Many small non-profits to lose their status.

[Demosthenes]

The number of tiny non profits in the US is horribly bloated. You'd be surprised how many one-person entities there are that started out as a good idea in someone's garage but fizzled out within a year, and they never bothered to file the paperwork to close the non-profit.

A little weeding out is a good thing.

[Pottapaug1938]

My Scout troop has qualified as a non-profit organization. If we ever dissolved (God forbid), I wonder if anyone would bother to tell the IRS.

[Demosthenes]

There are a ton of charities out there who would be better off if they were under the watchful umbrella of a parent charity.

Setting up your dog rescue program or clothing donation program, for example, is a really nice thing to do, but realistically, such programs can be run though your local humane society, Goodwill, or community foundation who can provide your charity with support and guidance.

The IRS doesn't have the resource to police (or even notice) tiny little charities, and as long as people are getting charitable tax deductions for making contributions to tiny little charities, the potential for large-scale abuse is problematic.

[Arthur Rubin]

Shouldn't this thread be under "Tax practice" rather than "Potpourri".

[Tax Man]

Shouldn't this thread be under "Tax practice" rather than "Potpourri".

Yes, and if your parent organization is big enough, you can get more time to file.

[Famspear]

Here is a statement from Doug Shulman, Commissioner of Internal Revenue, on the IRS web site on Tuesday, May 18, 2010:

Now that the May 17 filing deadline has passed, it appears that many small tax-exempt organizations have not filed the required information return in time. These organizations are vital to communities across the United States, and I understand their concerns about possibly losing their tax-exempt status.

The IRS has conducted an unprecedented outreach effort in the tax-exempt sector on the 2006 law’s new filing requirements, but many of these smaller organizations are just now learning of the May 17 deadline. I want to reassure these small organizations that the IRS will do what it can to help them avoid losing their tax-exempt status.

The IRS will be providing additional guidance in the near future on how it will help these organizations maintain their important tax-exempt status — even if they missed the May 17 deadline. The guidance will offer relief to these small organizations and provide them with the opportunity to keep their critical tax-exempt status intact.

So I urge these organizations to go ahead and file — even though the May 17 deadline has passed.

Filing a tax return for the small organizations is easier than you’d think. It just takes a few minutes to fill out the electronic notice Form 990-N (e-Postcard). This is available for small tax-exempt organizations with annual receipts of $25,000 or less. More information is available.

http://www.irs.gov/newsroom/article/0,, ... 09,00.html

And this, from the IRS web site:

Small tax-exempt organizations whose annual gross receipts are normally $25,000 or less may be required to electronically submit Form 990-N, also known as the e-Postcard, unless they choose to file a complete Form 990 or Form 990-EZ.

If you do not file your e-Postcard on time, the IRS will send you a reminder notice but you will not be assessed a penalty for late filing the e-Postcard. However, an organization that fails to file required e-Postcards (or information returns – Forms 990 or 990-EZ) for three consecutive years will automatically lose its tax-exempt status. The revocation of the organization’s tax-exempt status will not take place until the filing due date of the third year.

Due Date of the e-Postcard

The e-Postcard is due every year by the 15th day of the 5th month after the close of your tax year. For example, if your tax year ended on December 31, the e-Postcard is due May 15 of the following year. You cannot file the e-Postcard until after your tax year ends.

http://www.irs.gov/charities/article/0, ... 50,00.html

And see:

http://epostcard.form990.org/

[Vicbowling]

The number of tiny non profits in the US is horribly bloated. You'd be surprised how many one-person entities there are that started out as a good idea in someone's garage but fizzled out within a year, and they never bothered to file the paperwork to close the non-profit.

A little weeding out is a good thing.

I have to agree with this. I think there are far too many non profits on the books.