NMTI: We are not for profit

The Northern Marianas Trades Institute’s tax exempt-status has been revoked since 2013, a finding that was questioned in yesterday’s Senate Education Committee public hearing.

A public document from the U.S. Internal Revenue Service stated that NMTI had its tax exemption revoked back in May 15, 2013, due to its failure to file a form 990-series return or notice for three consecutive years.

When asked about the issue, NMTI chief executive officer Agnes McPhetres told Saipan Tribune the issue was present even before McPhetres joined NMTI.

“Unfortunately, [NMTI founder] Tony Pellegrino [nor the NMTI accountant(s) at the time] probably did not know of those things. Once I got in, I reviewed all the records and rectified whatever needed to be rectified to clean things up,” said McPhetres.

McPhetres reiterated in a letter to Sen. Sixto Igisomar (R-Saipan) that NMTI losing its IRS tax exemption was unintentional.

“There was in no way any intent to evade filing with the IRS. NMTI’s filing locally was mistakenly thought to be adequate in satisfying the needs of the exempt organization’s annual tax return,” wrote McPhetres in the letter dated March 13, 2017.

McPhetres told Saipan Tribune that the revocation “was not because of the misuse of funds [but] was because of the failure to file a form 990.”

She stressed that NMTI has been receiving clean audits for the last three years and has been receiving a certificate from the CNMI Department of Finance signifying that NMTI is compliant with local law.

“We have been getting certification every year from our local [taxation and revenue agency]. We are paying everything, filing everything, and doing everything we could, we get clean audits and so forth,” she said.

NMTI contacted IRS about the issue and, according to McPhetres, IRS urged her to reapply for tax exemption. Although that has been delayed due to the filing of income taxes, McPhetres said the institute is “ready to send its tax exemption application [to IRS]” with the goal of applying for federal grants.

Public comments

Yesterday’s committee hearing brought up the issue when the committee put up Senate Bill 20-21 for public comments. SB 20-21 is a bill that proposes to change NMTI’s status as a private nonprofit school to that of a public career and technical training institution and establish a “Northern Marianas Technical Institute,” an institute that would absorb the present NMTI.

According to the bill, the new institute as a career and technical educational institution would be established as a nonprofit public corporation under the CNMI government.

Latte Stone Training Academy executive director Arielle Buyum and Island Training Solutions owner James Arenovski went on to question the IRS – NMTI relationship.

Arenovski asked how businesses would avail of tax reductions for charitable donations to NMTI if the institution is not tax exempt in the first place.

The bill was opposed by the Northern Marianas College. NMC representatives questioned whether the CNMI government can fund the new institute, pointing out that, as NMC enrollment umbers went up, its funding steadily SB 20-21 includes a provision repealing Public Law 15-5, which mandates Northern Marianas College to develop U.S. Registered Apprenticeship Training Programs, or technical trades, effectively transferring responsibility to the new institute.

Also included in the bill is a repeal of PL 14-54, which authorizes the Public School System to establish a technical education program.

The Senate Education Committee has held in abeyance any action on the bill.