Passed in 2006, the Pension Protection Act of 2006 made two changes that affected tax-exempt organizations. One of those changes, that all organizations except churches and church-related organization had to file annual returns. The change had big impact on several of the small organizations that never had to file annual paperwork, said Dee Stepter, Media Relations for the IRS.
A second part of the bill indicates that any organization that fails to file for three consecutive years will automatically lose its federal tax-exempt status.
The tax returns for organizations between 2007 and 2010 mean that this is the first year the non-profits faced the possibility of losing their status.
“I found out two or three days ago that the laws have changed and we’ve been working since then to get our tax-exempt status back,” said Randy Simpkins, president of Central Middle School booster club.
The organization was established in 2006. It was very active for a year or two as it raised funds for athletic fields, but virtually stopped operating until a few months ago. No one was worried about taxes.
“The second we found out, we started working to see what we needed to do to get re-established,” Simpkins said.
He said filing and receiving approval to re-establish as a non-profit with the state is fairly quick, but the return of their tax-exempt status will take longer. Fortunately, after receiving approval, the status is retroactive to when the 501C3 was filed. As long as it is approved before the end of the year, anyone who donates this year to the program should be able to write it off their taxes.
The new enthusiasm in the boosters is a result of parents decided to help the school in any way they can. Several events have been planned for later in the summer to raise money or support the teachers.
“The teachers are the backbone of the school... The boosters has always been for sports, but the teachers help with the sports, volunteering to work the concession stand,” Simpkins said.
Teresa Leslie, the incoming president of the Carroll County Humane Society, said they found out their organization was on the list several months ago. The treasurer double checked at that time and the organizations paperwork was filed correctly.
“The organization on the list isn’t us,” she said. “It’s a different mailing address, different tax identification number. We don’t know who those people are.”
She said it was disconcerting to learn there was another group with the same name, but different address, with a tax-exempt status.
“The tax-free status is very important to some of our donors and we like our donors,” Leslie said.
She did not know the exact figure of money donated each year, but said it was high and a significant portion of their budget.
Some organizations on the list just don’t exist any more. Ed Christian, Fayetteville chapter president of the Blue Knights Motorcycle Club, said the Carrollton chapter, with the revoked tax status, hasn’t existed in several years.
“If an organization has had a tax exempt status revoked, I would encourage them to go to our website (irs.gov) because there is a lot of information on there to help them,” Stepter said.
She said organizations were notified about the changed laws through traditional methods like news outlets, and non-traditional methods. The IRS contacted organizations that assist large groups of non-profits about the law change.
This past October, an additional effort was made, extending the filing deadline, to try to get the small non-profits informed.
The forms that need to be filled out annually are very brief.