In 2006, Congress passed into law, the Pension Protection Act (PPA) that required most tax-exempt charities to provide an annual notice to the IRS providing various required information. Based on the law, small tax-exempt organizations that received annual donations of $50,000.00 and less would start complying with the notice provision’s rules in 2007. Any organization that didn’t file the required information notice with the IRS for 3 consecutive years would be automatically revoked from its tax-exempt benefits. Following this law, in June 2011, the IRS released the very first list of organizations that had been automatically revoked following failure to submit the required notice for 3 consecutive years. There were 275,000 organizations that have been revoked from their tax-exempt statuses in this release.

Set of Revoked Organizations

The list of organizations that was released by the IRS in June 2011 indicates the names of the charities, the Employer Identification Numbers (EIN) of these organizations, and the addresses of the organizations as held by the IRS in its database. It’s the responsibility of donors to confirm that the organizations that they’re donating to aren’t marked as “revoked” in the IRS’s books. This list of revoked charities can be obtained at the IRS website and could be sorted by name or state for easier reference. The IRS has additionally indicated that they will be updating the list on a monthly basis as more organizations escape compliance and are included with the list.

Efforts by the IRS to Ensure Compliance

Considering that the passing of the Pension Protection Act, the IRS has embarked on an awareness campaign to create qualifying charities aware of the brand new requirements and to ensure that they conform to the rule. There has been various educational forums to create charities aware of the brand new rules. 香港慈善機構 The IRS has additionally sent over 1 million letters to organizations that had not yet complied to have them comply before they’re forced to be revoked. Furthermore, the IRS has additionally extended enough time for automatic revocation since the 3 year non-compliance time period for big charities should have ended in 2009. Enough time frame for small tax exempt charities that have been to begin reporting in 2007 should have lapsed in 2010.

Relief for Small Charities

The IRS is aware that some small charities might have been ignorant of the notice filing requirement and are therefore, providing a lenient means for these organization to come into compliance retroactively from time of revocation (so that they will not enter into any donation complications). Tax-exempt organizations that receive donations of significantly less than $50,000.00 can gain status backdated to enough time of revocation if they apply to be reinstated and pay a diminished fee of $100.00 rather than the standard fee of $400.00 or $850.00.

Implication on Donors

For donors, funds or aid provided to these revoked organizations ahead of the revocation are still deductible for tax purposes. However, moving forward, a donor cannot create a donation to the revoked organizations and deduct such donations inside their tax returns. Therefore, it’s advisable for a donor to check on with the IRS’s list of revoked organizations prior to making donations to prevent any inconveniences during tax time.

Just how to be Reinstated

The IRS believes that the vast most of the charity organizations that have been revoked are defunct and therefore, there are no consequences to the revocation. However, organizations that have been revoked but that are still operational still have the opportunity of getting back into compliance. To take action, they will be required to perform a new application for registration and pay the relevant user fee. The payment of the fee also applies for organizations that have been otherwise exempt ahead of the revocation. However, to avoid the embarrassment to be listed on the revoked list, the IRS advises all tax-exempt organizations to ensure that they offer the relevant documentation for them in good time.