Florida’s Largest Teachers Union Lost Tax-Exempt Status

Florida Education Association Vice President Joanne McCall speaks to staff at Lee Middle School in Orlando. (Photo courtesy of the National Education Association.)

Florida Education Association Vice President Joanne McCall speaks to staff at Lee Middle School in Orlando. (Photo courtesy of the National Education Association.)

By Steve Miller
Florida Center for Investigative Reporting

What happened to the Florida Education Association’s tax-exempt status? There’s a story there, but the fact is that the state’s largest teachers union has been operating since January without its coveted 501(c)(5) tax exemption. The organization with $31 million in revenue in 2010 had its tax status revoked for failing to file a tax return for three consecutive years.

The explanation from the FEA is a convoluted tale of woe convincingly related by spokesman Mark Pudlow.

The FEA was established in the 1880s and perked along in right-to-work Florida for years until the ’70s, when the FEA splintered in to two, one connected to the National Education Association and the other to the American Federation of Teachers, each filing its own tax return.

“They spent much of the next three decades in competition, with similar goals and a different approach,” Pudlow explained. “And the counties in Florida, the county educator groups, would align with one or the other.”

In 2000, the FEA decided to stand as one, as they say.

But the structure of the actual organization in Florida had become complicated. A teacher group in Leon County, for example, filed its own tax return even though it was part of the FEA.

“Each of those unions are locals unto their own, but are affiliated with us,” Pudlow said.  “We are the state group.”

But these other teacher union groups are substantial on their own. The United Teachers of Dade took in $11 million in revenue in 2010, for example.

Then in the mid-2000s, the rules changed and each entity had to file more extensive paperwork, in the process muddying the reporting process. Tax ID numbers were mixed up in the process, mostly at the IRS.

It was a hangover from the 2000 move to merge the FEAs. The entity was filing its taxes, but under a number that was for some reason evading the IRS bureaucracy.

Tax-exempt entities enjoy tax-free perks of varying nature. For the 501(c) (5) exemption, the FEA doesn’t have to pay income taxes.

“It hasn’t had an impact,” Pudlow asserted. “Since we don’t have profit, there’s no real income there. There is savings, but no one takes profit out of the organization.”

He provided a taxpayer ID number confirming that the FEA has filed its tax forms over the past three years, the last of which landed us here.

Yet another entry at Guidestar.org, the go-to place to inspect the tax filings of non-profits, contains this warning when visiting one of the two pages for the FEA:

This organization’s exempt status was automatically revoked by the IRS for failure to file a Form 990, 990-EZ, 990-N, or 990-PF for 3 consecutive years. Further investigation and due diligence are warranted.

Pudlow said the IRS and FEA are to meet in a phone conference today to sort things out.

“I’m sure we will be back to normal very soon,” he said.

The question remains, though: Will the FEA have to pay income taxes on its contributions that were collected since January until reinstatement?

“Any revenue is regarded as income,” said IRS spokesman Mike Dobzinski. He could not address the FEA situation directly, but “generally speaking, if an organization is not tax-exempt, it is a taxable entity and all taxes are applicable. There are some appeal rights on revocations, though.”

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