After the scandal of one of its volunteers getting arrested on suspicion of embezzlement earlier this year, the Oakdale Youth Soccer League faces another financial blow as it is now operating with a revoked non-profit status while still soliciting funds and donations. League officials are currently working on getting the status reinstated on what they say were oversights and problems with correct records from the internal theft.
On May 15, the Internal Revenue Service notified league officials that its 501(c)(3) non-profit status was revoked. The league has not filed any financial returns since 2012.
If a nonprofit organization fails to file its annual return for three consecutive years, the IRS will automatically revoke its tax-exempt status. This automatic revocation happens by operation of law – there are no exceptions.
League officials had been initially tightlipped on the matter of why financials were not filed or giving an explanation, despite requests not only from The Leader, but the City of Oakdale and even other members of the league.
“Thank you for concern, we are in the process of resolving these issues,” OYSL President Greg Hodge stated in an Oct. 19 email to The Leader when contacted about the revocation.
When pressed for further information, Hodge said he would not comment further.
At its Oct. 8 Board of Directors meeting, the matter of resolving the non-profit status was on the agenda. Another item shows that Board Member Cherilyn Bairos addressed having a CPA “for issues with a non-profit status.”
When contacted on Oct. 20, Bairos said she was asked by representatives of the California Youth Soccer Association to communicate with the OYSL accountant about when the status could or would be reinstated.
“I was advised by the CPA that OYSL had not provided any documents to submit and she was awaiting Ann Orr (Treasurer) to submit them to her,” Bairos said. “I found that puzzling because days prior, Ann said the non-profit and tax issues were already in the hands of the CPA.”
Bairos added that the way many board members were notified that its status had been revoked was when they learned they could not be part of a federal grant to have lights installed at the T.L. Davis Sports Complex.
“We were under the assumption they were a non-profit,” Oakdale City Manager Bryan Whitemyer said on Friday, Oct. 21.
Whitemyer said when he heard earlier this month that the league had its charity status revoked and possible lack of liability insurance issues, the city initiated a review with all its sports leagues that use facilities. Notification was sent out requesting proof of non-profit status, insurance indemnifying the city at organization functions, and league financial statements.
“It’s the city’s obligation to have things in order when we partner with these organizations,” Whitemyer added. “It protects the city and the taxpayers.”
Whitemyer said OYSL has not formally responded, despite emails back and forth.
“The youth softball and baseball groups said ‘Here you go, right here’ and just opened up binders showing us everything,” Whitemyer said.
The city manager said OYSL would be suspended from use of any city facilities until the matter was resolved, but did allow them to use the T.L. Davis complex until the end of the month due to a trophy ceremony scheduled for Oct. 29.
Despite having its status revoked, the OYSL continued to promote itself as “a non-profit organization” on their website and receive sponsorships from the community. More than 50 businesses have made monetary offerings and team sponsorships to OYSL under the guise of tax-deductible contributions.
A review of the latest (July 2016) OYSL Board Minutes, shows that the organization reported $77,849.15 in its coffers.
An IRS revocation means that OYSL is no longer exempt from federal income tax and will have to pay corporate income tax on annual revenue. State tax exemptions are also removed and those taxes are also assessed. Donors are not eligible to receive a tax deduction for their contributions to the organization after the revocation date.
“The 2013 return has now been completed,” Orr said Friday afternoon, Oct. 21. “The CPA is also working on (years) 2014 and 2015.”
Orr added that nothing from the league has been filed with IRS as of yet.
When asked about the delay in filing, Orr took responsibility, stating she thought they had been filed and it was an “oversight.”
“It’s on me,” Orr said. “I thought they had been done.”
Orr said that the league had been dealing with incomplete financial data and was attempting to recover accurate bank records needed for the IRS filings since the alleged embezzlement.
In June of this year, the league’s US Club Program Director Jo Harris was arrested by the Oakdale Police Department after their investigation showed she took over $18,000 of league funds. Harris has continued to deny the accusation as the matter goes through the court process.
“It’s a ripple effect,” Orr said. “That right there caused things to be delayed.”
Orr added that as of Oct. 21 OYSL was fully insured and proof had been sent to Whitemyer that afternoon.
To regain its exempt status, OYSL must file the missing three annual reports, along with a new application for exempt status. Finally, it must explain why it failed to file the annual returns for three consecutive years and explain any new procedures which will ensure future compliance.
