10 July 2013: Clary Lake Association’s Official 501 c(3) Status


Paul Kelley was so happy to point out in his 44 page “closing brief” that the Clary Lake Association’s 501 C(3) non-profit status was revoked by the IRS somewhere back around 2007.  We were not aware of this. I looked into the matter and this is what I found out. From the Instructions for Form 1023 “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code”:

“The following types of organizations may be considered tax exempt under section 501(c)(3) even if they do not file Form 1023:

Any organization that has gross receipts in each taxable year of normally not more than $5,000 is not required to file Form 1023

Even though the above organizations are not required to file Form 1023 to be tax exempt, these organizations may choose to file Form 1023 in order to receive a determination letter that recognizes their section 501(c)(3) status and specifies whether contributions them are tax deductible.”

The Clary Lake Association’s annual receipts are and always have been well below the $5000 annual threshold so the fact that the IRS revoked our 501 C(3) status is a moot point: we are still a non-profit in the eyes of the law and donations made to the Association  have been, are now, and always will be tax-deductible. So Kelley’s assertion that the Clary Lake Association is technically not a registered 501(c)(3) at this time is correct, if irrelevant. Nonetheless, we thank Mr. Kelley for bringing this matter to our attention. We will be filing to reinstate our 501 C(3) status shortly.

The Association’s non-profit status is also irrelevant in regard the water level petition and one has to wonder why he felt it was worth mentioning at all in his closing brief. The petition was not filed by the Association. Clearly his goal was to discredit everyone he could think of.

Incidentally, the requirement for non-profits to file annually with the IRS was part of the Pension Protection Act of 2006; prior to 2006 there was no requirement for a non-profit of our size to file annually. After 3 years of receiving no filings, a non-profit organization’s 501 C(3) status is “automatically revoked.” This actually happened to hundreds of thousands of non-profits when the law went into effect. I spoke to our Treasurer and she was unaware of the need to file annually. If there was ever a notice sent to the Association, it was lost or misunderstood.

Reinstating an automatically revoked 501 C(3) status is a routine procedure. We’ll be submitting a new Form 1023 shortly.