Four years after a law was passed requiring nonprofit groups that bring in $25,000 a year or less to file tax returns, more than 220 of them in Winston-Salem are at risk of losing their tax-exempt status for failing to file.
That would mean that they could no longer receive tax-deductible contributions.
But last week the Internal Revenue Service granted those groups an extension from the original May 17 deadline. Organizations now have until Oct. 15 to file the paperwork that would let them to remain exempt from taxes.
The website of the IRS contains a list of organizations -- as diverse as the Ardmore Neighborhood Association, Professionals in Transition and the Forsyth County master-gardener program -- that have not complied with the law.
Craig Mauney, an agent with the Forsyth County Cooperative Extension Service, said that the master-gardener program disbanded as a nonprofit group some time ago and went under the N.C. Agricultural Foundation, a nonprofit educational corporation.
Before 2006, low-income nonprofit groups were not required to file tax returns.
The new requirement stems from a 2006 change to the tax code that calls for nonprofit groups with receipts of $25,000 a year or less to file tax returns, beginning in 2007. If an organization did not file for three consecutive years, it would risk losing its tax exempt status in May 2010.
In order to comply, nonprofit groups can use several tax forms, including one that is a postcard. The organization must provide such information as a taxpayer identification number, its legal name, a mailing address, the principal officer's name and a way to signify that receipts are $25,000 or less.
Getting the word out about the regulations has been difficult, officials with the N.C. Center for Nonprofits, have said. The center serves as a voice for nonprofit organizations and helps them be more effective.
Many of the smaller nonprofit groups are one- or two-person organizations that are run by people with a particular passion, said Damian Birkel, the founder of Professionals in Transition, a nonprofit group that works with the underemployed and unemployed. Birkel said he was unaware of the requirement.
As a small nonprofit group, it is hard to keep up with regulations, Birkel said.
He is required to fill out the same amount of paperwork as a larger organization that has paid staff members.
The work gets done because he has a passion for it, but it's not always easy to keep up, he said.
Lonnie Clark, the president of the Ardmore Neighborhood Association, said she was not aware of the regulation.
One of her goals for this year was to find an accountant, Clark said.
"Thank you for notifying me of this change," she said. "We will immediately notify an accountant to make sure we comply."
Clark later said that the organization had contacted an accountant and filed its tax return online.
mgiunca@wsjournal.com
727-4089
Email
Facebook
Google
Twitter
Favorites
More
Advertisement