Plenty of nonprofits risk losing exemption

DES MOINES, Iowa - More than 200,000 small nonprofits across the nation are about to lose their tax-exempt status because they haven't filed a new form with the Internal Revenue Service.

Many of these groups already operate on razor-thin budgets, and some worry an unexpected tax bill could force organizations to close.

"The nonprofits in your backyards, some of them are going to be gone," said Suzanne Coffman, a spokeswoman for Guidestar, which tracks data on nonprofits.

It's most likely the nonprofits aren't aware of the Monday deadline that only applies to groups that report $25,000 or less in income, excluding churches. Those organizations may not find out until Jan. 1, 2011, when they're notified they have to pay taxes on donations they thought were exempt. And it could be months before their nonprofit status is restored.

Congress required the form, called a 990-N, when it amended the tax code three years ago, and groups with a fiscal year ending Dec. 31 have until Monday to meet the deadline.

The Urban Institute's National Center for Charitable Statistics, which conducts economic and social policy research, estimated Friday that 214,000 nonprofit organizations had not filed the form as required.

Tom Pollak, program director for the center, said organizations that lose their tax-exempt status are no longer eligible to receive tax-deductible donations and are not likely to be awarded grants.

Donors who give to the organizations that lose their status will be able to receive tax deductions on gifts until January because the revocations won't be public until then.

In Iowa, the Warren County Historical Society was among more than 2,700 small nonprofits that hadn't submitted the form. The group's president, Linda Beatty, said she'd never heard of a 990-N until contacted by the Associated Press.

In Pennsylvania's Chester County, the A Cappella Pops performing group also hadn't heard about the deadline.

Money already is a problem for the 40-member singing group, marketing director Bruce Koepcke said, and would have been far worse if donations dropped or the West Chester group faced a big tax bill. He said that tax-exempt donations make up 25 percent of the group's revenue.