UPDATE 10/3/14 We have received official notice from the IRS that our 501(c)(3) status HAS BEEN REINSTATED!
UPDATE 8/20/14 All application materials and returns needed for retroactive reinstatement have been submitted to the IRS and uploaded to this website.
UPDATE 8/19/14 In a marathon session this weekend, all application documents were completed. We proofed them on Sunday, made corrections and gathered all needed signatures.
Also, note that the below post needs to be corrected. Our overhead/program split was actually 4% and 96%. We apologize for the error.
Posted 8/14/2014
An important message for all donors, volunteers, and supporters of Derby City Dog Rescue:
Yesterday, our Director received a letter from the IRS that our organization had its tax exempt status automatically revoked for failure to file the appropriate annual notices/returns for three years in a row. The letter also stated that the revocation was automatic, based solely on failure to file (i.e., it is not a judgment by the IRS that we are participating in illegal or unethical activities—it is entirely a “paperwork” issue), and that we were eligible for a streamlined process to correct the situation and have our tax exempt status reinstated retroactively to the date of revocation.
This letter came as a shock as we believed we were in full compliance with filing requirements for this year and last year. Since we did not have tax exempt status in our first year of operation, and have only existed for three, we did not understand how this could have occurred.
So, what happened? DCDR was incorporated as a business engaging in nonprofit activities in March 2011. Our initial activities, which consisted of finding rescue for shelter dogs through promotional activities, generated no income, so applying for 501c3 status was not a priority. We began doing more direct rescue in mid-to-late 2011, which generated a little adoption fee income and donations to meet our mission objectives of providing medical and other care to dogs in our adoption program. As we grew, we realized we would benefit greatly from 501c3 status, which would allow donors to receive tax deductions for donations and give us other opportunities to generate funds to save more and more dogs. We applied in February 2012 and received our official letter granting 501c3 status in September 2012.
We understood that this status was retroactive to the time of application. We did not understand that it was retroactive to the time of our formation. Organizations with less than $50,000 in receipts are not required to file a 990 or 990EZ, but instead submit an electronic 990N (or “postcard”), which essentially is a statement that the organization is not required to file a return. We did not understand we needed to file this for both 2011 and 2012, due to the fact that we believed exemption status was for 2012 only. And, to the best of our knowledge, we DID file the 990N for 2012. We did not receive confirmation of any kind, but the task was done. In our inexperience, we assumed (an assumption, in hindsight, we regret) that the lack of confirmation was “normal” and did not follow up. And, whether there was a human error, or a system error, the IRS has no record of the submission for 2012, and we have no physical evidence to prove the contrary.
In 2013, we grew exponentially. Through the generosity of donors as well as program-generated fees, we had income of just over $82,000, of which approximately $80,500 was used for DIRECT program expenses, saving the lives of 409 dogs that year. This means 98% went directly to the dogs for vet bills, food, supplies, transport, and boarding. (2% overhead paid for things like fundraising items and events, insurance, a small storage facility for donations, etc.). We were required to, and did, file a 990EZ and all appropriate supporting schedules; unfortunately, due to our own errors, this filing was done approximately 60 days after the due date. The end result is that due to the 2013 filing not being received by the due date, lack of record for 2012, and our failure to file 2011, the automatic revocation was triggered.
On receipt of the letter, we immediately began steps to fix this situation. We are currently gathering documents and information to apply for reinstatement. We intend to have all materials submitted within 14 days, if not sooner. We do not know how long the process will take at the IRS. If approved, and we are confident it will be, the reinstatement will be retroactive to May 15, 2014. However, until that has happened, this is formal notice that as of the August 11, 2014 notice from the IRS, donations made to Derby City Dog Rescue after May 15, 2014 are not tax deductible. When reinstatement occurs, those donations will be tax deductible.
We sincerely hope this setback won’t deter any of you from supporting us. Our record in terms of real measureable outcomes is strong, and we have no intention of abandoning our mission. We will need you more than ever to get past this obstacle, as we will lose access to some fundraising programs in which participation is contingent on 501c3 status. We still have many dogs in our care and our worst fear is that they will suffer during this difficult period. For them, and the dogs we have yet to save, we will get this resolved and move forward with our mission.
UPDATE 8/20/14 All application materials and returns needed for retroactive reinstatement have been submitted to the IRS and uploaded to this website.
UPDATE 8/19/14 In a marathon session this weekend, all application documents were completed. We proofed them on Sunday, made corrections and gathered all needed signatures.
Also, note that the below post needs to be corrected. Our overhead/program split was actually 4% and 96%. We apologize for the error.
Posted 8/14/2014
An important message for all donors, volunteers, and supporters of Derby City Dog Rescue:
Yesterday, our Director received a letter from the IRS that our organization had its tax exempt status automatically revoked for failure to file the appropriate annual notices/returns for three years in a row. The letter also stated that the revocation was automatic, based solely on failure to file (i.e., it is not a judgment by the IRS that we are participating in illegal or unethical activities—it is entirely a “paperwork” issue), and that we were eligible for a streamlined process to correct the situation and have our tax exempt status reinstated retroactively to the date of revocation.
This letter came as a shock as we believed we were in full compliance with filing requirements for this year and last year. Since we did not have tax exempt status in our first year of operation, and have only existed for three, we did not understand how this could have occurred.
So, what happened? DCDR was incorporated as a business engaging in nonprofit activities in March 2011. Our initial activities, which consisted of finding rescue for shelter dogs through promotional activities, generated no income, so applying for 501c3 status was not a priority. We began doing more direct rescue in mid-to-late 2011, which generated a little adoption fee income and donations to meet our mission objectives of providing medical and other care to dogs in our adoption program. As we grew, we realized we would benefit greatly from 501c3 status, which would allow donors to receive tax deductions for donations and give us other opportunities to generate funds to save more and more dogs. We applied in February 2012 and received our official letter granting 501c3 status in September 2012.
We understood that this status was retroactive to the time of application. We did not understand that it was retroactive to the time of our formation. Organizations with less than $50,000 in receipts are not required to file a 990 or 990EZ, but instead submit an electronic 990N (or “postcard”), which essentially is a statement that the organization is not required to file a return. We did not understand we needed to file this for both 2011 and 2012, due to the fact that we believed exemption status was for 2012 only. And, to the best of our knowledge, we DID file the 990N for 2012. We did not receive confirmation of any kind, but the task was done. In our inexperience, we assumed (an assumption, in hindsight, we regret) that the lack of confirmation was “normal” and did not follow up. And, whether there was a human error, or a system error, the IRS has no record of the submission for 2012, and we have no physical evidence to prove the contrary.
In 2013, we grew exponentially. Through the generosity of donors as well as program-generated fees, we had income of just over $82,000, of which approximately $80,500 was used for DIRECT program expenses, saving the lives of 409 dogs that year. This means 98% went directly to the dogs for vet bills, food, supplies, transport, and boarding. (2% overhead paid for things like fundraising items and events, insurance, a small storage facility for donations, etc.). We were required to, and did, file a 990EZ and all appropriate supporting schedules; unfortunately, due to our own errors, this filing was done approximately 60 days after the due date. The end result is that due to the 2013 filing not being received by the due date, lack of record for 2012, and our failure to file 2011, the automatic revocation was triggered.
On receipt of the letter, we immediately began steps to fix this situation. We are currently gathering documents and information to apply for reinstatement. We intend to have all materials submitted within 14 days, if not sooner. We do not know how long the process will take at the IRS. If approved, and we are confident it will be, the reinstatement will be retroactive to May 15, 2014. However, until that has happened, this is formal notice that as of the August 11, 2014 notice from the IRS, donations made to Derby City Dog Rescue after May 15, 2014 are not tax deductible. When reinstatement occurs, those donations will be tax deductible.
We sincerely hope this setback won’t deter any of you from supporting us. Our record in terms of real measureable outcomes is strong, and we have no intention of abandoning our mission. We will need you more than ever to get past this obstacle, as we will lose access to some fundraising programs in which participation is contingent on 501c3 status. We still have many dogs in our care and our worst fear is that they will suffer during this difficult period. For them, and the dogs we have yet to save, we will get this resolved and move forward with our mission.
