Since those in charge of not for profits organizations can certainly engage in plenty of behavior that might abuse a tax exempt status, the IRS has checks and balances. However, the IRS has tightened some of those requirements to the point that smaller not for profits might get the shaft. If they lose their tax exempt status, they need to refile for it and pay a fee, something that takes valuable donation money that you and I give them to diverts it from the tasks you and I may want them to engage in. That ain't right.
You can help your favorite local charities or non-profit organizations by telling them about a new law that may affect their exemption from paying federal income taxes.
A few years ago, Congress passed a law requiring all tax-exempt organizations, even the smallest ones, to file an annual return with the Internal Revenue Service. Any organization that does not file for three consecutive years automatically loses its federal tax exemption. Churches and some church-related organizations are among the few exceptions.
The first three-year deadline for filing those returns was May 17, 2010. While thousands of organizations did file, a significant number did not.
The IRS recognizes the value these local organizations give to their communities, so it extended the filing deadline to October 15, 2010. It also published a list with the names and last known addresses of organizations that are at risk of losing their taxexempt status. “The last thing we want to do here at the IRS is have these groups lose
their tax-exempt status because they haven’t filed a short, simple form,” said IRS Commissioner Doug Shulman.
The smallest organizations, with less than $25,000 annual receipts, should file a 990-N (ePostcard). The ePostcard asks only eight questions and is filled out and sent using the Internet. Larger organizations eligible to file the 990-EZ must file their past due
returns by October 15 and pay a compliance fee.
You can help by checking the “At-Risk List” or telling the local organization about the list. The list and information on keeping tax-exempt are at www.irs.gov/charities.
Some of the smallest groups do important work that no one else is doing. If you have a favorite local charity, look them up and let them know. It's not fair that that our hard earned money that we might set aside for charitable work might wind up in the IRS's pocket.