Hundreds of area agencies stand to lose nonprofit IRS tax status, taxpayer groups included

If the organizations lose their tax-exempt status, they may be required to pay income tax on any earnings they receive, according to Florida IRS spokesman Michael Dobzinski.

Until the organizations pay application fees of at least $400 to have their status reinstated, their contributors cannot write off their donations on their own income taxes, according to the IRS website.

— Hundreds of nonprofit organizations serving Southwest Florida are at risk of having their tax-exempt status automatically revoked by the Internal Revenue Service in October, the Daily News has found.

Among those on the list are the Marco Island Taxpayers Association, the Golden Gate Area Taxpayers Association, the Naples Press Club and the East Naples Civic Association.

The organizations are mainly those that usually take in less than $25,000 a year in contributions, and are unaware of a law approved in 2006 that required them to file an annual return for the first time.

Now, four years later, the organizations are butting up against an IRS automatic revocation policy, but all the officers of local organizations the Daily News spoke with said they had never been contacted by the IRS concerning the regulation and all but one was unaware of its existence.

Fay Biles

Fay Biles

“We’ve never, ever had to file one and never heard anything,” said Fay Biles, treasurer of the Marco Island Taxpayers Association, which strives to reduce the city’s taxpayer burden. “This is the first I’ve heard of this.”

“We’ve never, ever had to file one and never heard anything,” said Fay Biles, treasurer of the Marco Island Taxpayers Association, which strives to reduce the city’s taxpayer burden.

“This is the first I’ve heard of this,” Biles said.

If the organizations lose their tax-exempt status, they may be required to pay income tax on any earnings they receive, according to Florida IRS spokesman Michael Dobzinski.

Until the organizations pay application fees of at least $400 to have their status reinstated, their contributors cannot write off their donations on their own income taxes, according to the IRS website.

IRS officials have offered some additional “relief” to the affected organizations, allowing those that needed to file between May 15 and Oct. 14 to wait until Oct. 15 to file and avoid the automatic revocation.

There are 246 organizations in Collier County and 35 in Bonita Springs that are at risk of losing their tax-exempt status, according to a list the IRS posted to its website. Nationwide, more than 320,000 organizations are on the list, with nearly 15,000 of them in Florida.

CLICK HERE FOR list of Collier, Bonita nonprofits at risk of losing tax-exempt status

While some of the local organizations appear to be defunct, others are well-known and active in the Southwest Florida community, including several homeowners associations, sports and sport boosters groups, professional associations and veterans auxiliary groups.

According to the IRS website, in order to avoid losing their tax-exempt status the organizations must file an eight-line form that requires the organization to confirm it makes less than $25,000 and supply basic identifying information, such as a mailing address.

Naples Press Club treasurer Connie Kindsvater is the only organization official the Daily News spoke with who was aware of the law. She became the organization’s treasurer in October and was researching her new role when she discovered the news on the IRS website.

“It’s a small form, you can do it online,” Kindsvater said, before noting that she reached an IRS official by phone who was helpful in getting her started.

“Believe it or not, I got a really nice lady,” Kindsvater said.

Some nonprofits, such as churches, have never had to file and aren’t affected by the law that required the small nonprofits to file for the first time. Known as the Pension Protection Act of 2006, it went into effect Dec. 31, 2006.

Many of the small nonprofits hadn’t filed anything for decades and continued the practice after Congress passed the law. They have, however, always had to file something with state government in Florida.

“I’ll tell you right now we file an annual report with the state of Florida, and this is the first I am hearing of this,” said Heike Ruelle, treasurer of the Bonita Beach Improvement Association. “We’ll be contacting an accountant to look at our stuff.”

The earliest date one of the newly required reports needed to be filed was May 15, 2007. That date passed, along with May 15, 2008, and May 15, 2009, without any of these organizations filing their returns. If an organization required to file a return doesn’t do so for three years, the IRS has a policy of automatically revoking their tax-exempt status.

For more information on how to file the simple, eight-line nonprofit annual return, or to view a list of nonprofits outside of Southwest Florida, visit irs.gov/eo (click on link in related links below the story)

Though Dobzinski said the IRS went through a “pretty extensive notification process,” he couldn’t immediately confirm whether the IRS had sent notification letters to the organizations.

“The information has been out there for three years now and now it has come to fruition. We don’t want them to lose their status, but on the same coin we need to follow compliance,” Dobzinski said.

The IRS does have address information for the affected nonprofts, but it appears many of these addresses are as old as when the organizations sent their initial filing to the IRS and are no longer accurate.

Ted Beisler, president of the East Naples Civic Association, immediately turned to concern over other nonprofits when told the civic association is on the list.

“To take the nonprofit status away, that’s going to hurt a lot of organizations, and hurt the community you serve,” Beisler said. “If we lose our nonprofit status, we lose our money, we can do less for the community.”

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Comments » 3

ajm3s writes:

To all it may concern:

Here is the site

http://www.irs.gov/charities/article/...

JohninMarco writes:

in response to islandeye1#236971:

(This comment was removed by the site staff.)

Your buddies in the police foundation made the list too.

Fossil writes:

This headline is misleading. All these organizations have to do is file by the deadline. This is all part of Obama's plan to make the IRS enforce the laws of Congress. This is not a new requirement. In the past it was ignored becuase the previous administration believed it placed an unnecessary burden on these organizations. Purpose was to self identity those organizations that pulled in less then 25K and annually require them to make the same certification. Many such organizations throughout the country eventually grow and exceed the 25K limit. This enforcement ensures the IRS has actual and up-to-date data to perform the enforcement duties the Congress has burdened it with.

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