Abstract
More than 275,000 organizations have lost their tax-exempt status for failing to file a return with the IRS for three consecutive years. The Pension Protection Act of 2006 required most tax-exempt organizations to file a return with the IRS and called for automatic revocation for nonprofits that failed to file a return for three consecutive years. The majority of organizations are believed to be defunct, but the IRS announced special steps to help existing nonprofits reapply for tax-exemption. This brief provides a snapshot of the nonprofits that have lost their tax exempt status and examines these organizations by type, age and location.
The text below is an excerpt from the complete document. Read the entire brief in PDF format.
Introduction
Over 275,000 nonprofit organizations have lost their tax-exempt status for failing to file an information return with the
IRS in the last three years. This represents 16 percent of the entire nonprofit sector in the United States. Using the first
ever published Nonfiler Automatic Revocation List released by the Internal Revenue Service (IRS) on June 8, 2011, we
provide a snapshot of the organizations that have lost their tax-exempt status and examine these organizations by type,
age, and location.
The large number of revocations stems
from enactment of the Pension
Protection Act of 2006, which mandated
that nonprofits with less than
$25,000 in annual gross receipts file a new
Form 990-N, also known as the e-Postcard.
Previously, these smaller organizations had no
reporting responsibilities to the IRS; it was
unclear how many of them were still operational
and how many of them had become
defunct. The Pension Protection Act aimed to
address this issue by requiring nonprofits to file
an information return, whether it be a Form
990-N, 990-EZ, or 990, and calling for immediate
and mandatory revocation of tax-exempt
status for all nonprofits that failed to file a
return for three consecutive years.
Organizations had until October 15, 2010, to
file or face revocation.
Revocations by Type of Organization
Human services organizations account for the
largest percentage of revoked organizations
(31 percent) followed by public and societal
benefit organizations (28 percent) and arts
organizations (10 percent).
- Human services organizations: Recreation
and sports clubs, including hobby clubs,
country clubs, and amateur sports leagues
account for over a third of human service
revocations. Traditional human service
organizations, offering a range of services
including neighborhood community service
centers, community services offered in conjunction
with a religious organization, and
centers that support the independence of
those with special needs, account for a quarter
of the human services revocations.
End of excerpt. The entire brief is available in PDF format.
Latest Research
PDF
Print this page
