News: CJ Exclusives

Ballance Nonprofit Still Skirting Law

Rep. Frank Ballance’s state-funded charity to help youths apparently has failed to file IRS tax forms required for nonprofit organizations.

Carolina Journal first reported April 15 that the John A. Hyman Memorial Youth Foundation, chaired by Ballance, D-1st, had never filed an annual IRS Form 990, Return of Organization Exempt From Income Tax. At the time, Ballance told CJ the information would be available the following week.

But it was late July 2003 before a Form 990 for each year from 1994 through 1997 was filed with the IRS. At the time, foundation Executive Director Eddie Lawrence said, “The remaining years are being prepared by our accountant and will be filed with the IRS upon completion.” The information, if filed with the IRS, is also available at guidestar.org, a national database of nonprofit organizations. The Hyman reports that have been filed are available at that site.

But ongoing efforts by CJ to obtain the remaining overdue forms have been unsuccessful, indicating the forms have still not been filed. The telephone number for the Hyman Foundation has been disconnected. CJ left a phone message with Ballance’s congressional communication director, Joanna Keubler, about the past due forms. She did not return the phone call.

Tax-exempt nonprofits that have annual receipts greater than $25,000 are required annually to file Form 990 with the IRS. The foundation has routinely received more than $25,000 a year from the state since 1994. Nine or 10 years of reports were due. The information contained on the form includes the names and salaries of officers, the source of funds, and the expenditures by category. Copies of the past three years’ reports are to be made available to the public on demand, at the organization’s place of business during normal business hours.

In October the State Auditor’s Office released a scathing report on the foundation. Federal and state law enforcement officials have launched investigations, and Ballances’s family members and friends have been forced to testify to a federal grand jury.

Yet Ballance moves on. He recently completed a “state of the district tour” in which he met with constituents, heard their concerns, and offered assistance with their problems. The tour was not a campaign event, but Ballance made it clear he was going to run again.

Reporters questioned Ballance about the Hyman situation, but he would not discuss it. “I’m not going to go into that. It’s been hashed and rehashed. I want to stay on the message of what I can do on behalf of the people. I want to talk about creating jobs. I’m not interested in discussing that matter,” Ballance told the Greenville Daily Reflector. Raleigh TV station WRAL also interviewed Ballance about his future. “For legal reasons, I cannot talk about specifics of the ongoing investigation,” he said.

Ironically, one particular constituent service Ballance offers on his official congressional web site is help with the Internal Revenue Service. “If you have tried to work with the Internal Revenue Service and have had problems, we might be able to help you. Please click on Contact Me to write us,” reads Ballance’s offer.

According to IRS regulations, a tax-exempt organization that fails to file a required return is subject to a penalty of $20 a day for each day the failure continues. The maximum penalty for any one return is the lesser of $10,000 or 5 percent of the organization’s gross receipts for the year. Using these guidelines, the foundation’s fines for 10 years of not filing may be as high as $100,000.

Don Carrington is associate publisher of Carolina Journal.