A clerical error in its tax returns, repeated over three consecutive years, cost in Brentwood its nonprofit status — and approximately $26,000 in penalty fees. However, the change in status appears to be temporary, and the fees have been waived.
A second tax identification number, unknown to present-day members of the post, appears to be the culprit.
“We thought we were compliant,” said Post Commander Ed Hoffher about the organization’s nonprofit status with the Internal Revenue Service.
Hoffher and another member of the local veterans organization spent most of last Tuesday morning at the , seeking help, and an explanation.
“There was a mix-up,” said T.C. Powers, a field representative for Carnahan.
The post’s tax preparer filed the organization’s returns under the Goff-Moll Building Association, which is different from the American Legion Post’s tax identification number. “It went under the wrong account,” Powers said.
“It was an error on the side of the government,” Hoffher said. “We’ve filed our taxes under the building association tax ID number for years.”
Fortunately, the Goff-Moll Post was able to reconstruct its tax records, and Carnahan's office faxed 18 pages of documents to its local IRS tax advocate.
Officials expect a response in the next two weeks.
“Let one bureaucracy deal with another bureaucracy,” Hoffher said of the ordeal.
In 2006, Congress passed the Pension Protection Act that requires most tax-exempt organizations to file an annual information return or notice with the IRS. If an organization fails to file, it could lose its nonprofit status and start paying taxes, while donors could no longer deduct their contributions.
The IRS released a list of 275,000 non-profit organizations that did not supply an annual form in June. The Goff-Moll Post was on the list because of the tax ID error.