If you have ever set up a nonprofit organization, you know that you need to get incorporated as a nonprofit with the Secretary of State’s office and then file with the Internal Revenue Service for 501(c)(3) status. Hopefully, you know that you also need to register with the Secretary of State’s office for charitable solicitation and file for state income tax exemption with the Georgia Department of Revenue. Have you ever wondered what happens if you don’t do any of those things? Atlanta City Councilman H. Lamar Willis found out when he was recently fined $25,000 by the Fulton County Superior Court.
The actions stem from a finding that Willis solicited contributions for the now-defunct H. Lamar Willis Foundation, even though it was never registered with the Georgia Secretary of State as either a nonprofit corporation or an organization soliciting charitable donations. The Secretary of State found that Councilman Willis’s “foundation” raised $300,000 from local businesses and individuals without really being a charity at all. The $25,000 fine was in addition to $42,000 in tax liens previously placed on Willis by the Georgia Department of Revenue for unpaid corporate taxes for the Foundation. The IRS has not taken action yet, but Willis could be subject to additional fines and other discipline because he had not applied for 501(c)(3) status with the IRS.
Willis’s situation is an extreme example but it highlights the importance of ensuring that your organization makes all required filings, whether you are just now getting started or renewing your annual registrations. If you have questions about your nonprofit’s legal requirements, contact Pro Bono Partnership of Atlanta.