[Moderator's note: Off-topic but allowed because of the many US-based
non-profit shelters which subscribe to the FML. (Though every one I
know has already filed the form if necessary!) BIG]

Not sure who all this affects but wanted you all to know it just
encase. Kendra

Half a Million Nonprofits Could Lose Their Tax Exemptions

Half a Million Nonprofits Could Lose Their Tax Exemptions Did you know
that in May 2010, half a million nonprofits could find themselves
stripped of their exempt status? The IRS estimates that that's the
number of smaller organizations that have failed to file a Form 990-N.
The Pension Protection Act of 2006 requires exempt organizations that
don't meet the income thresholds for Form 990 or 990-EZ to file a new
return with the IRS. The IRS created Form 990-N for this purpose, and
smaller nonprofits began using it last year to report on tax years
ending on or after December 31, 2007.

The Pension Protection Act also mandates that the IRS revoke the
tax-exempt status of any organization that fails to file a Form 990,
990-EZ, 990-PF, or 990-N for three consecutive years. Revocations will
happen automatically beginning in May 2010. A nonprofit that loses its
exemption because of failure to file will have to reapply to the IRS
for exemption. Experts have longed believed that numerous defunct
nonprofits are listed as active in the IRS files. (Exempt organizations
are required to inform the IRS when they go out of business, but many
fail to do so.) It is unlikely, however, that these organizations add
up to half a million. That means that 18 months from now, hundreds of
thousands of charitable nonprofits, many operating on a shoestring,
may no longer be able to accept tax-deductible contributions. It means
that half a million charitable and noncharitable organizations could
suddenly find themselves required to pay federal income taxes--and
subject to financial penalties if they fail to do so.

The IRS has made a concerted effort to inform smaller nonprofits about
the 990-N, including mailings to every organization that their records
indicate is required to file the new return. It's not surprising,
though, that some nonprofits haven't heard yet--think of how many of
your holiday cards or business mailings come back as undeliverable.
Smaller nonprofits make up as much as three-quarters of the nonprofit
sector. Collectively they have a tremendous impact. At GuideStar, we
believe the sector and society will be the poorer if these
organizations lose their exemptions. But we also believe that tax
exemption is a privilege, and that this privilege carries significant
responsibilities. One of the most important is to report to the public
(via the IRS) on our activities. There's something we all can do to
improve the situation: spread the word. If you volunteer with, work
for, or give to a smaller nonprofit, make sure the organization' s
leadership knows about the 990-N. Encourage acquaintances associated
with other small nonprofits to do the same. If they want more
information, refer them to:

<http://www.irs.gov/charities/article/0,,id=169250,00.html>

[Posted in FML 6210]