GrassRoots facing IRS trouble, fines
GrassRoots TV may owe thousands of dollars in fines to the Internal Revenue service, its board of directors and staffers learned this week.
The community television station apparently has not filed tax forms with the Internal Revenue Service for at least three years.
GrassRoots board member and County Commissioner Shellie Harper said it appears a former board member failed to file forms with the federal government. As a result, the station may be required to pay tens of thousands of dollars in fines and penalties, depending on which forms were not filed.
Harper declined to name the former board member who was supposedly responsible for filing taxes, but she did say he agreed to help sort out the mess.
Local tax attorney Jim Kowar began sorting through the mess this week, drafting a letter to the IRS explaining the situation and filling out forms for past years. Citing attorney-client privilege, he declined to provide specific information about which tax forms were delinquent or speculate on what the station’s liability might be.
If the station failed to file Form 990, which lists officers, staff, revenues and spending at tax-exempt, nonprofit organizations like GrassRoots, it faces a penalty of $20 per day for every day it has not filed, said IRS revenue agent Richard Black.
Black pointed out that tax-exempt organizations are still required to pay social security and withholding taxes for employees, and many must also file a list of donors and the amounts of their contributions.
Penalties may be excused in extraordinary circumstances, Black said, but federal tax law gives the agency little room to maneuver. “If you know you are supposed to file and don’t, that’s not a reasonable cause for relief,” he said.
But Black said there are limits to the amount tax-exempt organizations are fined. At most, he said, an organization like GrassRoots would probably face around $15,000 in penalties for going three years without filing Form 990.
“When you come in yourself,” Black added, “the system is a lot more lenient.”
No one currently associated with GrassRoots was involved with the station when it went awry of the IRS.
Station board member Bonnie Kowar said station manager Sean Sunkel discovered the problem earlier this week, when he was trying to organize the books and transfer the station’s financial records to a computer program.
It is the latest in a series of setbacks that have plagued the station for much of the past year. Sunkel, the third manager since late 1997, took control last November, as many of the station’s board members resigned.
He and the three remaining board members – Harper, Kowar and Jim True – found the nation’s oldest community television station in shambles. Much of its equipment was in disrepair, and there had been no effort put into fund-raising or membership drives.
The matter with the IRS comes just as things were beginning to look up. The station raised more than $20,000 at a fund-raising concert and auction on Jan. 9, and two consultants are scheduled to begin helping the station rebuild its board and, ironically, sort out its accounting.
Board members Kowar and Harper expressed optimism about the station’s ability to weather its latest crisis. “Everybody is trying to work together to sort out this mess,” Harper said.
Black said that donors to the station who deducted their contributions needn’t worry, regardless of the outcome. “If you’re one donor among many,” he said, “it’s not really going to affect you because you were taking the deduction in good faith.”
In extreme cases of misconduct or delinquency, criminal charges are filed or organizations are stripped of their tax-exempt status and ordered to pay back taxes. In less severe cases, a payment schedule is set up and the organization in question retains it status.
“There’s very little that’s black and white. A lot of it’s gray and very little’s been tested in court,” Black said of the law that deals with tax-exempt organizations. “In the case of minor violations, the organization just pays the fine and life goes on.”
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