Thousands of nonprofits in danger of losing tax-exempt status

This is a crucial year for small non-profit organizations -- that is, those that have less than $25,000 in financial activity every year.

Until now, these small organizations were not required to file the nonprofit version of a tax return, called a Form 990.

But a federal law passed in 2006 now requires these organizations to file some basic information on Form 990-N with the IRS by Monday.

Several thousand Minnesota nonprofit groups are at risk of losing their federal tax-exempt status, and the loss of non-profit status could threaten their existence.


The 990-N form is also called an e-postcard. IRS spokeswoman Carrie Resch says the law states that any organization that fails to file the form for three consecutive years stands to lose its federal tax-exempt status.

"So we are now in the third year and that's why it's critical we get the word out to these small organizations to file this e-postcard," Resch said. "It's very simple to do. Just go to It's just about eight questions about the organization."

The IRS wants basic information such as the organization's taxpayer identification number, its legal name and any other names used, its mailing address and internet address and a statement confirming gross income.


Resch says as of the end of April, about 3,600 organizations in Minnesota had yet to file the form and were at risk or losing their tax-exempt status.

"If an organization would lose their tax-exempt status, they'd have to re-apply," Resch said. "In the meantime it could mean that any income that they earn would be taxed. It could also mean that donations would not be deductible to the donor."

The affected organizations include some veterans and human services groups, pension funds, environmental and sports organizations and even cemeteries and condo associations.

The Minnesota Council of Nonprofits has been trying to let these groups know about the upcoming deadline. The Council has listed thousands of organizations that could be at risk on its website, said Jon Pratt, the council's executive director.

"Many of these groups were formed over the last 80 years and the IRS sent the notice to their last known address," he said. "But it could have been an address even from before 1950. So the question is, 'Did groups know it?'"

Nonprofit groups can request a three-month extension, but that must also be done by Monday.

Groups that miss the deadline and lose their tax-exempt status can get it back, though. But they would have to re-apply and pay a $750 fee to the IRS.

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