About a month ago, I alluded to an investigation into the Cold Case Posse and said that some results could be expected in a month. I now have the expected information as promised.
In March of 2007, Mike Zullo as “Commander” of the Cold Case Posse applied to the IRS for exempt status. The IRS preliminary determination of the Maricopa County Sheriff’s Cold Case Posse, Inc. states that it is not required to file Form 990 (financial reports), that it is a § 501(c)(3) tax exempt organization, and that it is a public charity under § 509(a)(2).
The IRS determination seems reasonable based on what Zullo told the IRS, and what Zullo told the IRS seems reasonable based on the original intent stated at the Posse’s creation in 2007.
The question that I raise now is whether the IRS determination is still appropriate. In order to obtain exemption from filing public financial reports on Form 990, the CCP had to submit a narrative describing itself. It hypothetically describes itself as “organized as a separate entity of the governmental unit that created it.”1 In that narrative, very little is said about financing, only:
The individual posse members, just like volunteer fire fighters, donate their time and efforts to solve these [cold] cases without expecting or receiving compensation.
Lastly, it should be noted that members of the applicant are all individually responsible for the costs necessary to pay for any and all equipment and uniforms that they may need to fulfill their duties to the sheriff’s department and any necessary equipment needed for their safety.
As I read this, the Cold Case Posse represented to the IRS that it wouldn’t have any expenses. That reading is confirmed by explicit expense estimates on their Form 1023 Application for Exemption for tax years 2007, 2008 and 2009: $0. They also specifically state that no one with the Posse would receive compensation. That immediately raises a question for me because for each of those tax years, the CCP estimated revenue of $6,500 from “membership fees.” Why did they estimate $19,500 in revenue for the three years, but no expenses? What were they going to do with that money? If the IRS wondered the same thing, they approved the Application anyway.2
Part of classifying an organization involves its sources of funding. In 2007 all the funding was projected as coming from membership fees. Is that still true today? We simply do not know how much of their revenue today comes from membership fees and how much from the Sheriff’s Office (such as county cars, gas cards and deputy trips to Hawaii) and how much from non-member donations.
In 2007 no expenses were projected. Today there are least hints of expenses. Republic Media outlet AZCentral.com reported a year and a half ago (May 22, 2012):
The cold-case posse has spent about $40,000 on the investigation so far, according to the Sheriff’s Office.3
That might include the cost of sending a deputy with Mike Zullo to Hawaii, but not Zullo’s several lobbying trips this past year nor his three-week adventure “out west” this past month. It wouldn’t have included fees paid to Reed Hayes. The number, whatever it is, must be significantly larger today.
Things have materially changed since the Cold Case Posse’s charge to assist the Maricopa County Sheriff’s office on unsolved homicides with volunteers who pay their own way. Now it’s an expensive donation-driven investigation of President Obama’s identity documents, which is neither a homicide, nor any case in Maricopa County.
I wonder if the IRS would classify today’s Cold Case Posse the same way it did in 2007? I hope not.
1Some other Maricopa County Sheriff’s Posses do file IRS Form 990.
I use the word “hypothetically” because of the odd language in the narrative:
Chapter 501 (C)(3) states that an organization may request an exemption from federal income tax if it is organized as a separate entity of the governmental unit that created it.
The statement is true, but it says nothing about the Maricopa County Sheriff’s Cold Case Posse, Inc., although the careless reader might get that impression. The Cold Case Posse was chartered by the Sheriff’s Office, but they didn’t create the corporation that was seeking tax exemption. It was created by private citizens, and no one in their official capacity with the Sheriff’s Office signed the Articles of Incorporation.
2There are a few other curious things on the CCP Form 1023 Application. For example, Box XI (2) should have been checked, but it wasn’t.
3The Sheriff’s Office wrote to me that they had no financial records on the Cold Case Posse, who operate independently. That seems at odds with the Office being able to provide expense information to the Arizona Republic.