Lum: Nonprofit cautionary report
Aspen being a town of a billion nonprofit organizations and a trillion generous contributors to them, this IRS information is pertinent to the whole community.
My friend Sarah Glorian, who writes a column, “Justice in Motion,” for the Daily World in Washington state, said it well, so I will quote her.
“Heads up to anyone involved in the field of nonprofits, both giver and receiver:
“For those of you itemizing tax-deductible donations, be sure to check the Internal Revenue Service (IRS) website at http://apps.irs.gov/app/eos/ to confirm the entity to which you donate is in good standing. A law was changed in 2006-2007 requiring smaller tax-exempt entities to start submitting annual reports by 2009-2010. Notwithstanding outreach reminding these tax-exempt entities to start submitting these reports, many failed to do so, and their tax exempt status has been revoked. Many revocations occurred quite some time ago, and entities do not realize it has occurred and are continuing to accept donations that are no longer tax-deductible.”
I’d question the “outreach” part. If you’re in doubt about your organization and call a finance expert, the response will be, “I know exactly what you’re going to say,” because people all over the country have been absolutely blindsided by this.
The innocent, well-meaning small nonprofits, which had no idea that what used to be a one-time nonprofit status report now was required annually, now face the task of disentangling this web, which — don’t panic — can be done. You might check out others in the same boat by going to the website Sarah mentioned above and then approaching the best finance person you know as a group.
There also are ways for smaller nonprofit groups to piggyback on the nonprofit status of larger organizations, but I definitely am not a financial expert, so don’t ask me how.
Meanwhile, there’s the question of the contributors being tapped by the IRS for claiming false donations. Here it probably would be prudent to relax and trust the underfunding of the IRS and the enormity of the situation not to put you in jeopardy. All will be resolved, finally, but not without a ton of paperwork. You know how the IRS loves its papers.
Sarah goes on to mention some of the nonprofits affected by this recent law in the state of Washington:
“ … fraternal orders, armed forces posts, granges, booster clubs, community education, historical societies, civic- and social-welfare groups, social and recreational clubs, business leagues and chambers of commerce, labor organizations, voluntary employees’ beneficiary associations, etc.”
To all nonprofits: check your status. To all contributors: check their status. You also can go to http://www.irs.com and search for automatic revocation list for nonprofits. Enter ZIP codes 81611 and 81612, and you’ll be amazed at the number.
Su Lum is a longtime local who thinks amnesty is in order but wouldn’t count on it. Her column appears every Wednesday in The Aspen Times. Reach her at email@example.com.
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