Did your favorite charity lose its tax-exempt status? Maybe.
The Internal Revenue Service has announced that around 275,000 nonprofit organizations automatically have lost their tax-exempt status because they did not file required annual reports for three consecutive years.
This finding is critical not only for the groups, but also for taxpayers. Remember, one of the key rules for deducting a charitable contribution is that it go to an IRS-qualified organization.
The tax-filing requirement was instituted in 2007 as part of the Pension Protection Act passed the year before. "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 in announcing the revocation of tax-exempt status.
The IRS believes that most of the groups who've had their tax-exempt status pulled are defunct. However, the agency is also working with existing organizations that missed the filing requirement to help them apply for reinstatement of their tax-exempt status.
"We realize there may be some legitimate organizations, especially very small ones, that were unaware of their new filing requirement," said Shulman. "We are taking additional steps for these groups to maintain their tax-exempt status without jeopardizing their operations or harming their donors."
You can check the groups, listed by state in PDF and spreadsheet formats, that had their tax-exempt status pulled.
If you find an organization to which you contributed, don't panic. Even if your group is on the list, your tax deduction still might be OK.
As long as your gift was made before June 8, the date of the mass revocation of tax-exempt status, it's still tax deductible. Going forward, however, organizations that are on the list and that do not receive reinstatement are no longer IRS qualified.
That means any income the groups gets may be taxable and any contributions made to the organizations are not deductible to the donors.
If the group's tax-exempt status is eventually reinstated, then donations made after the IRS reconsideration will again count as deductible.
To make sure the group you give to is IRS approved, check out Publication 78, the agency's updated database of tax-exempt nonprofits. A quick online search will do wonders for your tax return and philanthropic peace of mind.
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