California waiting? Downstate GOP gov hopeful Sullivan owes Golden State $3,200 in taxes for nonprofit ‘paperwork error’

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One nonprofit entity created by Republican gubernatorial candidate Jesse Sullivan owes $3,200 to the state of California — plus additional interest and penalties — for failing to file its tax returns for nearly a year, and another of his organizations is currently listed as delinquent in the West Coast state.

In response to questions from a Chicago Sun-Times reporter, Sullivan’s campaign said Wednesday the downstate venture capitalist plans to settle that debt, which it attributed to a “paperwork error,” and work with California’s Department of Justice to “address these administrative filings to achieve good standing.”

“Jesse Sullivan set up a nonprofit that never began operations,” Sullivan’s campaign said in a statement Wednesday. “When notified today that this unused entity had accumulated fees due to a paperwork error, he immediately took steps to address the fee, and is now closing it.

“As governor, Jesse Sullivan will work to cut red tape and make it easier to start and grow organizations here in Illinois.”

That nonprofit, called Alter Investments, is one of two created by Sullivan. Alter Global, the other non-profit that was registered as a charity and public benefit entity, has had a delinquent status in California since February 2020, according to the website of that state’s attorney general.

The California attorney general’s office did not respond to questions from the Sun-Times about what prompted the delinquent status.

But Alter Global’s filing for renewal of its non-profit status last year was rejected, according to the website.

A spokesman for Sullivan’s campaign said while the nonprofit Alter Global remains in “good standing” with the California secretary of state, Alter Global is “working with the Department of Justice to address these administrative filings to achieve good standing before sunsetting the nonprofit organization later this year.”

Campaign video.

Sullivan registered Alter Investments, a nonprofit public benefit corporation, in California in March 2016.

That entity has been suspended since early November 2020 for “failure to file tax returns and pay the annual tax,” a spokeswoman for the California Franchise Tax Board, which collects personal and corporate income taxes in California, said in an email to the Sun-Times.

“The entity’s outstanding balance due is $3,200 plus additional interest and penalties,” she wrote.

Sullivan’s campaign said since Alter Investments’ founding, “no money was contributed to the entity, no individuals were hired by the entity, and it did not engage in any activities.

“It could have been dissolved immediately after determining it would not be used,” the campaign said in a statement. “Any taxes accrued were due to an oversight of notifying the Franchise Tax Board of the organization’s 501c3 status. Upon being notified of this error, Sullivan and Alter Global paid the total amount immediately, while Alter Investments awaits recognition of its tax exempt status from the [Franchise Tax Board]. It will then seek refund of the unnecessary tax payments and be dissolved.”

The website of California’s secretary of state still showed the nonprofit as suspended as of 5 p.m. Wednesday. A spokeswoman for the tax board did not respond to request for further comment.

Registration documents allowing Sullivan’s other nonprofit — Alter Global — to operate in Illinois were withdrawn at the end of last year. That nonprofit was first registered in California.

Asked about that move, Sullivan’s campaign said in a statement Alter Global, Sullivan’s business of the same name, purchased the “brand assets” of the non-profit that shared its name at the end of 2020, and the newly announced Republican candidate is “in the process of winding down the nonprofit to complete the transition to for-profit investing, to better attract the resources needed to support entrepreneurs at scale.”

A spokesman for the campaign said he expects Alter Global, the nonprofit, to be wound down by the end of the year.

Last week, Sullivan provided documents to the Sun-Times to support his contention that he lives in downstate Petersburg and that the central Illinois city is the headquarters of his business Alter Global after two of his GOP rivals dismissed him as an out-of-towner supported by the “big checkbooks” of the “Silicon Valley elites.”

Sullivan campaign

While voting records do show Sullivan has lived — and voted in — downstate Menard County for at least the last five years, the main location of his business had been listed as San Francisco or the Silicon Valley on social media accounts connected to the company.

Last week, Sullivan and a spokesman for his campaign said listing the West Coast locations were primarily for “marketing [and] branding purposes.”

Since last Monday, social media accounts connected to Alter Global have been scrubbed of any location.

Anthony Vazquez/Sun-Times file; Facebook

Sullivan entered the race in early September, the first Republican challenger to boast an eight-figure campaign fund in the primary — nearly $11 million in donations from out-of-state supporters. Three other candidates, state Sen. Darren Bailey, R-Xenia, former state Sen. Paul Schimpf, of Waterloo, and businessman Gary Rabine are also vying for the chance to oust Gov. J.B. Pritzker.

In his campaign announcement video, Sullivan billed himself as an “outsider” who wants to “solve problems and deliver results for our neighbors in need.”

But Bailey and Rabine painted a different portrait of their new rival, dubbing him more in sync with Silicon Valley than the Heartland.

“Our so-called ‘elites’ and their big checkbooks have had their run of things for too long,” Bailey said last week. “We think it’s time the regular folks in this state have their say.”