Polish Town Civic’s tax-exempt status revoked for failure to file income tax returns for 3 years, according to IRS

The Polish Town Civic Association Inc., the nonprofit organization which for the past 40 years has hosted one of Riverhead’s largest street fairs and festivals, has had its tax-exempt status revoked by the Internal Revenue Service.

The automatic revocation of the group’s tax-exempt status resulted from its failure to file federal income tax returns for three consecutive years, according to the IRS.

Polish Town Civic’s tax preparer Robert Gottschalk said the IRS is wrong.

“I’ve been doing this since 1988,” Gottschalk said when reached for comment this afternoon. “All of a sudden they’re saying we haven’t filed for three years. It must be some kind of a mix-up with our number or something,” he said. “I have the returns and I filed them.”

“I got a notice from the IRS right after the fair this year,” Gottschalk said. He said he responded to the IRS notice and was waiting to hear back from the agency.

According to IRS records available on its website, the Polish Town Civic Association’s tax exempt status was revoked effective May 15. According to the IRS, the revocation was posted on the federal agency’s website on Aug. 11, five days before the fair.

Polish Town Civic Association president Joyce Smith said this evening the revocation is “clearly a mistake.”

“Our organization as a whole is aware of it,” Smith said, “and the appropriate people are working on it. It is being rectified.”

The organization’s vice president, Tom Mielnicki, who is slated to become its next president in January said this afternoon that civic’s executive board was never informed of the revocation notice and was unaware that the group’s tax returns had not been filed for three years.

“I go to every meeting and we were never informed of this by the treasurer or president,” Mielnicki said. “I’m shocked and I don’t understand why or how this could even be.”

In a subsequent conversation, he said he’d called Smith and she told him she knew nothing about it.

But when Smith returned a reporter’s phone calls, she would not say if she knew about the revocation before her conversation today with Mielnicki.

“Our organization as a whole is aware of it,” Smith repeated several times when asked if she learned of the IRS action today.

“I have to check my paperwork before I can discuss this,” she said.

Mielnicki said he was “appalled” by Smith’s response.

Polish Town Civic treasurer Maureen Bock could not be reached for comment.

The organization grew out of a committee formed in 1975, in advance of the American bicentennial celebration “to represent Polish Town” in the celebration. The group decided to host “an authentic street fair reminiscent of the ones held in Poland,” according to the PTCA website. The first Polish Town Street Fair and Festival was held in August 1975 and has been held each year since then on the third weekend in August. The 2014 fair was the organization’s 40th.

Since its inception, the fair has grown significantly in size, both in the number of vendors and in attendance. The first festival in 1975 had about 50 vendors, the civic’s first president, Irene Pendzick, told RiverheadLOCAL this summer. This year, it had more than 250 vendors. It attracts thousands of visitors to the streets of Polish Town each summer.

At this morning’s town board work session, Councilman John Dunleavy, during a discussion of fees charged to nonprofit organizations for use of town properties and the town showmobile, said he was “not sure if Polish Town Civic is actually a nonprofit.” In an interview afterward, he said he’d like the town to require organizations that claim to be nonprofits to provide proof of their current tax-exempt status every year when they apply for special event permits.

“Just because it was something done years ago, doesn’t mean it’s right today,” Dunleavy said. “People take things for granted.”

He said he was not aware of the revocation of the civic association’s tax-exempt status and would ask the town attorney to look into it.

“These nonprofit organizations get a lot of fees waived by the town and have a lot of properties off the tax rolls,” Dunleavy said. “Is the town investigating whether they’re entitled to that status or does it just continue year after year. That’s what I want to know,” he said.

Polish Town Civic Association Inc. owns the quarter-acre parcel on Lincoln Street where its headquarters are located as well as a 1.3-acre site across from the headquarters where it has a pavilion. The combined market value of the properties is over $700,000, according to the town’s assessment roll for 2014-2015.

There are 164 parcels within the Town of Riverhead that enjoy property tax exemptions because they are owned by nonprofit organizations or religious entities, according to the town’s tax records.