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Council respect for volunteer time (or lack thereof)
I have made one thing clear with both the pack, troop and PTO : I will not be treasurer. It may not be as complex as it seems, but it just isn't my skill set. Sorry to hear how council has treated you. Not very professional. Good for you putting your foot down. My view is that there is a minimum amount of Pack activity I will accept. If the parents won't step up and do it, Council can find the volunteers to do it or I walk to another pack that appreciates my efforts. This is not a problem with the troop. It amazes me as troop activities take much more work.
My advice is not to go out on personal limbs for the BSA. Shrink back into the shadows and let your son enjoy doing things with his dad and let the pack and the CO deal with whatever problems arise. When he moves on to boy scouts, same advice.
I'm not a CPA, I do consult them, I have an overview understanding of tax law, I'm also not a tax lawyer. That said, a Cub Scout Pack doesn't exist. It is an extension of it's charter organization. It can get an EIN from the IRS for banking purposes only, but the Cub Scout Pack is not a legal entity, and therefore it cannot file a tax return. In terms of the bank signer and liability, I'm not sure why. I mean, if you failed to report income from the bank account (interest income), then you theoretically are at fault. However, as the person that collects checks, deposits them, and writes checks, you don't necessarily have a complete financial picture.
CPAs always think everything is a big deal, and its a function of the preparer penalties. My CPA relayed a story she heard at a CPE program, a CPA did a small return (a few hours, < $1000 for the return), on IRS audit, turns out that the rental property was short term rentals, and therefore to be taxed as a hotel and not a normal investment property. The CPA just got the numbers on the rental, but didn't ask (had never seen this before). The IRS in the end gave the CPA a fine of around $15,000 in preparer penalties, on a small $1000 return. That's why CPAs worry about minute stuff. If the IRS decided to ask questions, the Pack would explain, the PTA didn't care, we're a non profit, and the PTA would look confused. In the end, since there is no taxes involved, there is no penalty or interest. But the CPAs involved might get hit with preparer penalties for not looking into this.
If you are concerned, I'd total up the PNL for the last 7 years as each year, report it up to the PTA, and they can amend the 990s or not... You could break it down for them as needed, but it would probably be fine to report to them a number as "Cub Scout Pack, Net Income" that they could put on their 990. Since there are no taxes due, and it's all tax free, I'd just bring across the income for the past 7 years and report it all to the PTA, it's probably around zero.
That said, I see your side, you're a volunteer, and you have liability, however theoretical and remote, and you are trying to do the right thing, which the BSA doesn't want you to do.
I see the BSA's point of view, this is really immaterial, since any gear purchases are pretty minor (and can be written off in the year purchased), Cub Scout Packs don't have taxable profits. What do you have, a few hundred bucks in the bank at year end? I mean, it's a little hairy because you make dues money in the fall and spend it in the spring, but after the first year, that spreads out. However, if you keep raising the issue, you could put hundreds of charters in jeopardy.
If you are concerned about the liability, you resign. You don't get to threaten the rest of the BSA's charters in town, which your running it up the flagpole at the PTAs might do. I mean, if you scared the statewide PTA into thinking that over cub scout Packs they risk their 501(c)3 designation, they'll ditch the cub scout packs in a heart beat. There are no profits in Cub Scout Packs. The IRS knows we exist, and knows that there is nothing to look at here. If the IRS was interested, they'd take action, and the BSA would have to ditch the entire CO model.
We're a club, clubs don't file tax returns. The 70% of faith based charters don't file ("churches" are exempt), this is a minor issue. At a certain point you accept that things are hackneyed, or you don't.
The BSA's rediculous offices seem absurd, but I assume that they were financed via donors donating buildings. I've dug through my Council's 990, they aren't dealing in large sums of money that are floating around. All non-profits have absurdities in them, the BSAs isn't that bad.
Georgiamom, the first problem that you are dealing with is that you have no clue how BSA is put together. In the VAST MAJORITY of cases (yours included) BSA UNITS ARE NOT INDIVIDUAL LEGAL ENTITIES, AND DO NOT FILE INDEPENDANT TAX RETURNS. The only exceptions are those units who (for whatever reason) have filed with the government as an individual not-for-profit organization, and they are very rare indeed.
BSA units (your Pack being one) are NOT owned by your local BSA council. They are owned by, and take their tax status from, their Charter Organizations. In your case - your local PTA. It is up to the PTA to include THEIR BSA unit in their taxes (if they have enough income to even file, many do not).
Please read Pack18Alex above. He has it pretty much on the nose.
Did your local council District Executive act like a jerk? Yep, he sure did. Is that an indictment against the entire, national BSA organization? Of course not.
However, a tidbit that you obviously do not know, the salary of a DE is directly linked to the number of members, AND Charter Organizations, in their District. If the National PTA pulls all charters in your District, not only will a lot of boys be without Scouting, but your DE will be without a job.
So, you had your DE running terrified for his very job. All for, basically, very little cause.
As for your local council office that you found so overly indulgent, do you know for a fact that the council owns the building? Or the land the building sits on? Why do you assume that they paid an extravagant price for their building? Perhaps it was a gift. Perhaps your council got the building at a cut-rate price - because of who they are. For the large "Taj Mahal" type of buildings, many cities have given BSA a permanent, minimal ($1-$5) yearly lease on a municipal space. A BSA council building is, in many cases, it's BIGGEST form of advertisement for the BSA program. You can't be an effective advertisement if no one can see you, or know what you are. Again - NOT EVERY COUNCIL IS THE SAME! My council owns a rather small building. However, we are a rather small council. They are also looking into selling, and renting space, in the future to possibly save some money. Our SE's office is far from "plush". however, yes, it IS larger than the tiny cubicles of the DE's, and it does have an actual door! Perhaps we volunteers should fight to have that door removed! I am sure our DE would love to prop it across the entrance to his cubicle!
Your son's "hard earned popcorn sales" went to help fund YOUR PACK. They also went to help keep your local council camps operating. They helped to fund council/district summer camps, day camps, training expenses, and lots more.
Is BSA perfect? Of course not. However, it might be a good idea to do a bit of research on a problem BEFORE you run around yelling that the sky is falling, when all you have is a bit of loose plaster.
I've been through my Council's 990, we have big construction expenses where the camps are located, one "highly paid" scout executive that isn't that highly paid for his responsibilities, and 7 district executives whose pay isn't high enough to be reported on the 990. There is no large "rent expense" for some fancy building or anything else that would draw a red flag. I mean, BSA's leadership is amongst the highest paid for non-profits, but we're also one of the largest non-profits in the country, so that's not really shocking. I just don't see evidence that anyone is living large on popcorn sales, the guy who makes it to the top of a non-profit pyramid (or for profit pyramid) makes money, that's America.
However, the Council, Pack, and CO all told you that it wasn't a problem. At that point, you've told everyone, and they don't agree with you. If you feel you have personal liability at that point, you have the option of quitting. You don't have the option of being a bully to get your way. I realize that you thought you were doing the right thing, but once everyone told you it they didn't consider it a problem, and you did consider it a problem, your only choice was to resign.
I'm sorry that you found the phone calls chilly, but as pointed out elsewhere, your actions were inadvertently putting Scouting in your state in jeopardy, and animals backed against the wall tend to lash out.
I agree with Alex. The 990N covers all organizations receving less than 50k a year. It does not including any financial reporting, other than a declaration your organization made less than 50k. Do PTAs usually receive more than 50k a year? Does your Pack receipts push the PTA over 50k? If not you're worried about nothing.
Now I have seen quite a few organizations run afoul of the new 990N reporting, losing tax exempt status over not filing for 3+ years. Mostly Alpha Phi Omega chapters and alumni associations.
It sounds like your CPA has never filed a non profit tax return (quite common, actually)... most CPAs are auditors, most CPAs in private practice are tax accountants that handle individual returns 1040, partnership returns 1065, and S-corp returns 1120S... Most of them don't actually know how to do a corporate return (1120), and almost none of them know how to do a 990. My CPA was the non-profit person for a regional office of a national firm (not a Big 4). She said that of 600 Accountants in the firm, there were about 6 of them in the non-profit unit, and maybe 10 of them knew how to fill out a 990. It's a pretty rare work.
I'm in the process of establishing a 501(c)6 professionally, and the IRS was backed up a year before the 501(c)4 explosion.
Factually speaking, there is no missing tax return for the Cub Scout Pack. The Cub Scout Pack is a non-existant entity, it's a name, it MIGHT have a unique EIN, but it's part of the PTA's non profit. There is not a missing tax return. Your CPA doesn't know that, because your CPA doesn't have a clue how your entity is structured, or how this is reported. He does know how to answer "What happens if I'm the treasurer of a group that hasn't filed taxes in 7 years" -- you're screwed, pay me for 7 years of returns.
You were the bank signatory for a club operating under the local PTA's 501(c)3 and therefore never needed to file a return.
Providing the numbers at year end to the PTA was correct. Telling them that the Pack hasn't filed taxes in 7 years and that there is potentially $49k in penalties was simply causing hysteria and putting Scouting in jeopardy, and factually incorrect. If nobody from the Pack sent financials to the PTA, that's wrong, but probably irrelevant (the Pack's profits at year end are around 0), but the Pack can't fill out a tax return, it's NOT a legal entity that owes a tax return.
You had a tax law question, you went to a CPA whose certified in filling out forms (not a Tax Lawyer specializing in matters of tax law), answered you incorrectly, and you responded by rattling a hornets nest.
My local Starbucks store (company owned) doesn't file a tax return either, their PNL flows up to Starbucks Corporation and is part of their financials (their 1120 and their SEC filings). Not every entity in the world files a tax return. In fact, a club that simply collects dues (like a local rugby club) gets the same "for banking purposes only" EIN as my Cub Scout Pack operates on, and there is no entity for their numbers to flow up for.
What tax return do you believe that your Cub Scout Pack failed to file over the last 6 years?
yes its true its adults that are screwing up scouting but georgiamom is still correct.
while its absolutely true that she has no legal tax liability beyond giving that information to the CO the troop/pack financial information should be included on the chartered organizations tax return if they meet the threshold to file.
some scout groups do have hundreds of thousands of dollars in assets (normally land, or vehicles). these groups some of which do have their own independent nonprofit may file for themselves and not some church or something they may meet in.
you are generally safe as most scout groups dont have enough assets or money transfers to actually trigger an audit. and generally the irs only audits those who they believe they can get money out of. a cpa or licensed tax preparer however could expose themselves to liability for knowingly filling an inaccurate return as some on this board seem to be at least indirectly advising.
The end of the discussion is, if you do not feel comfortable doing something, don't do it. A lot of cub scout packs don't have much in the way of assets. I am not exactly sure what our treasurer does (another discussion entirely :P) but our pack made about 5k off popcorn/camp cards and got another 2-3k in donations from companies matching volunteer hours. We don't "own" expensive equipment as it would be our PTA who would have to own it, we can't as far as I am aware.
Our PTA does file tax returns as we are in a well-todo school district so they get lots of money and grants throughout the year.
She obviously doesn't want to carry the guilt if she did end PTA/PTO sponsorship of packs and troops in Georgia. Too late now.......Honestly the BSA is better off without someone like her. She would have been a thorn in the side of what ever organization she would have been a part of.