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[Snoopy]

Well, it is 15 minutes past closing time at 3ABN and I have received no fax.  Why am I not surprised?

[Snoopy]

I called today and David Carson is out sick.  So I sent a fax request to Mollie Steenson.  I just received the fax confirmation so I know it got there.

[childoftheking]

 K. Failure to File Penalties
Against the Organization
Under section 6652(c)(1)(A), a penalty of $20 a day, not to exceed the smaller of $10,000 or 5% of the gross receipts of the organization for the year, may be charged when a return is filed late, unless the organization can show that the late filing was due to reasonable cause. Organizations with annual gross receipts exceeding $1 million are subject to a penalty of $100 for each day the failure continues (with a maximum penalty with respect to any one return of $50,000). The penalty begins on the due date for filing the Form 990 or Form 990-EZ.

Use of a paid preparer does not relieve the organization of its responsibility to file a complete and accurate return.

Incomplete return.   The penalty may also be charged if the organization files an incomplete return. To avoid having to supply missing information later, be sure to complete all applicable line items; answer “Yes,” “No,” or “N/A” (not applicable) to each question on the return; make an entry (including a zero when appropriate) on all total lines; and enter “None” or “N/A” if an entire part does not apply.

Incorrect information.   This penalty may be imposed if the organization's return contains incorrect information. For example, an organization that reports contributions net of related fundraising expenses may be subject to this penalty.

Against Responsible Person(s)
If the organization does not file a complete return or does not furnish correct information, the IRS will send the organization a letter that includes a fixed time to fulfill these requirements. After that period expires, the person failing to comply will be charged a penalty of $10 a day. The maximum penalty on all persons for failures with respect to any one return shall not exceed $5,000 (section 6652(c)(1)(B)(ii)).

Any person who does not comply with the public inspection requirements, as discussed in General Instruction M, will be assessed a penalty of $20 for each day that inspection was not permitted, up to a maximum of $10,000 for each return. The penalties for failure to comply with the public inspection requirements for applications is the same as those for annual returns, except that the $10,000 limitation does not apply (sections 6652(c)(1)(C) and (D)). Any person who willfully fails to comply with the public inspection requirements for annual returns or exemption applications will be subject to an additional penalty of $5,000 (section 6685).

There are also penalties (fines and imprisonment) for willfully not filing returns and for filing fraudulent returns and statements with the IRS (sections 7203, 7206, and 7207). States may impose additional penalties for failure to meet their separate filing requirements. See also the discussion of the Trust Fund Recovery Penalty, under General Instruction D.

L. Contributions

[Snoopy]

I also left a message at the Illinois Attorney General's office to find out if the annual report had been filed there.

[Bob Pickle]

I sort of suspect that from some year forward, if Danny was receiving income from DLS Publishing he had to acknowledge that on 3ABN's Form 990.

Anyone know a CPA or CFE or auditor who can verify that, and tell us from what year forward that would have been the case?

[Snoopy]

Oh, oh, oh!!  Pick me, pick me!!  Thanks to Ian/Rosa, I can answer this one!

According to generally accepted accounting principles, 3ABN and DLS Publishing are related parties which would require disclosure and special audit planning and attention.  Any direct or indirect related party transactions should have been disclosed in the notes to the financial statements in the year they occurred.

Based on the property tax findings that Danny Shelton and NOT the Board of Directors controls 3ABN and an assumption that Danny Shelton also controls DLS Publishing, the relationship also should have been disclosed on Line 75c, Part V-A of the Form 990 if Danny Shelton were receiving compensation from DLS Publishing.  And Danny Shelton signed the 2006 Form 990 under penalty of perjury.

I sort of suspect that from some year forward, if Danny was receiving income from DLS Publishing he had to acknowledge that on 3ABN's Form 990.

Anyone know a CPA or CFE or auditor who can verify that, and tell us from what year forward that would have been the case?

[Bob Pickle]

The 2006 instructions state on page 35 that all you have to have is: "One or more persons exercise substantial influence over both organizations (see Example 3, later)." That's relationship 8.

If two organizations are related by relationships 1 to 6, they have to disclose more, but they still have to disclose something if they are related by relationships 7 or 8.

[Bob Pickle]

Yet the 2007 instructions don't have anything that corresponds to relationship 8, unless I'm missing something. Did this change?

[Snoopy]

They meet Relationship 2 also in 2006.

The 2006 instructions state on page 35 that all you have to have is: "One or more persons exercise substantial influence over both organizations (see Example 3, later)." That's relationship 8.

If two organizations are related by relationships 1 to 6, they have to disclose more, but they still have to disclose something if they are related by relationships 7 or 8.

[Snoopy]

And in 2007, if the property tax findings still hold true.

[Bob Pickle]

Ownership. The term ownership is holding (directly or indirectly) 50% or more of the voting power in a corporation, profits interest in a partnership, or beneficial interest in a trust.

Control. The term control is having 50% or more of the voting power in a governing body, or the power to appoint 50% or more of an organization’s governing body, or the power to approve an organization’s budgets or expenditures (an effective veto power over the organization’s budgets and expenditures). Also, control can be indirect by owning or controlling another organization with such power.

That's from the 2006 instructions.

Danny has 100% of the ownership and control of DLS Publishing, according to his affidavit filed in MN. But he wouldn't have even 50% ownership or control officially of 3ABN. How does this affect it all?

[Snoopy]

According to the Illinois Department of Revenue, Danny Shelton DOES control 3ABN.  Have you seen anything that would indicate a major change in oversight since then?

Ownership. The term ownership is holding (directly or indirectly) 50% or more of the voting power in a corporation, profits interest in a partnership, or beneficial interest in a trust.

Control. The term control is having 50% or more of the voting power in a governing body, or the power to appoint 50% or more of an organization’s governing body, or the power to approve an organization’s budgets or expenditures (an effective veto power over the organization’s budgets and expenditures). Also, control can be indirect by owning or controlling another organization with such power.

That's from the 2006 instructions.

Danny has 100% of the ownership and control of DLS Publishing, according to his affidavit filed in MN. But he wouldn't have even 50% ownership or control officially of 3ABN. How does this affect it all?

[childoftheking]

Quote from the 2007 instructions:

Facts and circumstances tending to show substantial influence:   
The person founded the organization.

[Snoopy]

I found pages 7-9 of the Franklin County Board of Review brief submitted to the Honorable Circuit Judge Vantrease quite interesting with regard to the 3ABN Board of Directors.

On page 7 we learn that 3ABN counsel advised against disclosing the make-up of the Board and that 3ABN failed to submit any written evidence with regard to the composition of the Board.

[Snoopy]

On page 8, we see that none of the witnesses provided testimony as to what the 3ABN Board did.  Except for Linda Shelton's testimony that policies established by the Board could be found in the Board Minutes.  However, no minutes were provided to the Court.