Ouch: 275,000 Nonprofits Lose Exemption

For anyone who doubted that the IRS means business when it requires tax-exempt nonprofit organizations to file annual Form 990s (at least in e-postcard form, for the smaller organizations), its June 8th announcement should serve as a wakeup call. Tax-exempt status was revoked for a whopping 275,000 organizations, all of which had failed to file the required paperwork for the last three years.

The IRS even published a list of the organization’s names, at http://www.irs.gov/charities/article/0,,id=240099,00.html.

Some of the groups on this list may simply have been defunct. Some, such as local garden clubs, may have discovered that receiving donations wasn’t high on their list of needs or activities, so that tax-exempt status wasn’t worth the effort.

But it’s likely that other groups didn’t understand that the requirements applied to them, due to changes in the reporting requirements over the last few years. For a full summary of these reporting requirements, see Nolo’s article, “Many Nonprofits Must File IRS Form 990-N to Stay Tax-Exempt.”

And for help complying with these and other requirements of keeping your nonprofit’s tax exempt status, see Every Nonprofit’s Tax Guide, by Stephen Fishman (Nolo).