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Nonprofits At Risk Of Losing Tax-Exempt Status

June 24, 2011
By Sharon Turano (sturano@post-journal.com) , The Post-Journal

Area nonprofits, including some in Chautauqua and Cattaraugus counties, are at risk of losing their tax-exempt status.

Not only would this mean they can no longer receive tax-deductible contributions, but any income they do receive can also be taxed, according to U.S. Sen. Charles Schumer, D-N.Y.

Schumer said that large nonprofits have had to fill out Internal Revenue Service filings. A 2007 change in the law, however, requires smaller nonprofits who are not used to filing claims to do so. The first time their status will be revoked if the organizations did not fill the requirements is based on 2010 returns.

On June 8, the IRS listed 275,000 nonprofits nationwide that lost status due to not filing annual reports for three years in a row. Some, however, may not have been aware of the change in the law or requirement, said Schumer.

He has therefore listed the nonprofits impacted on his website, www.schumer.senate.gov, where there is a list of the organizations in jeopardy of losing tax-exempt status . More than 6,000 New York groups are on the list, which includes 560 from the Southern Tier, some in Chautauqua County and some in Cattaraugus County.

"No nonprofit should needlessly lose their tax exempt status," he said.

"The good work of community charities has a vital impact on the everyday lives of New Yorkers," said Doug Sauer, chief executive officer of the New York Council of Nonprofits.

Schumer called the loss of tax-exempt status an unfair blow to sports leagues, museums, business networking groups, religious organizations, American Legions and others. He said those in danger of losing the status are "the very fabric of communities throughout Upstate New York."

"We realize there may be some legitimate organizations, especially very small ones that were unaware of their new filing requirement," said Doug Shulman, IRS commissioner.

Schumer said New Yorkers owe their high quality of life to tens of thousands of nonprofit groups from food pantires, theater groups and more.

"We are blessed with these nonprofits that add fiber and beauty to our lives" he said, adding nonprofits have also filled vacuums due to cuts made to agencies that provided services but can no longer do so due to the economy.

Being on list means nonprofits can no longer receive tax-deductible contributions and any income they receive can be taxed.

"This has the effect of raising taxes of the nonprofit, while also putting a serious damper on their fundraising," said Schumer.

Those on the list who met requirements for filing in the last three years can fax copies of past tax returns to be reinstated at no cost. Those with less than $50,000 in income that have not filed can request reinstatement for a $100 fee. If groups fail to file by Dec. 31, the fee jumps to up to $850.

Information can be sent to the Internal Revenue Service, 1973 N. Rulon White Blvd., M/S 6552, Ogden, UT 84404 or faxed to 801-620-5555.

 
 

 

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