IRS 990 Packet Information 


Provided By: 


The Minnesota Area Relief Association 
Minnesota State Fire Chiefs Association 
Minnesota State Fire Department Association 


December 30, 2011 

You have requested a copy of the detailed response packet prepared for the Coalition by Best & 

Flanagan LLP. A copy of 


the December 30,2011 update, which summarizes the tax issues facing VFRAs 
in each of the four categories we have identified is attached. In order to ensure that you receive the 
correct version of the response packet, we need the following information: 

1. Do you have a determination letter from the IRS that recognizes your VFRA as a tax exempt 
organization? If so, please indicate whether your organization is recognized as exempt under 

Section SOl(c)(3), Section SOl(c)(4), or another Code section. 

2. Have you received a notice that your tax exempt status has been revoked? If so, please scan 
and email thenoticetonzikmund@sbmfire.com 
3. Have you received a notice of a tax or penalty assessment? If so, please scan and email the 
notice to nzikmund@sbmfire.com 

4. Does your organization conduct charitable gambling activities? 
We will forward the appropriate response packet and an invoice via email (or snail mail upon request) 

when we receive your response to these questions. The detailed package is designed specifically to help 
you achieve the following goals: 

1. Ensure a retroactive reinstatement of your tax exempt status if that status has been revoked; 
2. Definitively establish that you are in fact a tax exempt organization (even if you are not on the 
automatic revocation list, we are recommending that you secure formal recognition of your tax 
exempt status - the fact that you are not yet on the automatic revocation list does not 
necessarily mean that the IRS recognizes your organization as tax exempt); 
3. To help ensure that any penalties assessed against your organization are abated, and if you have 
already paid a penalty assessment, to obtain a refund. 


Update on Tax Issues Impacting Voluntary Fire Relief Associations 

Provided By: 


The Minnesota Area Relief Association 

Minnesota State Fire Chiefs Association 

Minnesota State Fire Department Association 

December 30, 2011 

On June 8, 2011 the IRS published a list of tax exempt organizations subject to automatic revocation. There 

were approximately 60 Minnesota Volunteer Fire Relief Associations ¡UVFRAs") on that list. The list has 
been updated periodically and currently includes more than 70 VFRAs. The publication of the list triggered a 
broader discussion of tax issues facing Minnesota VFRAs, and it became clear that the VFRAs on the 

automatic revocation list were not the only VFRAs that had tax issues that needed to be addressed. 

Recognizing that not all VFRAs had the resources to address these complex issues on their own, the 

Minnesota State Fire Chiefs Association, the Minnesota State Fire Department Association and the 
Minnesota Area Relief Association formed a coalition (the "Coalition") to help fund and guide the collective 

efforts to resolve tax these issues. The Coalition has previously published general background information 
on tax issues impacting VFRAs and some recommendations regarding steps to be taken by VFRAs to restore 

and/or solidify their tax exempt status. The purpose of this update is to summarize the information we have 

previously provided and to offer VFRAs access to the detailed guidance we have developed. 

In our previous guidance, we identified the following four categories of VFRAs: 


1. Those that sought and received a tax exemption under Internal Revenue Code Sections SOl(c)(3) 
or SOl(c)(4) and a letter from the IRS that they were not required to file Form 990. 

2. Those that sought and received an exemption under Internal Revenue Code Sections SOl(c)(3) 
or SOl(c)(4) and have filed their Form 990 each year. 

3. Those that sought and received an exemption under Internal Revenue Code Sections SOl(c)(3) 
or SOl(c)(4) and subsequently stopped filing returns based on their belief that they were 

exempt from the filing requirement. 

4. Those that never affrmatively sought a formal exemption but simply operated as exempt 
organizations. 

We understand that some VFRAs in category 1 have recently received letters from the IRS notifying them 

that the exemption from the 990 filing requirement was erroneously granted, and that they would be 
required to file 990s going forward. Category 1 VFRAs that receive such a letter should contact their tax 

advisor to decide how to respond. For all other category 1 VFRAs, no additional action is necessary at this 
time - these organizations have been recognized by the IRS as being tax exempt and exempt from the 990 

filing requirement and are entitled to the benefit of those exemptions until the IRS tells them otherwise. 

The situation for category 2 VFRAs is fairly straightforward - if one of these VFRAs appears on the automatic 

revocation list, it is likely the result of a clerical error by the IRS. These organizations should get in touch 
with the IRS and offer to provide copies of previously filed 990s. 


The situation with respect to VFRAs in categories 3 and 4 is more complicated. Category 3 VFRAs will need 

to follow the procedures established in IRS Notice 2011-43 (for organizations the normally have annual 


receipts of less than $50,000) or 2011-44 (for organizations with annual receipts that normally exceed 
$50,000). These procedures require VFRAs whose tax exemption has been automatically revoked to submit 
a new application for tax exemption and a request to have their exemption reinstated retroactively to the 
date that it was revoked. VFRAs that were previously recognized as exempt under Section 50l(c)(3) will 
need to file a Form 1023, while VFRAs previously exempted under Section 50l(c)(4) will file a Form 1024. 
We have prepared detailed guidance to assist VFRAs in each of these categories in seeking reinstatement. 

You can obtain a copy of this guidance by contacting Nyle Zikmund at nzikmund@sbmfire.com or 


612.860.7442. 

VFRAs in category 4 are in a unique situation because they are starting with a blank slate when it comes to 
tax exempt status. Because most VFRAs have the ability to argue for tax exempt status under several 
different theories, VFRAs that have never sought formal recognition of an exemption have a choice to make. 
While the decision as to which type of exempt status to pursue will require a careful examination of the 
individual circumstances of a particular VFRA, we have concluded that most Minnesota VFRAs will be best 

served by seeking tax exempt status under Section 50l(c)(4), and we have prepared detailed guidance for 

category 4 VFRAs that decide to go this route. You can obtain a copy of this guidance by contacting Nyle 


Zikmund at nzikmund@sbmfire.com or 612.860.7442. 

As with our previous updates, we want to stress the fact that the guidance offered by the Coalition (in these 
updates and in the more detailed information available upon request) is offered to help VFRAs resolve their 
tax issues. Neither the Coalition nor its attorneys represent individual VFRAs, and the information we are 

offering does not attempt to address circumstances of individual VFRAs, each of whom face unique legal 


and practical issues. Accordingly, we would urge each and every VFRA to work with their leadership and 

professional advisors to identify and implement the approach that is best suited for their organization. As 

counsel to the Coalition, Best & Flanagan has agreed to offer a reduced rate schedule for VFRAs seeking 


individualized advice, and VFRAs interested in this option should contact Nyle Zikmund at 

nzikmund@sbmfire.com or 612.860.7442 for more information. 

Please contact Nyle Zikmund at nzikmund@sbmfire.com or 612.860.7442 if you would like a copy of the 

detailed guidance we have prepared for VFRAs in the categories described above, or if you have specific 

questions about the tax status of your particular VFRA. 


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