Small Minnesota nonprofits that haven't filed returns with the IRS for at least three years are going to be in big trouble after midnight tonight.
Three years ago, Congress passed a law requiring nonprofits with less than $25,000 in annual revenue to file returns with the IRS. If they don't file for three consecutive years, the consequences are severe -- they will lose their tax-exempt status.
"Not only would donations not be tax deductible for the donors, but the organization would then be required to pay corporate income taxes," said Christine Durand, a spokeswoman for the Minnesota Council of Nonprofits.
Originally, nonprofits had until May 15 2010 to file a return. The IRS pushed back the deadline to midnight Friday. As of this past summer, the IRS said some 5,500 Minnesota nonprofits had not complied with the new rule. That's still the latest count the IRS has.
IRS spokeswoman Carrie Resch said a wide variety of groups are at risk of losing their tax-exempt status, including Little League and hunting clubs, volunteer fire and ambulance associations, educational societies, veterans groups and some church-affiliated groups that may think they don't have to file because they're church related.
"But some of them do," Resch said.
Among the organizations on the IRS list of non-filers are: The Cat Fanciers Association Disaster Relief Fund, the Launderers & Dry Cleaners Association of St. Paul, the Minnesota Futurists, and Minnesota Peony and Iris Society. None of them could be reached for comment.
Resch said some of the organizations that haven't filed returns for years may not exist, or may have merged with umbrella organizations.
With the new filing requirement, the IRS hopes to have a much better handle on how many active nonprofits there are.
Counting the nonprofits that haven't filed with the IRS for many years, the IRS says there are 34,800 nonprofit organizations in Minnesota.
Resch said small nonprofits can take care of the filing requirement in minutes, filling out an eight-question form online at irs.gov.
"If you know somebody or if you are involved with a small tax-exempt organization, ask around and make sure somebody has filed that return," she said.
Organizations that lose their tax-exempt status can seek restoration of it, Resch said, but added that any donation received during the revocation period would not be tax-deductible and an organization's revenue would be taxed.