In less than a month, an estimated four hundred thousand charities, trade associations, and membership groups could lose their tax exemption, The New York Times reports.
Due to a provision included in the Pension Protection Act of 2006, any exempt organization that has not filed a tax form for three consecutive years will lose its exemption at midnight on May 15. Previously, only organizations with revenues of $25,000 or more — the vast majority of nonprofits — had to file. “We need some way of tracking organizations,” said Diana Aviv, president of Independent Sector. “The system we have right now gives you no real idea of who’s in and who’s not — and how can you manage a system if you don’t know who’s in or out of it?”
For years, the Internal Revenue Service has complained that it lacked adequate data on nonprofits because so many of them did not file tax forms. Without basic facts about individual organizations, the agency has little chance of providing appropriate oversight of the sector. Lois G. Lerner, director of the exempt
organizations division of the IRS, said that while non-compliant organizations would lose their exemptions effective May 16, the agency would probably not send out notices until January in order to give nonprofits a chance to bring themselves into compliance with the law. Donors to affected groups will be able to take a deduction for their gifts until formal notification from the IRS is received by the recipient organization.
Small organizations are the most likely to be affected. Experts say it is likely many of them are inactive and were unaware of the requirement that they inform the IRS when they closed their doors. “We are moving very cautiously,” Lerner said. “The last thing we want to do is revoke the exemption of someone who has
already filed.”
Rest assured that Impact 100 is in FULL compliance with all IRS guidelines.
Strom, Stephanie. “One-Fourth of Nonprofits Are to Lose Tax Breaks.” The New York Times 4/22/10. http://nyti.ms/bbbjKr
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