Freezer Longline Coalition

“Mike Shelford and Rick Shelford - family relationship”

“The Association has one class of members - regular members with voting rights.”

“Regular Members of the association are voting members with the right to vote for the election of Directors.”

“Regular Members may be required to approve significant decisions of the Board of Directors. For example, the Board of Directors will not approve any alteration, amendment or repeal of the Bylaws of the Association that would adversely impact the rights of any class of members unless they have first received approval of two-thirds of the members of such class.”

“The board president and treasurer review the Form 990 before filing.”

“Whenever there is reason to believe that a potential conflict of interest exists between the Freezer Longline Coalition and its Board members or directors, the Board shall determine the appropriate response. The designated reviewing official has a responsibility to bring a potential conflict of interest to the attention of the Board for action at the next regular meeting of the Board or during a special meeting called specifically to review the potential conflict of interest. The Freezer Longline Coalition shall refrain from acting until such time as the proposed action, policy, or transaction has been approved by the disinterested members of the Board. Whenever there is reason to believe that a potential conflict of interest exists between the Freezer Longline Coalition and an employee, the Manager shall determine the appropriate response. The Manager shall report to the Board President the results of any review and the action taken. The President shall determine whether any further Board review or action is required.In addition, Board members and the Manager complete an Affirmation of Compliance form when they join the Board or staff and annually thereafter.”

“The compensation of the executive director was initially determined through negotiations between the ED and a compensation committee made up of Board members. The ED's compensation is reviewed annually as part of the budgeting process. Any bonus compensation is determined in an executive session without the ED being present. The Board has hired an independent third-party compensation consultant to advise and determine the ED's compensation package in future years.”

“Governing documents, policies and financial statements are available upon request.”

“Client Note 1 - Statement of Reasonable Cause for failure to meet 6113 disclosure requirement under IRC 6710(b)___________________________________________________________________________________Some of Freezer Longline Coalitions (FLC) invoices did not contain disclosure required by IRC Section 6113. FLC 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 )(6) trade associations, and that it applies to membership dues. FLC is a 501(c )(6) organization with annual gross receipts normally exceeding $100,000. It is not described in section 170(c ) . FLC collects dues from its members on a quarterly basis. FLC did not include the required disclosure on its invoices in March of 2014.FLC hired a new executive director in November of 2012. The former director did not notify his replacement about the requirement to include the above disclosure on all invoices during the transition to new management.FLC engaged the services of a White Thompson Noland & Gibb, PS (WTNG) to prepare its 2013 Form 990. When preparing the 2013 Form 990, WT asked FLC if its invoices contained the disclosure required by IRC Section 6113. FLC replied that it did not make the required disclosure on its 2013 invoices.In June of 2014, As soon as FLC realized that is was not making the required disclosure on its invoices, it took immediate action to insure that future invoices 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. FLC timely filed its federal income tax returns. In addition, it complies with payroll tax reporting and payment obligations for its employees. It files Form 1099 when required. It notifies its members about nondeductible 162(e) expenditures as required by IRC 6011(e). This demonstrates that FLC acts in good faith and in an absence of willful neglect in other tax matters.As soon as FLC became aware that is was not making the required disclosure of IRC Section 6113, it took steps to comply with the requirement.Conclusion__________________FLC 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).”