Message from the SSA Chairman
As Chairman of the SSA Board of Directors, I am committed to keeping members fully informed regarding all issues relating to our Society, and must now report some serious societal financial problems, and actions the Executive Committee has taken to deal with them.
On August 5 th 2006, I notified the Board of Directors that the Executive Committee had been informed by the SSA Executive Director, Dennis Wright, that the Society had not filed federal tax-exempt information returns with the Internal Revenue Service since 2002. In the past, Johnson, Miller & Co. PC, CPA, our outside accounting firm, prepared SSA’s returns. Both Dennis Wright and James Francis, a principal of Johnson, Miller & Co., reported to the Executive Committee that this omission was due to our Chief Financial and Administrative Officer, Alan Gleason, not providing sufficient financial data required by Johnson, Miller & Co. to prepare the returns. The Executive Committee immediately asked Johnson, Miller & Co. to come to the SSA’s office and obtain all the requisite data to enable them to do so.
On August 17, 2006, Mr. Wright reported to the Executive Committee that during the gathering of information to prepare the delinquent returns, Mr. Francis had discovered that the SSA had not submitted federal payroll withholding, social security or Medicare, as well as New Mexico state withholding taxes for at least five quarters beginning in 2003. Although payments were made for other quarters, SSA did not file appropriate returns for at least twelve quarters. Additionally, the financial statements, specifically the balance sheets presented to the Board and the membership, did not reflect the unpaid taxes as liabilities of the Society. At this time, it is not known whether anything else is inaccurate in the balance sheets, however, further investigation is ongoing.
The Executive Committee immediately retained an outside attorney and investigated the situation. On August 23, 2006 Mr. Gleason claimed that a lack of available cash on hand caused him to decide to not pay the taxes when due. When questioned, he admitted not to have made anyone else, including the Board, aware of such decisions. The Executive Committee placed Mr. Gleason on paid administrative leave until such time as all information required to submit the state and federal tax returns is ascertained and it is determined exactly what federal and state taxes are due. Once those issues are resolved, appropriate further action regarding Mr. Gleason will be considered. Measures to protect SSA funds and other assets have already been put in place, as has an interim system to control SSA financial matters.
While accurate figures have not yet been derived, it appears that the actual tax liability could be between $200,000 and $300,000 which with the addition of interest and, to the extent not mitigated, penalties, could total as much as $600,000.
This obviously signals a potentially catastrophic situation. The Executive Committee intends to have a thorough and independent financial investigation conducted to ascertain, among other things, the reasons for the apparent cash shortfall.
To the best of its ability, the SSA will pay all applicable taxes, penalties and interest imposed by state and federal governments. Doing so will strain Society finances to the limit, however the SSA can borrow from certain unrestricted funds within the SSA Foundation. To place our Society on a sound financial footing going forward, significant reductions in services must occur. A task force of present and former SSA Board members has already been established to assist the Board in this regard.
The situation I have described above is clearly the single most serious challenge the Society has faced in its 75 year history. Please understand that SSA leadership is totally committed to reaching a successful resolution to this problem, but doing so will require significant continued support by the membership. SSA members have a long history of aiding the Society when most needed. I hope I can rely on you personally to support your SSA leaders during this extremely difficult time, as we strive to bring these matters to a successful resolution. Our goals are to meet our financial obligations to state and federal governments and to transform what has always been a struggling organization operating “on a knife-edge” into one that is financially strong, and that meets your needs as a member.
To save costs, all subsequent communications from me regarding these important issues will be posted on the members-only section of the SSA website and in SSA e-News. You may contact your Regional Director, other members of the Executive Committee, or me directly should you have further questions.
C. Dianne Black-Nixon
Chairman of the Board of the Soaring Society of America