Must Read News:One-Fourth of Nonprofits Are to Lose Tax Breaks (Shocking)
As many as 400,000 nonprofit organizations are weeks away from a doomsday.
At midnight on May 15, an estimated one-fifth to one-quarter of some 1.6 million charities, trade associations and membership groups will lose their tax exemptions, thanks to a provision buried in a 2006 federal bill aimed at pension reform.
“It’s going to be an unholy mess once these organizations realize what’s happened to them,” said Diana Aviv, president of the Independent Sector, a nonprofit trade group.
The federal legislation passed in 2006 required all nonprofits to file tax forms the following year. Previously, only organizations with revenues of $25,000 or more — or the vast majority of nonprofit groups — had to file.
The new law, embedded in the 393 pages of the Pension Protection Act of 2006, also directed the Internal Revenue Service to revoke the tax exemptions of groups that failed to file for three consecutive years. Three years have passed, and thus the deadline looms.
Bill Solomon, who founded Titan Youth Development in Brooklyn to provide after-school youth sports programs, first learned about the law when a reporter called to inquire about his organization’s status. The charity received its tax exemption in 2005 — but it did not start operations until last year.
“It was merged with another nonprofit — or I guess more like operated under the other nonprofit,” Mr. Solomon said. “I let this one be dormant for a while.”
He said Titan had brought in about $100,000 in revenue in 2009 through fees for service and private donations, so although he did not know about the law, he has an accountant working to prepare tax forms.
The I.R.S. has long complained it lacks adequate data on nonprofit groups because so many of them did not file tax forms.
(Excerpt) Read more at nytimes.com
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