Podcast: Is Your Organization Actually Tax Exempt?

Organization Tax Exempt

Written by Jeff Dvorachek

May 12, 2022

As we get close to May 15th, I just want to remind everyone about the tax return deadline for those charities with December 31st year-ends. So today, I want to talk about how to know if your organization is actually a charity as some operations that are operating are not actually classified as non-profits. Maybe the organization was smaller and no one ever applied to be tax exempt. Maybe the organization was tax exempt at one point but never kept up with the IRS filings. It is not uncommon as many boards are made up of volunteers and the positions change frequently.

HOW WOULD AN ORGANIZATION KNOW IF THEY ARE EXEMPT?

  • Have they been filing annual returns – all are required.
  • Go the IRS website and search for your organization
  • Cab be used by organizations or donors
  • Go to IRS Publication 78 – updated annually
    • Churches and affiliated organizations
    • Subordinate units included in group exemptions
    • Governmental Units

WHAT DO ORGANIZATIONS NEED TO FILE ON AN ANNUAL BASIS

  • 990-N – postcard for gross receipts less than $50,000
  • 990-EZ, 990, 990-PF if over that amount.

WHEN WOULD THE TAX EXEMPT STATUS BE REVOKED?

  • Non-filing of returns for three consecutive years
  • IRS treats you like a taxable organization – pay tax on net income.
  • Organization name appears on the website and Publication 78 as revoked

SO IF WE CHANGE BOARD MEMBERS IS THERE A WAY TO SEARCH FOR THE LAST TAX RETURN THAT WAS FILED?

  • IRS website – 990-N
  • Guidestar.org
    • Can get a copy of the last posted 990 that was filed (might not be the last one filed)

IS THERE A WAY TO GET THE ORGANIZATIONS TAX EXEMPT STATUS BACK?

  • Yes, but it is a process.
  • Nice thing is that it does not take as long as the original application which can take months.

Be sure to talk to a tax professional if you have any questions if your organization is tax exempt.

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Jeff Dvorachek
I joined Hawkins Ash CPAs in 1998. I am the partner-in-charge of the Manitowoc, WI, office and tax director for the firm. I have thorough experience providing tax services to individuals, commercial businesses, nonprofit entities and estates and trusts. I also provide compilation and review services. I lead the Tax Committee and am a member of the Information Technology Advisory Committee.

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