Area nonprofits may face losing tax-exempt status

About 50 nonprofits in Lawrence could have their tax-exempt status called into question after missing an important tax-filing deadline Monday.

Since 2007, all tax-exempt organizations, except churches and church-related groups, have been required to file an informational form with the Internal Revenue Service. Organizations that fail to file that form three years in a row automatically lose their federal tax-exempt status. If the organization’s fiscal year ended Dec. 31, the deadline was Monday.

Monday was the end of the three-year grace period.

While the deadline isn’t much of a concern for larger nonprofits with payrolls and big-time donors, some worry that smaller groups that operate on next-to-nothing budgets had no idea they were supposed to file a tax return.

“Those organizations that have operated on a very small scale for limited purposes simply haven’t in the past had to deal with filing federal tax returns,” said Chip Blaser, Douglas County Community Foundation executive director. “Those are the very organizations that there is a concern about.”

The National Center for Charitable Statistics at the Urban Institute compiled a list of nonprofits that had tax-exempt status and hadn’t filed a tax return. Those on the list in Lawrence included sport booster clubs, neighborhood associations, parent-teacher organizations and hobby-based groups.

United Way Executive Director Erika Dvorske said some on that list are now defunct or file under an umbrella organization. Dvorske said none of the 24 nonprofits funded under the United Way would be affected. In order to tap into United Way money, organizations already had to fill out tax forms.

But some nonprofits, such as Lawrence High Band Parents, had no warning they had to file a tax return.

“You would think the government would be able to send us a notice,” said Terry Jacobsen, the organization’s co-president.

The Lawrence High Band Parents doesn’t raise more than $5,000 each year, so the real benefit of tax-exempt status is to allow donors to deduct their contributions from their individual taxes.

“If we lose that status, that could affect people’s willingness to donate to us in the long run,” Jacobsen said.

And the parent group actually has until Nov. 15 to complete its paperwork, because its fiscal year doesn’t end until June 15.

An IRS spokesman encouraged any group that missed the deadline to complete the 990 form and send it to the IRS.

Those nonprofits that bring in less than $25,000 a year can fill out a post-card version electronically, IRS spokesman Mike Devine said. To determine whether an organization currently has tax-exempt status, Devine said, people can visit www.irs.gov.