Inter-Cooperative Exchange

“Louie Lowenberg President is the father of Craig Lowenberg(board member).Kevin Kaldestad (board member) and Tom Suryan (alternate board member) have joint ownership in another company.”

“The organization has a single class of members. The members are grouped into voting districts. Each voting district elects a single Delegate to represent its members in all matters requiring vote, consent or approval of the members (with the sole exception of the appointment of the district's Delegate).”

“During the fiscal year ended June 30,2016 there were no committees with authority to act on behalf of the governing body.”

“The board members receive a copy of the Form 990 for review before filing.”

“Disclosure is made on at least an annual basis via email or other appropriate correspondence between the Association and Covered Officials (described below). Disclosure is shared with the Association's Board of Directors, which may take such further action it deems appropriate. In addition, any relationship or circumstance that is created or arises in the interim is disclosed to the Board President and Executive Director as soon as possible.Covered officials include the board of directors, officers and key employees.Once a conflict of interest arises, in addition to disclosure, the person with the conflict should use their best judgment as to whether and to what extent they should recuse themselves from deliberations, voting, decision-making, and other participation with respect to the matter at issue, and whether they should resign from an office or position. In making this determination, the best interests of the Association should be the sole criteria. The Board of Directors may require full or limited recusal or other measures, including resignation from an Association office or position.”

“Governing documents are made available upon request.”

“Client Note 1 - Statement of Reasonable Cause for failure to meet 6113 disclosure requirement under IRC 6710(b)___________________________________________________________________________________Some of Inter-Cooperative Exchanges (ICE) dues assessments did not contain disclosure required by IRC Section 6113. ICE meets the reasonable cause exception provided by IRC Section 6710(b) and therefore is not subject to the penalty imposed by Section 6710(a).Detailed Statement of Facts______________________________IRC Section 6113(a) requires that all solicitations from an organization with gross receipts normally exceeding $100,000 that is not described in IRC Section 170(c) contain an express statement that contributions or gifts to such organization are not deductible as charitable contributions for Federal income tax purposes. The House Explanation of this provision clarifies that the rule includes 501(c )(5) organizations, and that it applies to membership dues. ICE is a 501(c )(5) organization with annual gross receipts normally exceeding $100,000. It is not described in section 170(c). ICE collects dues from its members. ICE historically sent dues assessments to its members on invoices, and all invoices contained the disclosure required by IRC Section 6113(a). After the 2013-2014 fishing year, ICE stopped sending paper invoices to its members and began assessing dues on a member website. ICE engaged the services of White Thompson Noland & Co., PS (WTNC) to prepare its Form 990 for the fiscal year ended 6/30/15. When preparing the Form 990, WTNC asked ICE if its invoices still contained the disclosure required by IRC Section 6113. ICE explained that it no longer issues paper invoices; members are assessed via the website. In the transition to electronic assessments, the statement required by 6113(a) was inadvertently omitted.In January of 2016, As soon as ICE realized that is was not making the required disclosure on its invoices, it took immediate action to insure that website assessments contain the required disclosure to comply with IRC Section 6113.Law and Analysis__________________IRC Section 6710(a) imposes a penalty for failure to meet the requirement of section 6113 with respect to a fundraising solicitation by (or on behalf of) an organization to which section 6113 applies. IRC Section 6710(b) provides that no penalty shall be imposed under this section with respect to any failure if it is shown that such failure is due to reasonable cause.Compliance and disclosure for tax exempt organizations is complex. ICE timely filed its federal income tax returns. In addition, it files Form 1099 when required. This demonstrates that ICE acts in good faith and in an absence of willful neglect in other tax matters. As soon as ICE became aware that is was not making the required disclosure of IRC Section 6113, it took steps to comply with the requirement.Conclusion__________________ICE has reasonable cause for not meeting the disclosure requirements of IRC Section 6113 provided by IRC Section 6710(b) and respectfully requests waiver of the penalty imposed by IRC Section 6710(a). (ICE) assessments did not contain disclosure required by IRC Section 6113. ICE meets the reasonable cause exception provided by IRC Section 6710(b) and therefore is not subject to the penalty imposed by Section 6710(a).”