Laguna High Club : Boosters Face Penalties in Tax Inquiry

A Laguna Beach High School boosters club operated as a nonprofit organization even though it lost its tax-exempt status 3 1/2 years ago, state officials said Friday.

However, officials of the state Franchise Tax Board and the attorney general’s office also said they doubt that they will seek strong sanctions against the parents who ran the club.

“These are local volunteers, dedicating their time and money to help a high school athletic department that is out of funds,” said Larry Campbell, registrar for the attorney general’s charitable trust division. He called any enforcement action against the club “a low-priority matter.”

Franchise Tax Board official Jackie Lewis, who noted that her agency was investigating the matter, said that although the club and its donors might have to pay back taxes on contributions, she doubts that the board would seek other penalties, such as closing down the organization.

Laguna Beach accountant Robert Gamaz, the club treasurer, called the problem “an oversight” that would be immediately corrected.

The Laguna Booster Club Inc., a parents’ group that has provided funds for high school athletics for more than 10 years, lost its tax-exempt status in September, 1983, after failing to file financial reports with the tax board for several years.

Failed to File Reports

Also, the club failed to file annual financial reports with the attorney general’s charitable trust division from 1981 to 1986, except in 1984, Campbell said. The club raised about $25,000 to $35,000 a year during that time, with several hundred parents donating from $25 to $500 each to the club, Laguna Beach High School Principal David Wheeler said.

But Wheeler said that he and the parents he worked with were unaware that the club was doing anything improper. “We had no idea,” he said. “What has occurred here was a changing treasurer each year, a volunteer. . . . It was really not an intention to hide anything.”

Until the last month, he had never heard any complaint from state agencies, Gamaz said.

But Campbell, the state’s registrar of charities, disagreed. Each year, he said, his agency sent delinquency notices. According to Campbell, the notices warned that “if you don’t report, you’re going to be penalized.”

In the case of a high school club, Campbell said, he is more interested in solutions than penalties. “I was hoping to explain to somebody in a phone call” what the club must do, he said. “If you see Mr. Gamaz, tell him I would hope they give me a call.”