LEWISTON — Five years after the IRS pulled the Great Falls Balloon Festival’s tax-exempt status for failing to file required paperwork, and more than a year after the festival’s treasurer said she was in the process of getting it restored, the group’s federal tax exemption is still revoked.
Last year, Treasurer Mell Hamlyn said she’d spoken to the IRS and was “told that what I have already sent in will resolve everything and we should be reinstated back to the revocation date without issue — with no lapse.”
Fifteen months later, Hamlyn said she’s still working on it.
“We’re at the IRS’ mercy, their time,” she said this week.
Asked about a delay, Hamlyn said, “They’ve just asked for more information.”
The festival is scheduled for August and is expected to go on regardless of its position with the IRS.
The balloon festival is one of the area’s biggest and most popular events in Lewiston-Auburn, drawing tens of thousands of people to the area during a single summer weekend. More than 30 nonprofits sell food at the festival or otherwise rely on it for a large chunk of their annual fundraising.
The festival is funded through sponsorship, donations and the sale of souvenirs, as well as a portion of passenger balloon rides and fees it sets on for-profit and nonprofit vendors at the event. The festival also receives about $16,000 in policing, public works and other help from Lewiston taxpayers, including use of Simard-Payne Memorial Park.
The festival is run by a board of volunteers and has long been considered a federal 501(c)(4), a nonprofit that is tax-exempt even though donations are not tax-deductible as they are with a 501(c)(3).
Tax-exempt nonprofit events are more attractive to donors, grant organizations and public funds than for-profit events, which means they’re more likely to get money. They also aren’t required to pay the same taxes as for-profits.
Someone connected with the balloon fest raised concerns about its management last year, prompting Lewiston city officials to examine the festival’s finances. Lewiston Finance Director Heather Hunter found no improprieties but did have recommendations for ways the festival could better document procedures, deal with bank reconciliation and capture information on balloon launch tickets.
Around the same time, three of the festival’s five board members abruptly quit, two of them of saying they left because they were worried about the festival’s management. A number of entertainers and businesses, including the festival’s insurer, also said they had to chase Hamlyn for months to get paid.
It also became public that the state had dissolved the festival as a nonprofit corporation three times since 2005. The first two times, in 2005 and 2014, the group had failed to file its annual report. The last dissolution occurred between Sept. 10, 2015, and March 6, 2017, for failing to update its contact information with the state. That means the group was not registered as a nonprofit with the state during the 2016 balloon fest.
A spokeswoman for the Secretary of State’s Office said at the time that it’s not unusual for groups to lose and regain their registration, but they’re not supposed to do business in Maine without it.
This week, the festival was listed as “not in good standing” with the state for again failing to file its annual report. That changed Wednesday, after the paperwork was submitted. The festival is now listed as “in good standing” with the state.
However, its status with the IRS remains an issue.
The IRS pulled the festival’s 501(c)(4) in 2013 because it said the group had not filed paperwork for the previous three years. The IRS said it has received nothing from the festival since 2009.
When asked about it last year, Hamlyn said she’d filed the required documents yearly, and she emailed copies to the Sun Journal as proof. The copies were not dated or signed; Hamlyn said that was because they were computer copies and only printed versions are signed and dated before being sent to the IRS.
She said she believed the IRS situation was caused by a problem with the festival’s identification number. However, the same ID number was listed on both the IRS Form 990s Hamlyn provided and the IRS’ revocation notice. The IRS also listed the festival’s current address.
At the time, Hamlyn said she’d just spoken to the IRS and a resolution was imminent.
This week, she said it’s “being worked on.”
“I don’t know if you’ve ever dealt with the IRS, but that takes a while,” she said.
Privacy rules prevent the IRS from commenting on a specific case. A spokesman could not say how long cases such as the balloon festival’s typically take to resolve.
The 26th annual balloon festival will be held Aug. 17-19. This year’s theme is Rock Around the Park.
After doing a splash and dash, Windspirit, right takes A pair of balloons does a splash and dash in the Androscoggin River during a Sunday morning’s launch at the 2016 Great Falls Balloon Festival. (Sun Journal file photo)
A pair of balloons does a splash and dash in the Androscoggin River during a Sunday morning’s launch at the 2016 Great Falls Balloon Festival. (Sun Journal file photo)
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