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For those who think that small community organizations are often in the best position to serve local needs, there's bad news coming out of Washington. The Chronicle of Philanthropy reports:

More than 292,000 nonprofit organizations—about 18 percent of the charities in the United States—may lose their tax-exempt status in the next year for failing to file a tax return with the Internal Revenue Service, according to a report released on Thursday by the Urban Institute’s National Center for Charitable Statistics.

2006 law gave charities with less than $25,000 in gross receipts three years—or until May 17, 2010—to file the new Form 990-N, better known as the e-Postcard. Previously, such small charities were not required to file with the IRS. So far, 196,000 charities have missed their deadline. Another 96,500 charities have deadlines between now and April 15, 2011.

These organizations, mostly staffed by volunteers, presumably have more constructive ways to use their time than filing tax forms. Very few of the organizations involved were even aware of the filing deadline, according to the Urban Institute.

So here's a little multiple choice question about the result of this new requirement.

Will it...

a) force charities to go out of business

b) waste the hours of hardworking volunteers

c) give more fodder to people who like to tell charities what to do

d) all of the above

1 thought on “Thousands of charities may lose tax exemption”

  1. Patrick Sternal says:

    I’m not sure I understand the gripe here, Ms. Riley. The Form 990-N asks for 8 lines of information and takes maybe 5 minutes to file. News of it has been published for the past year in major outlets, discussed thoroughly on the internets and every nonprofit advocacy organization has made a big deal out of this requirement. The IRS has even gone squishy on the hard deadline that was May 17 and is apparently even yet accepting filings. It is hard to see how that is a “waste of hours of hardworking volunteers.” While I have no desire to see charities go out of business, is it asking too much that they keep their information up-to-date at the IRS?

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