NONPROFIT HYMAN FOUNDATION NEVER FILED REQUIRED TAX FORM

Group, Which Supports Drug Programs, Is Headed By U.S. Representative

A nonprofit foundation that supports drug-treatment programs in Eastern
North Carolina and is headed by U.S. Rep. Frank Ballance has never filed a
required federal-tax form in its 18-year history, The Wilson Daily Times
reported yesterday.

The John A. Hyman Memorial Youth Foundation has never filed the Internal
Revenue Service Form 990, the newspaper reported. The IRS requires the form
each year from tax-exempt, nonprofit organizations with annual receipts of
more than $25,000.

Ballance, who served in the N.C. Senate for 17 years, said he was unaware
that the nonprofit organization needed to file a Form 990. He said
Wednesday that an accountant is working on the forms and should submit them
soon.

Valerie Thornton, a spokeswoman for the IRS in Greensboro, said yesterday
that she couldn't comment on the specifics of the foundation's filings,
other than to verify that it has never filed a Form 990.

"That may be for a variety of reasons: that no return was required, that no
return was due yet, that the return may be in processing or the returns may
be delinquent," she said. "The IRS would pursue activity if we were aware
of it."

Ballance, a lawyer from Warrenton in his first term representing the 1st
District, said he will hold a news conference next week to explain the problem.

He received some bad recommendations from an accountant, said Eddie
Lawrence, the foundation's director. Lawrence, who has been the director of
the foundation for three years, said he has the audits required by the
state. Those are more detailed, he said Thursday.

The group receives money from the N.C. Department of Correction. The money
is termed "pass through," meaning that the department provides financing,
but requires no oversight.

According to a report to the state Senate, the Hyman Foundation received
$225,000 from the state last year. The report shows that $112,000 was spent
on salaries and payroll taxes. On prevention minigrants, the foundation
spent $75,346. More than $25,000 was spent on rent, transportation, payroll
processing, utilities and miscellaneous. The foundation kept almost $9,000
in reserve.

The state started funding the program in 1994 and it has held steady at
$250,000 for several years, Lawrence said.

Don Carrington, the vice president of the John Locke Foundation, said he
has twice asked in writing for the Form 990s.

Failure to file the Form 990 may result in a penalty of $20 a day for as
long as the failure continues. There is a maximum penalty of $10,000 for
each failure to provide a copy of an annual information return. There is no
maximum penalty for the failure to provide a copy of an exemption application.

The information contained on the form includes the names and salaries of
officers, the source of funds and the expenditures by category. Copies of
the past three years are to be made available to the public on demand, at
the organization's place of business during normal business hours.

The foundation, named for the first black elected to Congress from North
Carolina, was started in 1985. Ballance said that it makes grants of $5,000
to $10,000 to area churches to install drug-prevention programs. The Hyman
Foundation has three centers: one in Ballance's hometown of Warrenton, one
in Roanoke Rapids and one in Ahoskie.