The local committee established to raise funds for the Democratic National Convention is in a jam with the IRS.
The Philadelphia 2016 Host Committee filed a public charity application last year, but it has been put on hold pending some "technical questions," Anna Adams-Sarthou, DNC host committee spokeswoman, said Monday. She declined to elaborate.
The New York Post first reported the problem Monday.
The committee's pending status could be an issue for donors who gave big checks to the committee last year and are now filing their taxes. Individual donations to a public charity, classified as a 501(c)3, qualify for tax deductions.
The host committee is trying to raise $85 million for the convention, scheduled for July 25 to 28 at the Wells Fargo Center. Officials have been keeping a tight lid on how much has been raised, only saying that they are meeting their goals.
Adams-Sarthou said that less than 2 percent of donors in 2015 were individuals. The majority of donations are from corporations, which can claim deductions through the host committee's nonprofit business league status, classified as 501(c)6.
"Most of our donors have no concerns whatsoever about our (c)3 status," Adams-Sarthou said. "We fully expect to receive this status well in advance of the convention."
Marcus Owens, a Washington tax lawyer who ran the IRS's tax-exempt organizations division for a decade, said donors could claim the deduction this year and "be ready to defend it" if it comes up in an audit, assuming that by then the DNC will get its charity status. The tax status is usually retroactive to the application date, Owens said.
Philadelphia applied for its charity status in May 2015.
Ed Rendell, the former governor and mayor who is chairman of the host committee, said that after not hearing back from the IRS, the committee inquired. "The IRS gave us some feedback," he said.
He would only describe the feedback as "some technical problems" on the application. An IRS spokeswoman said she could not speak specifically about any application.
Owens, who used to work for the IRS, said the delay could be because the application did not explain clearly how the money would be spent.
"The IRS is looking to see if beneficiaries will be the general public," Owens said.
Rendell said he had only had one donor ask about the delay.
"Drew Katz, who is a good friend of mine, gave $50,000. ... Once I explained it to him, he understood," Rendell said. "He's fine."
Katz, who runs Cherry Hill-based Interstate Outdoor Advertising, did not return a call for comment.
The Cleveland 2016 Host Committee, which is raising funds for the Republican National Convention to be held in Cleveland from July 18 to 21, received its 501(c)3 status in August 2014.
Philadelphia is banking that if Cleveland got it, the committee here will also get charity status.
"We are in the process of addressing and resolving," Adams-Sarthou said. "As the Cleveland Host Committee for the Republican Convention performs identical functions, and received its (c)3 status, we do not anticipate that there will ultimately be any issue in receiving the same determination from the IRS."