In 2006, Congress passed into law, the Pension Protection Act (PPA) that required most tax-exempt charities to supply 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 didn’t file the mandatory information notice with the IRS for 3 consecutive years would be automatically revoked from its tax-exempt benefits. Following this law, in June 2011, the IRS released the very first set of organizations that were automatically revoked following failure to submit the mandatory notice for 3 consecutive years. There were 275,000 organizations that were revoked from their tax-exempt statuses in this release.
Set of Revoked Organizations
The set of organizations which was released by the IRS in June 2011 indicates the names of the charities, the Employer Identification Numbers (EIN) of the organizations, and the addresses of the organizations as held by the IRS in its database. It’s the responsibility of donors to confirm that the organizations that they’re donating to are not marked as “revoked” in the IRS’s books. This set of revoked charities can be acquired at the IRS website and may be sorted by name or state for easier reference. The IRS has also indicated that they may be updating the list on a regular basis as more organizations get free from compliance and are included with the list.
Efforts by the IRS to Ensure Compliance
Considering that the passing of the Pension Protection Act, the IRS has embarked on an awareness campaign to produce qualifying charities conscious of the new requirements and to make sure that they adhere to the rule. There were various educational forums to produce charities alert to the new rules 香港慈善機構. The IRS has also sent over 1 million letters to organizations that had not yet complied to possess them comply before they’re forced to be revoked. Furthermore, the IRS has also extended the full time for automatic revocation since the 3 year non-compliance time frame for large charities should have ended in 2009. Enough time frame for small tax exempt charities that were to begin reporting in 2007 should have lapsed in 2010.
Relief for Small Charities
The IRS is conscious that some small charities has been ignorant of the notice filing requirement and are therefore, providing a lenient way for these organization ahead into compliance retroactively from time of revocation (so that they may not get into any donation complications). Tax-exempt organizations that receive donations of less than $50,000.00 can gain status backdated to the full time of revocation should they connect with be reinstated and pay a decreased fee of $100.00 as opposed to the regular fee of $400.00 or $850.00.
Implication on Donors
For donors, funds or aid provided to these revoked organizations before the revocation continue to be deductible for tax purposes. However, going forward, a donor cannot create a donation to the revoked organizations and deduct such donations in their tax returns. Therefore, it is advisable for a donor to test with the IRS’s set of revoked organizations before making donations to prevent any inconveniences during tax time.
How to be Reinstated
The IRS believes that a vast most the charity organizations which were revoked are defunct and therefore, you can find no consequences to the revocation. However, organizations which were revoked but which are still operational still get the chance to getting back to compliance. To do so, they’ll be required to complete a fresh application for registration and pay the relevant user fee. The payment of the fee also applies for organizations that were 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 supply the relevant documentation to them in good time.