By Karen Smith Welch
Amarillo Globe-News
September 25, 2011
http://amarillo.com/news/local-news/2011-09-24/pavones-group-unclear-revocation#.Tn8c6l0TpDU
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| Rev. Frank Pavone Amarillo Globe-News |
A nonprofit led by embattled Roman Catholic priest the Rev. Frank Pavone solicits tax-deductible contributions but hasn’t had authority from the IRS to do so for 16 months.
Gospel of Life Ministries — one of three nonprofits at the heart of a dispute between Pavone, the charities’ self-described frontman, and Amarillo Bishop Patrick J. Zurek — continued to feature on its website an online donation form that refers to contributions as tax-deductible. The IRS revoked the group’s tax-exempt status in May 2010.
“If it still is collecting tax-deductible donations, it’s collecting under false pretenses,” said Vaughn James, a Texas Tech University Law School tax law expert. “I know the IRS won’t take it lying down.”
Groups that lose their exemptions are liable for income and other taxes, as are donors who donate after the date the IRS publicly posts the revocation — even if a charity represents contributions as tax-deductible, said IRS spokesman Clay Sanford.
“Regarding Gospel of Life, we are unclear why its tax-exempt status would be in any jeopardy,” Jerry Horn, the charity’s spokesman, said in an email Friday night. “We have asked our tax advisers to contact the IRS to determine why the organization’s name was listed and how to correct the situation. We do not anticipate any problem in doing so.”
Organizations that fail to file returns or notices with the IRS for three consecutive years automatically have their tax- exempt status revoked under a 2006 law. Organizations at risk of forfeiting their exempt status receive numerous notices, and the IRS did extensive media campaigns to warn nonprofits of the new mandate before beginning automatic revocations, Sanford said.
“We know that in recent months, the IRS has revoked the tax-exempt status of a large number of not-for-profit organizations due to nonfiling of information returns,” Horn said. “Subsequent reviews have indicated that many of these organizations were not required to file because no revenues were received.
“Gospel of Life Ministries was founded in 2006 but did not generate any significant revenue in a number of the years being questioned. Again, it is a small organization. We are in the process of correcting this situation.”
An IRS news release announcing revocations in June said that “for small organizations, the (2006) law imposed a filing requirement for the first time in 2007.” The agency said it mailed “more than 1 million notices to organizations that had not filed.”
Until a couple of weeks ago, Zurek and Pavone had quietly waged an internal church battle over what the bishop called a lack of financial transparency on the part of Pavone’s anti-abortion entity, Priests for Life, and affiliated nonprofits, Rachel’s Vineyard, which ministers to people affected by abortion, and Gospel of Life, a lay association for Priests for Life.
Amarillo Monsignor Harold Waldow said he did not know about the IRS revocation, but conversations about the finances of Priests for Life, Gospel of Life and Rachel’s Vineyard have taken place between Pavone and Zurek, who is traveling and could not be reached for comment.
Zurek tethered Pavone to the Diocese of Amarillo indefinitely until the financial questions can be resolved. Zurek made the disagreement public in a Sept. 9 letter to bishops nationwide suggesting they consider alerting their congregations to withhold donations to the charities until the dispute is settled.
Pavone has appealed the bishop’s decision to the Vatican. He remains a priest in good standing in the diocese, and the questions over finances do not assume wrongdoing, said Waldow, diocese vicar of clergy.
“The most recent financial statements for Rachel’s Vineyard and Gospel of Life Ministries have been sent to the Bishop of Amarillo — numerous times, and without any acknowledgment — including all financials for 2006, 2007, 2008 and 2009,” Horn said.
Horn declined an Amarillo Globe-News request for copies of the documents.
“We are not giving over further internal documents (to the press),” Horn wrote in an email Friday.
The diocese “will be sent the most recent year’s audits shortly,” Horn said. “If and when they ask any specific questions ... we will be happy to answer them in full.”
The IRS posted the revocation of Gospel of Life’s tax- exempt status to a list on its website in June to alert donors that the organization no longer is eligible to receive tax- deductible contributions. The federal agency also removed Gospel of Life’s name from IRS Publication 78, a cumulative list of organizations that can accept tax-deductible gifts.
As recently as Friday, a staffer in the Gospel of Life’s Staten Island, N.Y., donations department said contributions could be deducted on tax returns.
James, of Texas Tech, said that practice should cease immediately.
Contributors of Gospel of Life gifts after May 17, 2010, who were unaware of the revocation, could take deductions until the June 9 revocation posting, according to the IRS’ general guidelines.
But no deductions can be taken for donations since the posting, the IRS information shows.
Any organization whose status is revoked is liable for all income, excise or other federal taxes and penalties that may have been owed at the time of revocation and is responsible for future tax liabilities it accrues, the IRS website states.
Gospel of Life also could be liable for real property, sales or other state and local taxes without the cover of the exemption, an IRS document states. A representative of the New York State Department of Taxation and Finance did not return a message Friday.
Sanford said taxes would be owed by any entity for money collected since revocation.
IRS information said the government will not reinstate a revoked nonprofit status. Charities must apply for a new exemption.
Charity Navigator, a watchdog group based in Glen Rock, N.J., had no information on Gospel of Life, but that could be because the charity collects less than $1 million in annual revenue, spokeswoman Sandra Minuitti said. A search of Guidestar, an online nonprofit database, did not turn up tax returns for Gospel of Life.
“Both Rachel’s Vineyard and Gospel of Life are very small organizations in terms of revenue, less (than) $200,000 for Gospel of Life and $500,000 for Rachel’s Vineyard,” Horn said.
Minuitti said many small groups lost tax-exempt status under the automatic revocation rule, which implemented the annual filing requirement “because the IRS was having a difficult time determining which charities were in business and which were not.”
Some small groups were caught unaware, she said.
But Gospel of Life shares Staten Island, N.Y., offices, some staff and website links with Priests for Life. Rachel’s Vineyard is based in Pennsylvania but has a Staten Island, N.Y., post office box.
“If they’re savvy enough and large enough to have a website, and if they’re sharing offices with another group, it would be hard to make that excuse for them,” Miniutti said.
Charity Navigator rates Priests for Life as a two-star charity on its four-star scale, largely because 64 percent of the organization’s budget is going toward its programs, she said. “Most charities spend 75 percent or more,” Miniutti said.
The watchdog group introduced a new way of evaluating charities on accountability and transparency last week. The scrutiny shows “more concerning, that they (Priests for Life) don’t have enough independent voting members on their board,” Miniutti said. “When we’ve seen charities involved in scandals and falling apart, it’s because there’s not enough oversight.”
The Globe-News has requested names and contact information for members of the organizations’ boards. The request has gone unanswered by Priests for Life.
karen.welch@amarillo.com
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