In 2006, Congress passed into law, the Pension Protection Act (PPA) that required most tax-exempt charities to provide an annual notice to the IRS providing various required information. Based on the law, small tax-exempt organizations that received annual donations of $50,000.00 and less would start complying with the notice provision’s rules in 2007. Any organization that did not file the required information notice with the IRS for 3 consecutive years will be automatically revoked from its tax-exempt benefits. Following this law, in June 2011, the IRS released the initial list of organizations that had been automatically revoked following failure to submit the required notice for 3 consecutive years. There were 275,000 organizations that have been revoked from their tax-exempt statuses in this release.
Listing of Revoked Organizations
The list of organizations that was released by the IRS in June 2011 indicates the names of the charities, the Employer Identification Numbers (EIN) of these organizations, and the addresses of the organizations as held by the IRS in its database. It’s the responsibility of donors to verify that the organizations that they are donating to are not marked as “revoked” in the IRS’s books. This list of revoked charities can be acquired at the IRS website and can be sorted by name or state for easier reference. The IRS has additionally indicated that they may be updating the list on a monthly basis as more organizations get out of compliance and are added to the list.
Efforts by the IRS to Ensure Compliance
Because the passing of the Pension Protection Act, the IRS has embarked on an awareness campaign to make qualifying charities conscious of the new requirements and to make sure that they conform to the rule. There have been various educational forums to make charities aware of the new rules. The IRS has additionally sent over 1 million letters to organizations that had not yet complied to own them comply before they’re forced to be revoked. Furthermore, the IRS has additionally extended the time for automatic revocation since the 3 year non-compliance time period for big charities should have ended in 2009. 慈善團體 The full time frame for small tax exempt charities that have been to start reporting in 2007 should have lapsed in 2010.
Relief for Small Charities
The IRS is aware that some small charities could have been ignorant of the notice filing requirement and are therefore, providing a lenient way for these organization in the future into compliance retroactively from time of revocation (so that they may not enter any donation complications). Tax-exempt organizations that receive donations of less than $50,000.00 can gain status backdated to the time of revocation should they connect with be reinstated and pay a reduced fee of $100.00 rather than the normal fee of $400.00 or $850.00.
Implication on Donors
For donors, funds or aid provided to these revoked organizations before the revocation are still deductible for tax purposes. However, moving forward, a donor cannot create a donation to the revoked organizations and deduct such donations inside their tax returns. Therefore, it is advisable for a donor to check with the IRS’s list of revoked organizations before making donations in order to avoid any inconveniences during tax time.
Just how to be Reinstated
The IRS believes that the vast most of the charity organizations that have been revoked are defunct and therefore, there are no consequences to the revocation. However, organizations that have been revoked but that are still operational still are able to getting back in compliance. To take action, they will be required to perform a fresh application for registration and pay the relevant user fee. The payment of the fee also applies for organizations that have been otherwise exempt before the revocation. However, to steer clear of the embarrassment to be listed on the revoked list, the IRS advises all tax-exempt organizations to make sure that they give the relevant documentation in their mind in good time.