Entertainment Charity BizParentz Falsely Advertised as Tax Exempt Years After Revocation
The organization had its tax exemption revoked by the IRS and California, its corporate status suspended and charitable listing deregistered.
BizParentz Foundation, which describes itself as a charity supporting families of children working in the entertainment industry, had its tax exemption revoked by California authorities almost four years ago and by the IRS about a year and a half ago for failing to file informational tax returns for three years in a row, but until becoming the subject of an inquiry by The Hollywood Reporter, the organization falsely claimed on its website (archived here) that it was still a "non-profit charitable corporation with a 501c3 status."
The purpose of informational tax returns is to disclose a charity’s finances and use of funds to the IRS and the public and identify the organization’s key "program service accomplishments" each year. Returns can often be accessed on a non-governmental site dedicated to oversight and transparency of non-profits, called Guidestar, but the site has no returns from BizParentz after the 2010 tax year. "Further investigation and due diligence are warranted," warns the site in red.
In addition, the California Attorney General’s records shows BizParentz’s charitable status as "Not Registered" and the California Secretary of State website indicates "FTB Suspended," meaning that the state Franchise Tax Board has suspended the organization for failure to file tax returns or for failure to pay taxes. Those two state websites do not indicate the effective dates of the actions, but the current list of state tax exemption revocations gives a "revocation status date" of Dec. 1, 2011.
"If they’re saying they’re tax exempt, they’re not," said an IRS staffer who confirmed the information on the federal agency’s website to THR. Although the effective date of that revocation was May 15, 2014, he added that the IRS would have sent BizParentz a revocation notice around August 18, 2014, a week after that status had been publicly posted.
In a statement, Anne Henry and Paula Dorn, the founders and operators of BizParentz, said "we were unaware of the issues with BizParentz's statuses and are diligently working to ascertain what has occurred. The actions appear to be automatic and related to a change in reporting requirements. We are confident that this situation will be resolved quickly and our statuses retroactively restored."
They added "that while we regret our error, there was no intent to mislead anyone, and no donors were affected." In addition, in an email newsletter Monday, Henry and Dorn called the matter a "clerical error and oversight," then made reference to "ridiculous and unfounded accusations" and said they were "feeling harassed and threatened."
UPDATE 10/18/15: THR recently obtained a copy of a bio supplied by BizParentz, in which Dorn is described as a "Plant Accountant ... and certified tax preparer."
The organization says it spearheaded a state law, the Child Performer’s Protection Act, requiring fingerprint screening and a Child Performer Services permit "for those working closely with children in our industry" and adds that when BizParentz finds that someone is operating without a permit, it will ultimately expose them: "Their reputation will take a hit when they are called out in public for operating illegally."
But now — suspended, deregistered and doubly revoked — it’s BizParentz that may have been operating outside the law.
An organization that has its tax exemption revoked “is no longer exempt from federal income tax, … may be required to file [a] federal income tax return and pay applicable income taxes, [and] is not eligible to receive tax-deductible contributions,” says the IRS. Yet the BizParentz website continued, for almost four years after the state tax exemption was revoked and almost a year and a half after the IRS action, to solicit and accept purportedly tax-deductible contributions, asserting that "your contribution is tax deductible to the fullest extent of the law."
A state tax return and payment of state taxes also become obligatory after loss of state tax exempt status.
In addition, a suspended entity "cannot legally transact business, defend or initiate an action in court [and] also loses the right to use the entity name," according to the FTB. But BizParentz has apparently continued to conduct business, with the founders using the organization name to participate in government functions with the Los Angeles City Attorney and, most visibly, to appear in and promote a controversial documentary on teen sex abuse in Hollywood, An Open Secret. In a June 24, 2015 email to one of the film’s producers, Gabe Hoffman, co-founder Henry indicated that her activities involve some media manipulation as well: "I might appear to be 'just a mom,' " she wrote, "but that is the lure of it for the press — they trust us and see us as an authentic voice. Might as well exploit that now."
In response to a THR query, the City Attorney’s office said, "Thank you for bringing this issue to our attention, which we were unaware of until today. We will look into this matter further."
Hoffman said that he and his producing partner Matt Valentinas were unaware of the issues with BizParentz until a query by THR. The film’s director, Amy Berg, did not respond to a request for comment.
Meanwhile, the organization seems to have abandoned activities that it touted as key program service accomplishments in its 2008, 2009 and 2010 filings: an annual CARE Awards charity event, an email newsletter and an informational website. The last CARE Awards was apparently in 2011, the newsletter archives end in 2009 and much of the site seems stale, such as a discussion of actors unions that predates the 2012 merger of SAG and AFTRA.
Those older tax returns assert that Henry and fellow co-founder Dorn do not draw a salary, but do include payments of about $7,000 per year to "members," a curious item, since nothing on the organization’s website indicates that BizParentz is a membership organization. There are also payments of as much as $8,600 per year for professional fees and independent contractors. But the disposition of monies collected after 2010 is unknown, as the organization has not filed since then.
One area of the group’s website that is fresh is material on sexual abuse of minors. That’s been an abiding concern of BizParentz, and the organization offers a list of "Questionable Behaviors (Risk)" that offers tips on identifying pedophiles using both sensible criteria and such peculiar risk factors as "has a dog" (over a third of the country does), "extremely computer literate" and "meticulous planner" — and even a few that describe BizParentz itself: "offers gifts" (in 2009, "[CARE] awardees were presented with bags containing kid-centric gifts … worth more than $400"), "promotes charity events," "speaks out freely against others" and has had "financial issues."
More understandably, to keep kids safe, "check licenses and corporate registrations," the organization recommends. But in fact, that’s not possible with BizParentz — not only are its organizational credentials revoked, suspended and deregistered, but Henry and Dorn also do not themselves have Child Performer Services permits. Although they appear to work closely with industry kids, the law they championed doesn’t even apply to them.
Read the entire BizParentz statement:
Prior to your email, we were unaware of the issues with BizParentz' statuses and are diligently working to ascertain what has occurred. The actions appear to be automatic and related to a change in reporting requirements. We are confident that this situation will be resolved quickly and our statuses retroactively restored. As an immediate action, we have removed all reference to IRS 501(c)3 status and all donation capability from our website, and have communicated this to our subscribers. Please be assured that while we regret our error, there was no intent to mislead anyone, and no donors were affected. Our always free Bizparentz Foundation services will remain available, as they have been for more than a decade.
Although we fully support the educational value of An Open Secret, we have no financial relationship to the film. We were partially reimbursed for travel expenses one time, and were reimbursed for educational postcards distributed at the premiere.
Regarding the question you asked about Child Performer Services Permits, you are correct: the law does not apply to us in any way. We do not advocate wasting government resources by obtaining unnecessary permits. We do not provide services specifically to children as defined in the law. We do not charge for our services. Our role is education about the law, both to those whose businesses require permits, and to families who utilize those providers.