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 did not file the necessary 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 initial list of organizations that were automatically revoked following failure to submit the necessary notice for 3 consecutive years. There have been 275,000 organizations that were revoked from their tax-exempt statuses in this release.
Set of Revoked Organizations
The list 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 is the responsibility of donors to ensure that the organizations that they are donating to aren’t marked as “revoked” in the IRS’s books. This list of revoked charities can be obtained at the IRS website and can be sorted by name or state for easier reference. The IRS has additionally indicated that they can be updating the list on a monthly basis as more organizations escape compliance and are included with the list.
Efforts by the IRS to Ensure Compliance
Since the passing of the Pension Protection Act, the IRS has embarked on an awareness campaign to create qualifying charities conscious of the newest 慈善團體 requirements and to ensure they comply with the rule. There have been various educational forums to create charities conscious of the newest rules. The IRS has additionally sent over 1 million letters to organizations that had not even complied to have 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 timeframe for large charities should have ended in 2009. The full time frame for small tax exempt charities that were to start reporting in 2007 should have lapsed in 2010.
Relief for Small Charities
The IRS is aware that some small charities may have been ignorant of the notice filing requirement and are therefore, providing a lenient way for these organization to come into compliance retroactively from time of revocation (so that they can not get into any donation complications). Tax-exempt organizations that receive donations of significantly less than $50,000.00 can gain status backdated to the time of revocation if they connect with be reinstated and pay a low fee of $100.00 rather than the regular fee of $400.00 or $850.00.
Implication on Donors
For donors, funds or aid provided to these revoked organizations prior to the revocation are still deductible for tax purposes. However, going forward, a donor cannot make 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 prior to making donations to avoid any inconveniences during tax time.
Just how to be Reinstated
The IRS believes that a vast most of the charity organizations which have been revoked are defunct and therefore, there are no consequences to the revocation. However, organizations which have been revoked but which can be still operational still are able of having back into compliance. To take action, they’ll be required to complete a brand new application for registration and pay the relevant user fee. The payment of the fee also applies for organizations that were otherwise exempt prior to the revocation. However, to avoid the embarrassment to be listed on the revoked list, the IRS advises all tax-exempt organizations to ensure they provide the relevant documentation to them in good time.