocation. When I specifically asked her about the Feb 2007 date that I got  from Dan, she said that she could see that date in our file but it had a code  that she could not decipher. She suggested that I call the EO number and ask to  speak to a supervisor or contact the Office of Taxpayer Advocate at 877  777-4778. WRT calling EO she said that she could not put me through to any  person and transferred me to the regular EO line (877 829-5500). As in past  calls, I selected the prompt #2 and then #4 but this time I got a recording that  said there were too many calls asking for the option I had selected and that I  would have to call back another time.

090617  I called Taxpayer Advocate 877 777-4778. A Miss Williams ID#01-50730 answered  and took my information. She said she would get a taxpayer advocate assigned and  then she put me on hold for about 15 minutes (returning twice to be sure I was  still holding). She finally came back and said that she had successfully  referred my request for a taxpayer advocate to be assigned and that someone  would call me back within three days.

090623  Bernadette Hines-(ee#07-92835 & tel # 866 325-7090 & fax 866 690-6134)  called from the Georgia Taxpayer Advocate office (where she works from 6:30 AM  to 2:30 PM). She said our case file number is 45-06508 and she asked me if AEF  had gotten a letter of rejection and what it said. I told her I would call her  back because I was in my car.

090624  I called Miss Hines and left a message. She returned my call and asked me to fax  the rejection letter we got to 866 690-6134. I did so immediately. She will  investigate and get back to me in two weeks.

090710  Ms Hines called to say she had not gotten my fax. I was out of town and faxed it  again when I returned on July 14. This time I verbally confirmed that she had  gotten it. She said she would investigate and call me.

090720  Ms Hines called me today and said that it was our filing status, not our 501(c)3  exception, that had been revoked in Feb of 2007 and that I would receive a  letter in 15 days telling me how to reestablish it. This did not make sense to  me but I decided to wait for the letter and then call Ms Hines back with more  detailed questions.

090821  Ms Hines called to see if I had gotten the letter from the IRS. I had not but I  contacted our AEF chairman and he dropped off the IRS letter. I found that it  just gives us the same instructions for reinstating.

090911  I spoke again with Ms Hines. She got John Riley of the IRS Ogden office  (ee#1000144786) on a conference call. Mr Riley said he had good news in that he  was able to determine that we were not terminated but rather just put in an  inactive status. He could not tell the reason we were placed in this status but  he wondered if it might have something to do with our state filing in Arizona. He suggested  that we call the Arizona Corporation Commission at 602 542-3230 and get a letter  that says we are in compliance. I reminded Mr Riley again that the reason I  contacted the Office of Taxpayer Advocate was because I believed we had made all  of our required filings and, that, if so, we should not have to jump through any  hoops to get reestablished in an active status. Mr Riley explained that only the  Cincinnati office could determine why we were put  in an inactive status and that the Cincinnati office cannot be contacted by phone,  only by fax, and he gave us their fax number (513 263-4330). He told Ms Hines  that, as a Taxpayer Advocate, she “has a lot of power” and should be able to get  that information from the Cincinnati office. Ms Hines protested that she  really did not have that much power but reluctantly volunteered to contact the  Cincinnati  office on our behalf if I would fax her a copy of the original IRS letter that  we received. It was the same letter I have previously faxed to her on June 24  and on July 14 but I faxed it to her again today (Sep 11). She said she would  call me back today or Monday (Sep14).

090916  I called Ms Hines. She had not done anything yet (in spite of prior assurances).  She said “you’ve got to give me a few days. I have to handle cases by the  date.”

090917  Ms Hines called and left a message with no details. I called back and left her a  message requesting that, if she missed me again, to leave me a more detailed  message (or email) telling me what specific form we had failed to file or had  filed incorrectly. (My suspicions are growing that she will not send an email  because it would leave a record of her lack of performance.)

090918  I called Ms Hines again and left the same message as above.

090921  I called Ms Hines again and left the same message as above.

090924  I called Ms Hines again and left the same message as above.

090930  Ms Hines reached me by phone in my car and started the conversation by reminding  me that “you are not my only case.” Then she went on to give me a new reason  that AEF was moved to inactive status. She said it was because we had not filed  a 990 for three years and we have to file every three years even if we are below  the $25,000 threshold. (Because I was driving in my car and out of state I  decided not to pursue a detailed explanation and to call her back when I  returned home.)

091007  I called Ms Hines to ask for an IRS cite for the three year requirement  regarding filing referred to above and a copy of the letter we supposedly  received from the IRS in 2007 informing us of our failure to meet this  requirement and notification of our resulting movement by the IRS to inactive  status. The ensuing 10 minute conversation was quite rambling and it was obvious  that Ms Hines had little interest in doing any more work on our case. She told  me that the 2002 was the last return IRS had received from us. She told me at  least three times in the conversation that we would have to get recertified  irrespective of whether we got answers to either of my questions and (amazingly)  even if the IRS was completely at fault and we had done nothing wrong. Several  times she refused to even look for the IRS cite justifying the three year  requirement but later she agreed to try to find it and get back to me. Regarding  the notification we should have received in 2007 she said she had gotten this  from the Cincinnati office (who confirmed that we were  transferred to inactive status). Ms Hines said she had not requested a copy of  such notification. When I clarified my request for a copy Ms Hines indicated  that it was not available. Another response from her was that she “was not going  to answer that” when I tried to find out why I could not get a copy of the  letter. I asked her what happened to the letter and if the IRS could have lost a  document from our file that is only two years old. Ms Hines then agreed to try  to get a copy for me. A few times in the conversation Ms Hines’ excuse for not  knowing an answer was that she “did not have the file in front of her” but, at  one point in the conversation she said that on January 29, 2007 the IRS had  “deleted our requirement for filing a 990” (not sure how she could say that if  she did not have our file in front of her). In answering a question of hers I  had to read to her from portions of our 4 May 2009 IRS letter (actually from  ePostcard) that I have previously faxed to her on three separate occasions.  Another comment she made was that, at some point the IRS will simply declare us  to be a “C” corporation and that we should be glad that the IRS did not revoke  our 501(c)3 status but rather just declared us to be inactive. (Another  unanswered question is why we have to recertify if our status was not  revoked.)

091023  I left a message for Ms Hines asking her if she had found a copy of the letter  from IRS to AEF notifying us of the fact that we had failed to file for three  years. I also asked if she was able to find the specific provision in the IRS  code that we had failed to follow.

091104  I called again and left same message as above.

100108 I logged on to ePostcard  and filed the 990N for 2009. The site stated that I would get a confirmation  within 30 minutes but nothing came back.

100112 I received email notice  that our 990N had been rejected again for the same reasons as last  year.

100203 Called the IRS number on  our notice 877 829-5500 and spoke to CSR John Riley (ee#0144786) who said “there  is a problem with your status.” He said he “had to go all the way back to 2000  to find a return” for us. He said that we were terminated because we not active  and we would have to submit a “letter of reinstatement.” He said that IRS does  that after three years (but I believe the 3 year rule is a relatively new  provision in the code). When I asked him to tell me the code section we had  violated he said that he “would have to do a lot of research.” He put me on hold  and, after holding for 20 minutes, I had to leave for another  meeting.

100505 I tried again today by  calling the IRS number 877 829-5500. I got a message that the hold time would be  “greater than 15 minutes” (it was about that long). A Miss Vimahi-ee#0145154  came on the line and I asked her specifically about the reason our 990-N was  rejected. She said it was because of “the status” we are in. However, she said  that I would have to speak with someone else to get any more detail. She then  transferred me and a voice message said that the hold time would be “more than  30 minutes” (it was about 40 minutes). A Mr Kelly-ee#0197138 came on the line  and said that AEF was in a terminated status as of February 2007. I opined to  him that the IRS may have made a mistake in our case by terminating us because  we had not filed for several years. I said I knew there is now a requirement  that even small companies (less than $25,000 in gross receipts) file. He said he  did not think that was the reason we were terminated because that requirement is  very recent. He surprised me when he said that he did not think our 501c3 status  had been terminated but rather our “organization” had been terminated. (I did  not get the feeling that he knew what he was talking about on that comment.) I  also explained that prior IRS contact people had told me our status was  “inactive” rather than “terminated” but Mr Kelly did not seem to know the  difference. When I pressed him about why we were terminated he said that he  could not answer that (in spite of two or three conversations with his  supervisor). Mr Kelly suggested that AEF must have filed a “final return” at  some point that caused the termination. He said there was nothing more he could  do for me and there was no place I could call to determine the reason for our  termination. He read me the requirements to get reinstated and said that he  would send a letter explaining that to the AEF PO Box. He also said that AEF  could send a letter requesting an explanation for the termination to IRS TEGE  Correspondence Unit Room 4024 PO Box 2508 Cinti OH 45201 or fax it to 513  263-4330.

100505 I faxed a request to the  IRS as indicated above and also sent a hard copy by snail mail. I also emailed  Senator Kyl’s chief of staff and outlined our problem, along with a brief  history of the AEF. Nancy Gilliam was assigned to our case and called me to  request a privacy release form. When I received that I faxed it back to Senator  Kyl’s office.

100514 I received a letter via  snail mail dated 7 May 2010 from Cindy Thomas (IRS Manager, Exempt  Organizations, Determinations) that stated AEF is “currently exempt under  section 501(c)(3) of the Internal Revenue Code.”

100517 I refilled the 990-N via  epostcard to comply with the May 17 deadline.

100727 I called IRS at 800  829-4933 because AEF showed up on the IRS list “Exempt Organizations At-Risk of  Revocation.” The voice message said my wait time would be 10-15 minutes. After  about that long Ms Delion (ID#0143198) came on the line. When I told her that I  was calling about the aforementioned list she put me on hold to get a copy. When  she came back on the line she said I would have to speak with the Exempt  Organizations line (even though I previously went through several prompts to get  to the right place). Ms Delion transferred me to 877 829-5500 and the voice  message said that the wait time was 4-7 minutes. Ms Smith (ID#0196561) answered  and I explained my concern. She said that AEF was shown to be in an “unable to  locate” status, probably due to our post office box address, but that she would  put us back in the system as an exempt organization. She then explained the new  990 filing requirements but when I said that I had filed the 990N on time she  put me back on hold. She then said that she checked her files and said that our  990N did not show as posted. However, she said that might be due to the fact  that AEF was listed as having “no filing requirement.” She said she would put us  back in the system as having a filing requirement and that I should wait eight  weeks and then re-file the 990N. Then I told her that, to make sure we got mail  on a timely basis, I had changed the address on the 990N to my home office  address. She then offered to go into the system and change the official address.  Because she did that, she said that I did not need to wait eight weeks to  re-file the 990 but that I only needed to wait four weeks from today’s date. She  said I would then get a confirmation that the 990 had been accepted. However,  she said I should also wait another three weeks and then go to the IRS online  site and check to be sure that the 990 had been accepted. As an afterthought she  also said that I would be getting a letter explaining what AEF needed to do to  get reinstated but that I should ignore that letter.

100826 As instructed by the IRS  (above), I attempted to re-file the 990 and got the following email response:  “Your organization has already filed an  e-Postcard for 2009 (1/1/2009 through 12/31/2009). The system will not accept an  amended e-Postcard. You can make corrections or update your information when you  file your next e-Postcard, which will be due after  12/31/2010.”

100828 Today I received a  letter, Notice Number CP259E dated 30 August 30 2010, from the IRS entitled  “REQUEST FOR ELECTRONIC FORM 990-N (e-POSTCARD).” The letter began “We did not  receive your Form 990-N.” It went on to say that AEF “must file the e-Postcard  electronically” (which, as can be seen from the prior chronology, I have done at  least three times) and “there is no paper form.” However, as a humorous aside,  there was attached with this letter a paper form to submit (with correspondence)  and an envelope included for such submission. I sent it in with a copy of the  narrative above. I also attempted again to file the 990-N e-Postcard and  received the following response: “Your  organization has already filed an e-Postcard for 2009 (1/1/2009 through  12/31/2009). The system will not accept an amended e-Postcard. You can make  corrections or update your information when you file your next e-Postcard, which  will be due after 12/31/2010.”

101018 Called 877 829-550. I was  on hold for 35 minutes. Mrs Ostarcevic (ID#0143822) answered and told me that  the deadline for our organization’s filing was October 15 but that it was good  that I had called because the computer had not yet revoked our status. She was,  by the way, the most intelligent and thoughtful of all the agents I have spoken  to. She even apologized several times for the runaround we have gotten. She said  that the reason our 990N kept getting rejected is because we had filed an  extension (Form 8868?) last year. (Why had no one else told me that?) For any  other 990 filing this would not be a problem but, for 990N filers, a request for  an extension causes all subsequent electronic filings to be rejected. She said  she was able to correct our status for 2007 and that IRS had just stopped  sending notices for 2008 990Ns that they had failed to receive. For 2009 she  said the only way I can correct the failure to file is to complete a paper 990EZ  (downloadable from IRS.gov) and send it with a cover letter explaining why we  failed to get our 990N filing accepted and requesting that IRS not assess  penalties. (Send to Box 9941 Ogden UT 84409) She said she would document our  file so that whoever got my 990N and cover letter would understand the  situation.

110112 I refilled our 2010 IRS  Form 990 by e-Postcard and received confirmation that it was  accepted.

110617 I received a letter from  the IRS stating that our Form 8868 APPLICATION FOR EXTENSIOIN OF TIME TO FILE AN  EXEMPT ORGANIZATION RETURN was APPROVED and I immediately returned it by mail  with a copy of our letter stating that our 2010 IRS Form 990-N (e-Postcard) was  “accepted” on 1/12/2011……..to be  continued