IRS Identifies Organizations That Have Lost Tax-Exempt Status

Thursday, June 9, 2011

The Internal Revenue Service announced that approximately 275,000 organizations nationwide under the law have automatically lost their tax-exempt status because they did not file legally required annual reports for three consecutive years. For Tennessee, there are 4,473 organizations on the list. The IRS believes the vast majority of these organizations are defunct, but it also announced special steps to help any existing organizations to apply for reinstatement of their tax-exempt status.

Congress passed the Pension Protection Act (PPA) in 2006, requiring most tax-exempt organizations to file an annual information return or notice with the IRS. For small organizations, the law imposed a filing requirement for the first time in 2007. In addition, the law automatically revokes the tax-exempt status of any organization that does not file required returns or notices for three consecutive years.

For several years, the IRS has made an extensive effort to inform organizations of the changes in the law through multiple outreach and education avenues, including mailing more than 1 million notices to organizations that had not filed. In addition, last year the IRS published a list of at-risk groups and gave smaller organizations an additional five months to file required notices and come into compliance. About 50,000 organizations filed during this extension period. Overall, the IRS believes the vast majority of small tax-exempt organizations are now in compliance with the 2006 law.

“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,” IRS Commissioner Doug Shulman said. “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.”

As part of this, the IRS issued guidance today on how organizations can apply for reinstatement of their tax-exempt status, including retroactive reinstatement. In addition, the IRS announced transition relief for certain small tax-exempt organizations – those with annual gross receipts of $50,000 or less for 2010 – that were made subject to the new "postcard" filing under the PPA. The relief allows eligible small organizations to regain their tax-exempt status retroactive to the date of revocation and pay a reduced application fee of $100 rather than the typical $400 or $850 fee. Full details are available in Notice 2011-43, Notice 2011-44 and Revenue Procedure 2011-36, issued today.

If an organization appears on the list of organizations whose tax-exempt status has been automatically revoked it is because IRS records indicate the organization had a filing requirement and did not file the required returns or notices for 2007, 2008 and 2009.

The list of organizations whose tax-exempt status has been revoked for failing to meet their filing requirement, which will be available on the IRS website at www.IRS.gov, includes each organization’s name, Employer Identification Number (EIN) and last known address. It is searchable by state. It also includes the effective date of the automatic revocation and the date it was posted to the list. The IRS will update the list monthly to include additional organizations that lose their tax-exempt status.

The vast majority of tax-exempt groups file their required returns and are unaffected by the revocation listing. In addition, the IRS believes the vast majority of the newly revoked groups are no longer in existence and need to be removed from the tax-exempt listing as the 2006 law requires.

This listing should have little, if any, impact on donors who previously made deductible contributions to auto-revoked organizations because donations made prior to the publication of an organization’s name on the list remain tax-deductible. Going forward, however, organizations that are on the auto-revocation list that do not receive reinstatement are no longer eligible to receive tax-deductible contributions, and any income they receive may be taxable.
Publication on the list of organizations whose tax-exempt status has been revoked serves as notice to donors and others that they may no longer rely on a prior listing in IRS Publication 78, Cumulative List of Organizations, as an indication of an organization’s tax-exempt status or its eligibility to receive tax-deductible contributions. An updated version of Publication 78 with current listings will be published on the IRS website later this week. Nor can donors rely on an IRS determination letter issued to the organization prior to the date of automatic revocation.

Existing organizations that seek to have their tax-exempt status reinstated must complete an application and pay a user fee regardless of whether they were originally required to file such an application. More information on the reinstatement process, including retroactive reinstatement, can be found on IRS.gov.



Alexander Says Bipartisan Bill Will Help Stabilize Individual Health Insurance Market, Then Lower Premiums

Senate health committee Chairman Lamar Alexander announced on Tuesday he and Senator Patty Murray (R-Wa.) have reached a short-term deal to offer bipartisan legislation to stabilize the individual health insurance market and begin to lower the costs of premiums, so all Americans have access to health insurance. “Our legislation is based on the four bipartisan hearings and ... (click for more)

Richard P. McKenney Joins U.S. Bancorp Board Of Directors

U.S. Bancorp announced Tuesday its Board of Directors has elected Richard P. McKenney as a director of the company, effective immediately.   Mr. McKenney, 48, is the president and chief executive officer of Chattanooga based Unum Group, a leading provider of financial protection benefits in the workplace, including disability, life, dental, and voluntary benefits.  ... (click for more)

City Council Rejects Share Of Big City Contract Recommended By Berke Administration For Start-Up Staffing Firm

The City Council on Tuesday night rejected awarding a share of a big contract for a start-up staffing firm that had been pushed by the Berke administration. Councilman Chip Henderson made a motion to approve "for the purpose of discussion" on the plan to give Msi Workforce Solutions part of the work along with a North Chattanooga firm that has had the contract for temporary staffing ... (click for more)

Chattanooga Airport To Go "Off The Grid" After Final Phase Of Solar Panel Installations

The Chattanooga Airport is embarking on the third and final phase of its solar farm, which when completed will allow the Airport to "go off the grid." John Naylor, Airport vice president, said, "This will give us all the power we need to run the Airport." He said EPB will assist with installation of a power storage unit and a micro-grid controller to make the change-over possible. ... (click for more)

Vote No On The Rezoning For A New Landfill In Harrison - And Response (3)

County Commissioners, please consider the following facts when voting on the rezoning request for a new privately-owned C&D landfill in Harrison.  Use of this property for a landfill has been rejected by the county three times in the past (1971, 1984 and 2007).  In 1971 and 2007 the County Commissioners unanimously rejected the proposal.  In 1984 the ... (click for more)

Roy Exum: ‘Mom Don’t Have…I Do’

It’s hard to know what goes through the mind of a five-year-old, particularly one who watches her mom go in and out of jail due to drug addiction. But little Sunshine Oelfke is obviously being raised right by her grandmother because the other morning, the five-year-old came into the kitchen before leaving for kindergarten with a baggie full of coins from her piggy bank. “I asked ... (click for more)