Tax exempt small groups face the IRS deadline gun

October 11, 2010
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OK, small nonprofits? This time, the Internal Revenue Service really, really means it — pretty much.

Friday is the deadline for tax-exempt organizations with annual gross receipts of $25,000 or less to file the e-Postcard, or Form 990-N. It’s available only online.

The Pension Protection Act of 2006 added the new filing requirement, which affects a wide variety of small groups with tax-exempt status, from athletic booster groups to social clubs to educational societies and church-affiliated groups, according to the IRS.

Thousands of small organizations across the nation risked their tax-exempt status by failing to file the e-Postcard on the IRS website for the tax years 2007, 2008 and 2009. So many organizations missed the last of their filing deadlines this year that the IRS announced it would offer a reprieve until Oct. 15.

Under a voluntary compliance program, organizations eligible to file Form 990-EZ can file returns for previous tax years by Friday and pay a fee. Their smaller brethren that are eligible to file the electronic 990-N can — surprise — request an extension.

The IRS says it will revoke tax-exempt status for organizations that fail to meet Friday’s deadline. Those who donate to revoked nonprofits after Friday may still deduct the amounts “until the final revocation list is published by the IRS,” according to its website, which does not give a publication date.

Those who lose their status may re-apply, but any income earned between revocation and reinstatement could be subject to tax.

Find the eight-question 990-N, instructions and a list of organizations at risk of losing tax-exempt status at www.irs.gov

Sprouting an opportunity

The 208,000-square-foot commercial greenhouse complex in rural Walker once known as Glass Corner is on the market and is a “unique business opportunity,” according to its owner, GreenStone Farm Credit Services.

GreenStone is asking $2.1 million for the 8.2 acre site, which includes 12,000 square feet of service buildings in addition to the 208,310 square feet of greenhouse space, according to the GreenStone website.

The property, which is currently leased for the 2010-2011 growing season, was deeded to GreenStone in 2007, according to city of Walker tax records.

In November 2007, Rick and Joyce Mast of Glass Corner Greenhouses Inc. announced they were ceasing operations at the location, because of “five years of continuous setbacks and extraordinary circumstances,” according to a report published in Greenhouse Product News.

Gale Arent, executive director of the Michigan Floriculture Growers Council, said commercial greenhouses “aren’t often listed” for sale because many typically change hands among relatives or with other greenhouse operators.

Arent said the U.S. floriculture industry has been hurt by the recession over the last two years. The value of the industry’s sales has declined 7 percent — although in Michigan, it actually increased 1 percent during that period. But Arent is quick to add that doesn’t mean Michigan growers are doing well. A 1 percent increase “doesn’t keep pace with inflation,” he said.

Michigan’s floriculture industry ranks third in the nation, according to Arent, behind California and Florida.

“We have lots of very talented, skilled growers who know how to grow quality crops,” he said. Their long experience and “a big marketing platform” that serves the eastern United States “are the reasons most of our greenhouses are hanging in there pretty well, in spite of the recession.”

Big box stores are a major market for the commercial greenhouses. “A lot of the box stores put downward pressure on their grower/suppliers,” said Arent. “They want to offer the lowest possible price for their customers.”

The national decline in the market over the past two years is the first time it has declined in two decades, said Arent. “It has been a market that’s been gradually expanding.”

In Michigan, most commercial greenhouse production is in bedding plants and potted flowering plants such as mums, orchids, poinsettias and Easter lilies, said Arent. Arent said that about two-thirds of Michigan’s floriculturalists are in West Michigan. The two big clusters in the state are in the Kalamazoo region and in the region defined by Grand Rapids, Muskegon and Holland. The largest growers in the state are in the Kalamazoo area; a couple may have more than 15 acres under enclosed cultivation. All greenhouse footage throughout the state totals about 50 million square feet, Arents said.

At 208,000 square feet, the former Glass Corner greenhouse complex is roughly equal to five acres, according to Arent.

According to its website, GreenStone Farm Credit Services is one of the country’s largest rural lenders. Headquartered in East Lansing, it claims to be the country's fifth-largest association in the Farm Credit System and is a $5 billion organization of 18,000 members with branches throughout Michigan and northeast Wisconsin.

Developing a debate

About a week from now, the two gubernatorial candidates will get some mail from the Small Business Association of Michigan: a “blueprint” for the future direction of Michigan’s economic development strategies.

The blueprint had its origins in “Propelling a New Economic Direction for Michigan,” a white paper SBAM released back in July.

In September, a consortium of West Michigan economic development agencies released a study of its own: “Policy Recommendations for the Improvement of Statewide Economic Development in Michigan.”

The two papers present different viewpoints, with the crux of the matter being a debate on just where most new jobs come from — the big companies, or the small, swift entrepreneurs?

SBAM wants to see economic development in the state shift toward “economic gardening,” as espoused by the Edward Lowe Foundation, which has an emphasis on entrepreneurial businesses that are poised to grow.

“We seek to temper the public sector’s traditional role of using tax credits and incentives to lure industry and business from outside the state, and instead suggest a new emphasis on making Michigan welcoming and nurturing for the homegrown, high-growth small businesses that are proven to be the true job-makers,” SBAM president and CEO Rob Fowler said when the SBAM study was released.

The West Michigan economic developers’ study suggests that the widely held belief that small start-ups provide most of the job growth is “inaccurate.”

“We are not opposed to hunting (for outside companies to come in) as a strategy. We’re opposed to hunting as the only strategy,” Fowler told the Business Journal last week.

Fowler said SBAM intends to make a recommendation “that is pretty specific about what it would look like if Michigan were to become a leader in economic gardening. We’ll have that finished by Oct. 15, and we’re going to share it with both candidates for governor.”

More swinging doors

Centennial Country Club in Cascade is changing owners again, after a big remodeling job two years ago by Pioneer Construction, which also owns the property. Pioneer’s Ty Beckering has managed the property.

The banquet center, restaurant and golf clubhouse is reportedly being purchased by the company that provided summer-long food services, Bobby J’s Catering. The transition is expected Oct. 30.

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