COLUMBIA — A slew of Columbia nonprofits are at risk of losing their tax-exempt status after a change in tax law has been slow to catch on.
More than 175 organizations in Columbia are in violation of the Pension Protection Act of 2006, which requires all tax-exempt organizations to file an annual return with the IRS beginning in 2007, according to a list released Monday by the IRS. (Click on the pdf link below for the complete list.)
The organizations in question include the International Association of Lions Clubs Columbia and several fraternities and sororities at MU.
According to the IRS, these organizations are among the 7,300 in Missouri — and countless others nationwide — that are in violation of the law.
Nonprofits that qualify for tax exemption are not required to pay federal, state or local taxes. Additionally, they can qualify for special grants or government funding and their donors can deduct contributions from their own taxes.
But the Pension Protection Act, in addition to requiring organizations to file a return, states that any organization failing to file for three consecutive years would have its tax-exempt status automatically revoked. According to IRS records, none of the organizations on the list filed returns in 2007, 2008 or 2009.
The organizations will lose their tax-exempt status if they do not file an annual return by Oct. 15. Churches and church-related organizations do not have to comply.
Michael Devine, IRS media relations for Missouri and Kansas, said the IRS has made multiple attempts to contact small nonprofits through the media and via a letter campaign that consisted of more than one million mailings to notify nonprofits of the changed law.
"We're just doing everything we can to contact these organizations and make them aware they have this requirement now," Devine said. "We don't want any organization to lose their tax-exempt status because they didn't file a simple form."
Greg Buckman, president of the Boone County Cattlemen's Association, said he suspected his organization was on the list.
"The duty to file got passed around and passed around, then dropped," he said.
Buckman said the Cattlemen's Association was not contacted by the IRS about the new requirements.
The IRS is offering a one-time relief program that will allow any nonprofit on the list to file by Oct. 15 and retain their tax-exempt status.
For the smallest organizations, required to file Form 990-N, a simple online filing process can bring them back into compliance. Organizations eligible to file Form 990-EZ must file their delinquent information and pay a compliance fee.
Nonprofits that do not take advantage of the relief program will have their tax-exempt status automatically revoked after the deadline. Any organization that loses its status will have to reapply with the IRS, and any income received in that time could be taxable.