IRS rules Coastal Uncorked tax exempt

Coastal Uncorked, the gourmet food-and-wine festival going into its second year in and around Myrtle Beach, has received its tax-exempt status from the Internal Revenue Service.

The letter arrived at the city this week, sent through the federal office branch in Cincinnati. It lets Coastal Uncorked organizers know the group is tax exempt.

However, donations to Coastal Uncorked are not tax deductible.

Coastal Uncorked is considered a nonprofit organization, and one in good standing, according to Secretary of State Mark Hammond's website, and now the federal agency has declared its status, as well.

"It makes perfect sense," Myrtle Beach city spokesman Mark Kruea said of the 501-C4 status. "Coastal Uncorked is not a charity. It's not the United Way. Instead of taking profits out, they reinvest profits into the event."

The festival, which takes place this year between May 8 and 15, includes events such as beer and wine dinners, a restaurant week, special pricing at participating restaurants, a beer tasting, a wine tasting, a two-day tasting trolley that takes participants to 10 different spots to sample local menus, a cooking demonstration, book signing and tasting event with Food Network star Paula Deen, a brunch with James Beard-award winning cookbook authors Matt and Ted Lee, and a cooking competition and dining event for the finale.

Coastal Uncorked Executive Director Candace Howell said she and the organization were happy to learn of the IRS's decision about the group's status.

Renee Daggerhart, media relations director for Hammond's office, is reviewing some documents related to the festival.

But Daggerhart said the festival is not being investigated, as some people have said.

"We've requested some documents, but it would not be fair to say it's an investigation," she said. Like all nonprofits, Coastal Uncorked is required to turn in its 990 form, which discloses its financial reports from the previous year's event. That paperwork is due by May 15.

Some area residents have said the event misrepresented itself by saying it gives a substantial portion of its proceeds to two area colleges. Coastal Uncorked has donated $1,000 apiece to Horry-Georgetown Technical College's culinary school and Coastal Carolina University's hospitality program.

But Howell said the majority of the profits are reinvested into the festival, and how much is given out in scholarships depends mainly on how much the festival brings in.

Last year, the first year of the festival, attendance was about 3,000 people. Howell said this year's goal is to draw between 4,000 and 10,000 people, and she anticipates this year's events will sell out.

"Our Tasting Trolley ticket sales are already up 200 percent over last year," she said.

The Coastal Uncorked goal, she said, is to bring people to the area and put the spotlight on the many culinary offerings and styles both in Myrtle Beach and around the Grand Strand, as well as all the area's other amenities.

The city gave the festival money last year - $80,000 from the city's general fund. Coastal Uncorked requested money through the accommodations tax revenue, but because the city sweeps all of that into its general fund, mainly to pay for police, fire and beach services, it gives out grants to nonprofits and other groups through the general fund.

Coastal Uncorked made a second request to the city later in the budget process, under the "outside agencies" requests council members consider, but the request was rejected.

This year, Coastal Uncorked has asked for $150,000 from the city. The Accommodations Tax Committee has recommended $100,000, but council members discussed an amount closer to $80,000 at this month's retreat, Kruea said.

In addition, the Myrtle Beach Area Chamber of Commerce has helped the festival with $300,000 for advertising, using private funds.

"Those funds came from businesses that specifically designated funds for Coastal Uncorked, in hopes of securing additional promotional funds through the state matching grant program," chamber President and CEO Brad Dean said Wednesday. "The largest expenditure was for several ads in Southern Living [magazine]."

He said there has been "a lot of misinformation" going around about where the money came from, but said none of the money from the revenue the chamber receives from the 1-cent sales tax used for tourism development was used for the festival. That money is all earmarked for out-of-area advertising.

Heidi Vukov, who began the festival, said Coastal Uncorked is part of a widespread effort to promote the Grand Strand to out-of-area visitors. She said the group researched to determine the best time to have the event, and are hoping it will draw adults who want a weekend away during one of the area's best months. If they are parents, she said, maybe they will want to come back during the summer with their families.

"It's about bringing people to our area," she said, and even if some don't favor a food-and-wine event, they might hear about the festival, see pictures of the area and decide it appeals to them as a vacation destination.

Scott Brandon of The Brandon Agency, which publicizes the event, said last month that Coastal Uncorked is one part of a widespread effort to replace May biker-related revenue that no longer comes to Myrtle Beach since the city enacted strict laws in 2008 designed to curb the motorcycle rallies.

He said ticket sales indicate a larger crowd will attend this year's event, and 70 percent of the tickets have been sold to people living in out-of-market ZIP codes.

Reporter David Wren contributed to this report.