Group must pay $600 to California Franchise Tax Board to renew
their business license
Gilroy – The Gilroy Hispanic Chamber of Commerce is trying to get its house back in order after operating almost a year with a suspended business license.
The suspension has not disrupted the nonprofit group’s efforts to raise and distribute thousands of dollars in scholarships and donations, but has temporarily disrupted the functioning of its governing board and prevented the registration of new members, according to chamber Treasurer Raul Vega.
The chamber must pay roughly $600 in fines to the California Franchise Tax Board for failing to file tax forms for the 1994-95 fiscal year, Vega explained. He could not say why the agency caught the omission a decade after it occurred, but called it a book-keeping error that the chamber’s board of directors only learned of in July.
“They don’t go into details,” Vega said. “I just know I have to comply with them. They sent a letter to the book-keeper saying you must give us this information for this year.”
That letter took months to reach the chamber’s board of directors, which has had its corporate license suspended since Nov. 1, 2005, due to the death of their long-time bookkeeper at Datamate Bookkeeping Service, according to Vega. He could not specify the exact name of the employee responsible for the chamber’s paperwork, and the company did not return a call for comment.
Ten or more businesses call each day for miscellaneous information or to join the chamber, Vega said, but he has had to turn them away while he resolves the chamber’s license issues.
He could not say how many businesses are currently chamber members. The organization did not send out membership renewal notices last year or collect dues, another responsibility traditionally handled by the bookkeeper.
The fees represent a small percentage of the roughly $25,000 the organization hands out in scholarships and other community support each year. More than half the money typically comes from volunteer fundraising at the Gilroy Garlic Festival, along with sales of fireworks leading up to the Fourth of July. The money is distributed during a spring Ambassador’s Ball.
Despite having a suspended license, the chamber carried out all of its fundraising activities and made good on its scholarship promises this year, Vega said. State law allows a nonprofit to continue those activities even with a suspended license, though the group may have to pay an $800 corporation fee and an additional 8.8 percent tax if its nonprofit status is not restored. Those fees can be recouped once nonprofit tax status is restored, according to FTB spokesman John Barrett. He said it is not uncommon for smaller organizations to have their licenses suspended, often as a result of leadership changes over the years.
“Job number one for this organization is to bring themselves back into compliance,” Barrett said. “Once they’re back in good standing, all their fundraising becomes legitimate again.”
Vega said “the mess is getting cleaned up” with the continued assistance of Datamate. He stressed that all funds are accounted for and that the group’s problems are limited to paperwork issues. He expected to have the chamber’s status restored within a week.
Since first establishing itself as a nonprofit business association in 1984, the chamber has performed mostly charitable functions with the help of volunteer organizers. It has never grown and maintained a presence as a clearinghouse for business information, networking and other services for the Latino business community.
“That’s always been the goal,” board member Rachel Munoz said, “but people are so busy in their lives that nobody’s been able to step up to the plate because it’s such a great responsibility.”
Munoz and Vega are two of nine volunteers who serve on the chamber’s board of directors. The group canceled its August and September meetings while it resolves the licensing issues, but expects to have its records up to date in time for November board elections.
The board of directors has traditionally received annual summaries of fundraising and expenditures, but for Vega, the suspension of the business license highlights the need for a permanent director.
“We actually need somebody in charge, somebody who will be the face of the chamber,” he said. “But for that, people are not going to do it for free.”
But for the moment, Vega said other issues take top priority: “Before I invite everybody for cookies and coffee to talk about business, I have to make sure we have the right to conduct business.”
