Nonprofits could lose their tax-exempt status

[fgoodwin]

I've always heard that BSA encourages units to NOT apply for separate 501©(3) status; but if you do have such status, this may affect your unit; consult your tax advisor:

 

Nonprofits could lose their tax-exempt status

 

http://stories.dailytimes.com/story.lasso?ewcd=fcf75400d37ec1f0

 

From staff reports

The Daily Times

Published January 24, 2010

 

Several hundred Kerr County nonprofit organizations could be in danger of losing their tax-exempt status this year because of a 2006 federal act that requires most to file at least every three years with the IRS.

 

Most of the bigger organizations such as the university, Peterson Regional Medical Center and local foundations file with the IRS every year, but many smaller organizations were not previously required to file.

 

That changed with the Pension Protection Act of 2006, which went into effect in 2007. Under the act, an organization that does not file automatically will lose its tax-exempt status after three years. Another change now requires even small organizations, which were previously exempt from filing, to file a Form 990-N online.

 

Form 990-series returns and e-Postcards, are due by May 15 for organization that run on the calendar year.

 

[excerpted]

[BadenP]

Good catch Fred. And for you units who do have your own tax exempt number when you do file expect to get red flagged and a letter from the IRS asking you why you have not filed before, and a probable follow up audit. This is the reason why individual units should never have their own tax exempt status since there are annual reporting requirements.

[Eamonn]

"This is the reason why individual units should never have their own tax exempt status since there are annual reporting requirements"

Said who?

The main reason the Ship went this route was so that we could accept donations of boats and be able to provide the needed paperwork so the person donating could claim the donation.

I don't have any problem what so ever having my accountant take care of the necessary forms.

As for an audit? We have absolutely nothing to hide and while it might be an inconvenience and the accountant might charge me. I really don't see it as a big deal.

 

Not to change the subject but sometime back another forum member posted that all units are supposed to make their CO aware of their financial dealing each and every year.

Have to admit to having never done so.

Ea.

[emb021]

Actually, FWIW I am a member of several national non-profit organizations which instructs its local units to file the 990-N stuff every year. The individual units are NOT registered as separate 501c3 groups.

 

Its actually a piece of cake to do this. I have to do it for one of my groups, and it takes less then 15 minutes.

 

[Kahuna]

As emb021 says, the reporting is a minor issue. Lots of good reasons for units to establish 501©(3) organizations. For example, you can change sponsors without losing your equipment. If you have boats or buses, it's a necessity.