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275,000 Groups Lose Tax Exemptions After Failing to File Paperwork With IRS
Source: The Chronicle of Philanthropy  ·  June 8, 2011  ·  Excerpt

The Internal Revenue Service said today that 275,000 nonprofits have lost their tax-exempt status because they did not file legally required documents for three consecutive years. That move trims the number of tax-exempt groups by about 14 percent.

Many of the groups that lost their exemptions are charities, and donors to those organizations cannot claim a charitable deduction for gifts to the groups after the IRS makes the list official.

Most of the organizations knocked off the charity rolls are believed to be defunct, the IRS said, but groups that are still operating may now apply to get their charity status back.

“During the past several years, the IRS has gone the extra mile to help make tax-exempt groups aware of their legal filing requirement and allow them additional time to file,” said Douglas Shulman, the Internal Revenue Service Commissioner, in announcing the revocations. “Still, we realize there may be some legitimate organizations, especially very small ones, that were unaware of their new filing requirement. We are taking additional steps for these groups to maintain their tax-exempt status without jeopardizing their operations or harming their donors.”

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Our take
Keeping up with ever-changing tax laws and regulations can be a challenge. Most nonprofits stay busy enough with the daily struggle to fulfill their organization's mission - but it's just as important to stay current on operating within the tax-exempt environment. Event the simplest or most routine requirements, if ignored, have the potential to disrupt any organization, especially smaller sized ones.

Contact Compass Pointe today for help answering these and other questions:

  • What are current rules and requirements as they relate to my organization's region or industry being served?
  • How can my organization stay current on tax laws and other regulations at levels of local, state, and federal government?


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