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Arroya group lacks tax-exempt status

The tax-exempt status of a local nonprofit group responsible for operating and maintaining Camp Arroya was revoked more than two years ago.

According to an Internal Revenue Service online database, the revocation of nonprofit Camp Arroya Inc.'s federal tax-exempt status became effective Feb. 15, 2011. The group failed to file an annual form for three consecutive years following a change in the law that requires all nonprofits, even small ones, to file a form disclosing various types of information.

Sherry Stilley, president of the volunteer board of directors for Camp Arroya Inc., said she was unaware of the situation when contacted earlier this month by The Daily Republic. Later, Stilley, who took over as the nonprofit's president in June, contacted the IRS, which confirmed the group's tax-exempt status was revoked, she said.

Camp Arroya Inc. is now in the process of reapplying for its tax-exempt status.

"We were not made aware that we needed to start filing," Stilley said.

Camp Arroya, tucked away on the northern shore of Lake Mitchell, is owned by the city of Mitchell, but has been leased and run by Camp Arroya Inc. for the past 25 years. Earlier this summer, the Mitchell Park and Recreation Board voted to recommend that the city not renew its 25-year, dollar-a-year lease of Camp Arroya to Camp Arroya Inc. The lease is set to expire at the end of December.

The 12-acre camp includes a main building, a picnic shelter, children's play areas, an open grassy area near the shore and nature trails. Camp Arroya Inc. rents out the grounds to youth organizations, such as scouting groups or church groups, but anyone is able to rent the camp.

Karen Connelly, a spokeswoman for the IRS, declined to comment on Camp Arroya Inc. specifically.

Although nonprofit status is determined by the state, tax-exempt status is determined by the IRS, Connelly said.

According to the South Dakota Secretary of State's Office, Camp Arroya Inc. is in good standing as a nonprofit organization because it has filed all of its required annual reports.

In 2006, legislation was passed that required all federally tax-exempt organizations to file an annual return, known as Form 990, with the IRS. Before that, certain smaller organizations were not required to file an annual return, Connelly said.

Forms 990 provide information on the filing organization's mission, programs and finances, and are open to public inspection.

The legislation gave tax-exempt organizations three years to come into compliance with the new law.

"Those folks who failed to file at that point were automatically revoked," she said.

Once revoked, Connelly said organizations have to reapply to the IRS to regain tax-exempt status.