Organizations may lose tax exempt status
The Internal Revenue Service released a list Friday of about 275,000 organizations nationwide that have automatically lost their tax-exempt status due to deficient filing reports over the past three years.
Affected local officials said they were unaware they were at risk and that exclusion from exemption could hurt their donations.
International Association of Lions President Leo Bell of Killdeer was surprised to hear that his group was on the list, which includes dozens of organizations from the region. He said he was unaware of any notice and that the organization's tax account was managed by a member who recently passed away and an accountant in Dickinson.
"If we have to start paying taxes on the money we take in, it will really hurt our donations," Bell said, adding that the majority of funds raised by the Lions is donated to other entities.
The 2006 Pension Protection Act required many exempt organizations to file a yearly information return to the IRS beginning in 2007. The law also automatically removes tax-exempt status from organizations not filing the required notice for three consecutive years.
IRS Media Relations Representative Carrie Resch said that an extensive outreach program to inform organizations of new filing requirements began with the enactment of the law.
Notices were sent by mail, through press releases, web postings and contacts to groups that work within the tax-exempt and no-profit community, Resch said.
"Still, we realize there may be some legitimate organizations, especially very small ones, that were unaware of their new filing requirement," IRS Commissioner Doug Shulman said in a release Friday.
Some of the organizations listed are defunct or have reorganized.
Dickinson Baseball Club Treasurer Dan Kovash said his group is an active reorganized section of a listed group, Dickinson Legion Baseball, that has not been in operation for more than 15 years.
"There are so many entities on the books that are stagnant or not operating any more," Kovash said. "That is probably why the IRS is doing what they are doing."
Active operations who have been removed can apply for retroactive reinstatement of tax-exempt status, with eligible organizations paying reduced application fees.
Donors who made contributions to revoked organizations before they were listed will not be affected and prior donations will still remain tax-deductible, according to an IRS press release.