More than 150 local nonprofits, including popular charities, volunteer fire departments, Knights of Columbus and American Legion groups, will have their tax-exempt status revoked in October if they don’t file a tax form with the Internal Revenue Service.
That’s because the Pension Protection Act of 2006 requires even the smallest nonprofit groups to have filed a basic form by May 15, a deadline that’s now been extended to Oct. 15.
Organizations with budgets less than $25,000 were previously exempt from filing the form, but now are being asked to fill out a 990-N. The form is online at www.irs.gov.
Many small nonprofits don’t know about the requirement, and attempts to reach them through outdated addresses have in many cases been unsuccessful.
Bob Ottenhoff, president and CEO of Guidestar, a group that promotes public access to nonprofit information, estimates that a few hundred thousand inactive organizations are still in IRS records. But another several hundred thousand are still working but haven’t complied with the requirement.
“This has put pressure on both small nonprofits who are filing for the first time and some bigger ones that should have been filling all along,” Ottenhoff said. “There’s now for the first time a sense of urgency about this.”
The aim of the new rules is to keep nonprofits accountable to their donors, make sure money is being used properly and to ensure a baseline of financial record-keeping.
