Roughly 400 donors to a nonprofit group that supports Charlotte Catholic High School were told by letter this week, that their gifts may not be tax deductible.
According to the foundation's website, nearly 1,400 students at Charlotte Catholic benefit from a foundation that supports the school through donations for technology, security, teachers, the library and more.
The foundation was started by parents of the school, and has been in place for 40 years. However, director Cindy Grim told Channel 9 that a tax filing mistake led to the group being stripped of its tax exempt status.
Grim said a failure to file the proper 990 tax forms in 2008, 2009 and 2010 led the IRS to notify them in July of 2012 that it had lost the exempt status.
"It was really an oversight," Grim said. "We've been working for months now to correct it."
Donors to the school, like parent Lisa Tomchin, believe it'll be a short-term problem.
"Well, I think that's unfortunate. Someone messed up I guess, but it think they'll get it fixed," she said.
The principal at Charlotte Catholic High School did not want to comment on the issue. The school referred our questions to the Catholic Diocese of Charlotte, which also refused comment, saying it's not a diocese issue. The foundation is an entirely separate entity.
Charlotte accountant Jim Young said an IRS rule change in 2006 wreaked havoc on thousands of nonprofit groups nationwide.
Young said his office received many calls from non-profits after the IRS made subtle changes to how donations that nonprofits collect should be reported.
The issue with the foundation may not be exactly the same, but the end result is, Young said: the challenge of contacting the IRS, and getting reinstated as a tax exempt entity.
"In our experience when you send something like that into the IRS, it could be six months or a year to get it turned around," he said.
Grim said the Charlotte Catholic High School Foundation applied to the IRS back in January for reinstatement of its tax exempt status. However, it's still waiting on the agency to get through a backlog of cases, to theirs.
"We thought it would be a quick process," she said. "We had to let our donors know it was taking longer than we expected."
Some donors Channel 9 spoke to on Tuesday aren't concerned about whether their donations to the school are tax deductible or not.
"I do believe people will continue to donate. It wasn't so much about getting a tax write-off when we donated," Tomchin said.
Until the issue is fixed, the foundation said people can donate directly to Charlotte Catholic High School which still has its tax exempt status.