Have you lost your tax-exempt status?

Have you lost your tax-exempt status?


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Just this week, the IRS released the list of nonprofit organizations that have lost their tax-exempt status. Why was it lost? Because they failed to file required reports. As you should know by now, the IRS changed their rules and began requiring small nonprofits (under $25K budget) to file a 990 report. That report was due in May 2010. Then the deadline was extended to October 2010. I blogged about this each time. Still many did not file.

So now 275,000 groups have lost their tax-exempt status. According to a Chronicle of Philanthropy article, it is believed that many of those groups were defunct anyway. However, for an organization that is still functioning, it could mean that a donor who contributed with the expectation that he/she could receive a tax benefit from that contribution may discover that the contribution is not eligible. Why? Because the contribution was given to an organization that was no longer tax exempt. You see why this is important? 

So if you're in doubt about your organization, check this list on the IRS website. Apparently it could cost $850 or so to obtain tax exemption once it's lost. This is not a small mistake, for those organizations who may have neglected to file.

Sometimes we're so focused on delivering services, and being committed to our organization's mission, that we forget the importance of such details as filing reports. This is an example of what could happen if you don't stay on top of such matters. Small organizations may feel overwhelmed with running the organization AND delivering services. You have to figure out how to accomplish all of that, or you won't be around to provide the services. Organizations like the Axelson Center and many others offer programs and resources to help professionals in nonprofit organizations to learn what to do, where to go for guidance, and provide connections to networks of people who can help. If you need assistance, email us at axelson@northpark.edu.

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