Some nonprofits to lose their IRS Exemption Status

Monday May 17, 2010 is the due date to file yearly returns for nonprofit organizations on the January 1- December 31^st fiscal year. This year, however, is the first year a new law will be enforced stipulating that

if an [tax-exempt] organization does not file as required for three consecutive years, the law provides that it automatically loses its tax-exempt status. Loss of exempt status means an organization must file income tax returns and pay income tax, and its contributors will not be able to deduct their donations (see http://www.irs.gov/charities/article/0,,id=217087,00.html).

If necessary, the IRS provides the procedures for requesting a time extension at http://www.irs.gov/charities/article/0,,id=210780,00.html If you have not done so, we strongly encourage you to take the necessary actions to ensure that your organization can continue to provide the great services you offer in your communities. 

Guidestar (see http://bit.ly/cV5771) estimates that an astounding "350,000 to 400,000 nonprofits are in danger of losing their exemptions." To learn which organizations are potentially at risk, see http://nccs.urban.org/ or go directly to http://tinyurl.com/3a6qlrj to look up the information.

I appreciate Guidestar and others calling attention to this matter. If your exempt status is revoked, you may have to reapply for exempt status, which could be both time-consuming and costly.