Merrimack Education Center Inc

PART X, LINE 2:

“The organization was granted tax-exempt status under internal revenue code section 501(c)(3) on september 21, 1978, and has been generally exempt from federal and state income taxes since that date. The organization was notified by the internal revenue service (irs), by letter dated april 13, 2016, that, effective july 1, 2012, the irs is proposing to revoke the organization's status described in section 501(c)(3). If the organization receives a final revocation letter from the irs, the organization will be subject to income tax beginning with the year ended june 30, 2013. The organization intends to vigorously contest the irs proposal. Also, in the unlikely event that they would be subjected to income taxes, management has determined that federal and state carryover deficits estimated at approximately $2,100,000 would be available to offset any future income after june 30, 2016. Therefore, no provision for income taxes has been provided for in the accompanying financial statements as of june 30, 2016. Asc 740-10, accounting for uncertainty in income taxes, requires the organization to evaluate and disclose tax positions that could have an effect on the organization's financial statements. The organization has been reporting its activities to the internal revenue service and to the commonwealth of massachusetts on an annual basis as a tax-exempt entity since its inception. The informational returns that have been filed by the organization are generally subject to audit and review by the governmental agencies for a period of three years after filing. Substantially all of the organization's income, expenditures and activities relate to its exempt purpose, therefore, despite the irs proposed revocation of the organizations tax exempt status, management continues to assert that the organization is not subject to income taxes and will continue to qualify as a tax-exempt not-for-profit entity.”