ROCK HILL The S.C. Secretary of States Office has placed the Rock Hill Rescue Squad under suspension preventing volunteers from collecting donations and putting them at risk of being shut down if they dont pay a $2,000 debt after squad members didnt revise errors made on a tax document they submitted nearly a year ago.
Secretary of State Mark Hammonds office sent the rescue squad a letter Sunday, telling them that they are suspended for failing to pay administrative fines and violating state laws that require public charities to file an annual tax form reporting their financial activities in a given fiscal year, according to documents obtained by The Herald.
State law says charities must send the completed financial reports to the Secretary of State within four-and-a-half months of the end of the previous fiscal year. The penalty for failing to file the reports can result in administrative fines not exceeding $2,000.
When the rescue squad submitted its annual report last May for the 2011 fiscal year, Hammonds office refused to accept it, sending a notice a month later asking the squad to make several corrections on the form, Hammond said.
The squad didnt differentiate between program expenses and total expenses, said Shannon Wiley, general counsel for Hammonds office.
Program expenses are those which directly relate to the charitable services of an organization, Wiley said, and dont include management or fundraising expenses.
The squad included figures that should have been filed under fundraising expenses in its $69,339 tally of its program expenses, Wiley said, making it unclear where the squad reported the sum total of its fundraising expenses on the tax form.
A joint financial report between the Rock Hill Rescue Squad and Summit Productions, a North Carolina photography company the squad uses for portrait fundraisers, shows that the squad paid a little more than $50,000 in profits and fees to the company throughout the year.
That amount isnt clearly reported on the 990 form. Instead, it shows the squad spent $11,752 in other direct expenses.
It was an honest mistake, said Joe Shackleford, captain of the Rock Hill Rescue Squad.
An outside accountant filled out the forms, Shackelford said, and the group submitted the original form on time.
When the Secretary of States Office sent notices about the fines, Shackelford instructed his treasurer at the time to meet with the accountant. The forms were submitted, he said, and returned again.
The squad received the letters, but, all of us are volunteers who respond to calls and focus on saving lives, Shackelford said. It wasnt anything intentional.
In July, Hammonds office sent the squad another letter, saying that a corrected version of the financial report had been due on May 15, 2012. Officials warned that if the corrections werent submitted within 15 days, the squad would be fined $10 per day until they came into compliance with state laws.
In September, Hammonds office mailed a notice giving the group 30 days to pay the fine and submit the forms correctly, or request a hearing in Administrative Law Court, which would enable them to contest the violation and present evidence on why the fine was improper.
State officials in January sent another letter to the squad, telling it to pay the fine within 30 days or risk suspension.
Failure to pay this fine amount within 30 days of receipt of this invoice may result in suspension of registration, the letter reads, in part.
On Sunday, Hammonds office suspended the rescue squad as a public charity, taking away its ability to receive money from donors.
They are suspended and should not be soliciting, Hammond said. The time to pay the fine has already expired.
Were not saying this is a bad organization, Wiley said. It just looks like they have never returned (the forms).
The letter bans the Rock Hill Rescue Squad from soliciting charitable contributions in the state, but not from performing rescues and providing aid, Wiley said.
In order to have the suspension lifted, the squad is instructed to pay all the outstanding fines and submit the financial reports to the state.
If the rescue squad fails to return to compliance, or Hammonds office finds proof that theyre still soliciting, he said hell file an injunction in Administrative Law Court asking a judge to shut down the organization until the fines are paid.
Losing the ability to raise money is a setback for an organization that does everything with donations, Shackelford said.
He estimated that 90 percent of the rescue squads operating costs depend on contributions since county support has dwindled within the past several years.
The Rock Hill group, along with six other county rescue squads, received $3,250 from York County this fiscal year.
That $3,200 isnt a drop in the bucket, Shackelford said. We have to pay $15,000 a year in insurance just to cover us in the things that we do.
Last year, the squad purchased a cutting tool to help slice through metal to free drivers trapped in their cars after a collision.
Thats $10,000 right there, Shackelford said, not including costs for gas, electricity, phones and member training.
Were well-trained at rescue; what we do, we do it good and we constantly train in it, he said.
On Tuesday, an investigator with Hammonds office called Shackelford, telling him the squad had been suspended. The squad captain said he plans to work on a solution.
Ill pay the fine and itll be over with. Its not that we were trying to do anything illegal.