Non-profits could lose tax exemption

Published 8:22 pm Friday, August 6, 2010

Some non-profit organizations could be losing their tax-exempt status come October 15.

The Pension Protection Act of 2006 made some changes to the rules affecting non-profit organizations, among them requiring an annual return to be filed by all non-church related organizations and a mandate that those organizations that failed to file for three consecutive years would lose their tax-exempt status.

As such, organizations that failed to file a return for 2007, 2008 and 2009 are at risk of losing their tax-exempt status if they do no not file a return by October 15.

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According to Dan Boone, IRS Media Specialist, the loss of that status would carry hefty consequences.

“First of all, any income that organization brings in would become taxable just like any other business,” Boone said.

“Second, donors to the organizations can no longer write off donations on their taxes.”

If tax-exempt status is revoked, it can be reapplied for, but Boone said the application process is fairly lengthy and could take months to process.

A fee would also be required to reapply for tax-exempt status. Organizations with annual gross receipts of less than $10,000 would have to pay a $400 fee to apply, while those organizations with annual gross receipts of more than $10,000 would have to pay a fee of $850. The fee for group exemption requests is $3,000.

However, Boone said the prevention of losing the tax-exempt status is an easy process.

“It’s very easy to get into compliance before October 15,” Boone said.

“Many of the smaller organizations would have to fill out a Form 990N, which is called an e-postcard because of how quick and easy it is. Larger organizations would need to fill out a 990EZ or a Form 990, which is a regular form that is a good bit longer.”

The IRS also released a list of at-risk organizations on its website July 26.

Here in Pike County, 36 organizations can be found on that list.

In Troy, American Legion Post 70, Cedar Creek Plantation, Christians United Inc, the Pike County Chapter of Disabled American Veterans, Helping Hands Inc, Henderson Volunteer Fire Department, the Louise Williams Foundation, Mosses Housing Incorporated, Troy’s National Exchange Club, Pike County United Way, Sav-A-Life Inc, South Alabama Community Center and Troy Charity League are all listed on the list of at-risk organizations.

Troy University also has six organizations on the list. Those organizations are the American Association of University Women, the American Criminal Justice Association, Chi Omega Fraternity, Lambda Chi Alpha Fraternity Inc, Sigma Chi House Corporation and Zeta Phi Beta Sorority.

In Brundidge, the American Legion Auxiliary 145, Hamilton Crossroads Fire Department, the National Association of Letter Carriers 6375, Spiritual Life Ministries and Tarentum Community Center are on the IRS list.

In Goshen, American legion Post 0207 and the Elam-Rodgers Recreation Association are both on the list. The International Association of Lions Clubs’ Goshen chapter is also on the list, but is listed with a Troy address.

Banks’ only organization on the list is Christian Life Ministries.

In addition to the mentioned organizations, eight local chapters of Order of the Eastern Star are also on the list.

137 Floral Star, 266 Humphrey Beauty, 340 Arnold, 708 Muse Pride and 857 Davis Choice are the five Troy chapters on the list.

Brundidge’s 13 Anchor and 619B Holland Beauty are on the list as well, while Goshen’s 290 Wilkerson Beauty is the final chapter listed.

The Jack chapter of ALTRUSA is also listed, but is listed with a Brundidge address.