On 17 May many smaller charities might find themselves in post-tax-exempt status as the IRS reconfigures its guidelines and filing expectations for these groups. According to Grant Williams at ‘The Chronicle of Philanthropy,’ “Nobody really knows for sure how many organizations will target=”_blank” lose their tax exemptions, but several research groups estimate that more than 300,000 organizations listed on the Internal Revenue Service’s rolls ultimately could be affected.”
The new guidelines are meant both to winnow out of the IRS records any charities that no longer exist and to keep the Service in closer touch with those who do. All charities are to fill out reports, but the most significant change is that those with revenues of $25,000 or less must also fill out a, or ‘e-postcard.’ The form is available online, and the deadline, let us repeat, is 17 May.
Extensions can be applied for and are given automatically to those who request it by the deadline. But if missed a charity drops out of tax-exempt status and must reapply. Though the IRS will work to get those groups back into the proper category, charities must pay fees for the application, and they will be liable for taxes during the period they have lost said status.
Mr. Williams’s article includes excerpts from an interview with Lois G. Lerner, who oversees monitoring of charities and foundations for the IRS. She spoke of the Service’s efforts to reach out to all the smaller charities on their list, though other experts point out that smaller charities are most likely to have turned over records and officers at a faster rate than larger ones, and thus the IRS might be reaching out to people who have not worked on the local charity’s board for some time. Recouping their status might prove burdensome and comparatively expensive for such groups.
Though a jarring loss of tax-exemption is likely to greet up to 300,000 groups, according to Williams, all his sources agree that having some sort of regular contact with the IRS (even though not paying taxes) might not be a bad thing. It could help winnow out defunct charities and help assure the public of the validity of those still active. Just be sure to be active enough to file to retain your status by next week!