Back in 2006, Congress passed the Pension Protection Act, which requires most tax-exempt organizations to file an annual information return or notice with the IRS. The law automatically revokes the tax-exempt status of any organization that does not file required returns or notices for three consecutive years.
WASHINGTON –– The Internal Revenue Service today announced that approximately 275,000 organizations under the law have automatically lost their tax-exempt status because they did not file legally required annual reports for three consecutive years. The IRS believes the vast majority of these organizations are defunct, but it also announced special steps to help any existing organizations to apply for reinstatement of their tax-exempt status.
“During the past several years, the IRS has gone the extra mile to help make tax-exempt groups aware of their legal filing requirement and allow them additional time to file,” IRS Commissioner Doug Shulman said. “Still, we realize there may be some legitimate organizations, especially very small ones, that were unaware of their new filing requirement. We are taking additional steps for these groups to maintain their tax-exempt status without jeopardizing their operations or harming their donors.”
As part of this, the IRS issued guidance today on how organizations can apply for reinstatement of their tax-exempt status, including retroactive reinstatement. In addition, the IRS announced transition relief for certain small tax-exempt organizations – those with annual gross receipts of $50,000 or less for 2010 – that were made subject to the new “postcard” filing under the PPA. The relief allows eligible small organizations to regain their tax-exempt status retroactive to the date of revocation and pay a reduced application fee of $100 rather than the typical $400 or $850 fee. Full details are available in Notice 2011-43, Notice 2011-44 and Revenue Procedure 2011-36, issued today.
This listing should have little, if any, impact on donors who previously made deductible contributions to auto-revoked organizations because donations made prior to the publication of an organization’s name on the list remain tax-deductible. Going forward, however, organizations that are on the auto-revocation list that do not receive reinstatement are no longer eligible to receive tax-deductible contributions, and any income they receive may be taxable. (emphasis mine)
The IRS website does provide a full list of organizations that have lost their tax-exempt status, along with a video of what needs to be done to have that status reinstated.
Some of you might be asking what this has to do with politics. Well, I’ll tell you. I looked through the list, and there are plenty of “Knights”, “Rotaries”, “Lions” and “Masons” included in it. Lots of youth organizations and college sororities/fraternities beginning with the letter “Z”. There are also some orgs that provide services to veterans. AND there are other types of organizations listed, such as Planned Parenthoods, union-related organizations…even political campaign orgs are on this list!!!
For the sake of full disclosure, I’ll admit to being “politically biased”, very much so on the conservative side. I wanted to try to find a way to send a simple “head’s up” to any organizations on the conservative end of the spectrum that might have let this fall through the cracks without drawing excessive amounts of attention to it otherwise.
That’s why I didn’t go with the title “Some Planned Parenthood Organizations Lose Tax-Exempt Status”!