275,000 Groups Lose Charity Status

June 14, 2011

Moving forward, theIRS plans to release the names of organizations that fail to file their paperwork every month, according to the Chronicle of Philanthropy.

According to the Chronicle of Philanthropy and the IRS, 275,000 groups just lost their exemption status. The IRS has been lenient and extended the window for three years for organizations that were lagging to file the required forms. Congress passed a law in 2006 that increased reporting requirements and lowered the threshold for what triggered the need to file. This was the beginning of additional scrutiny focused on tax-exempt groups. Essentially, if you aren’t going to pay taxes, you have to prove why you’re legitimately tax exempt on an annual basis.

The IRS believes that most of the affected organizations are likely defunct groups but any that are still in operation will have to apply to get their charity status back. The IRS has published an Automatic Revocation of Exemption List, which is available on their website, organized by state, and is intended to serve as a notice to donors and others that contributions to these groups will no longer be tax deductible. In addition, the groups may now owe taxes on income.