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Nonprofit groups in jeopardy

Hundreds of small isle organizations must act now to preserve their status with the IRS

By Dan Nakaso

POSTED:
LAST UPDATED: 12:42 a.m. HST, Oct 15, 2010



The Hawaii Alliance of Nonprofit Organizations is scrambling to notify hundreds of small Hawaii nonprofit groups that they have just two more days to preserve their tax-exempt status by filing with the IRS.

ON THE NET

IRS list of nonprofit groups at risk of losing their tax-exempt status, as well as guidance on how to preserve that status: http://www.irs.gov/charities/article/0,,id=225889,00.html
Tax-exempt nonprofit organizations that have not complied with annual filing requirements for three consecutive years automatically lose their tax-exempt status. But the IRS has extended its previous May 17 deadline to Friday to allow nonprofit groups to file a simple electronic postcard called a Form 990-N.

"If they lose their 501(c)(3) nonprofit status they cannot solicit donors because donors will not be able to take a tax deduction anymore," said Lisa Maruyama, president and CEO of the Hawaii Alliance of Nonprofit Organizations. "For a lot of smaller ones, that's going to be a hardship. To comply, they just have to fill out an electronic postcard that doesn't take much time to complete. It's not arduous or onerous at all. But I'm really concerned because a lot of them don't even know they should be filing. Some are all-volunteer run and they're very busy running their own lives and these nonprofits."

In August, the IRS listed more than 1,700 small nonprofit groups in Hawaii that earn less than $25,000 in annual gross receipts and were at risk of losing their tax-exempt status.

Yesterday, IRS spokesman David A. Tucker said it is "challenging to know at this point how many have complied. But we continue to make awareness of the issue because we know that a lot of the smaller organizations are run by volunteers and may not be aware of this requirement."

To comply, organizations have to fill out "eight elements of information that would roughly take less than 10 minutes to complete," Tucker said.

The IRS' one-time "relief program" is not available to larger organizations that are required to file Form 990 tax returns or private foundations that file Form 990-PF.

After being told in August by the Star-Advertiser that his Oahu Volleyball Association was on the IRS list, President Paul McCurdy went online to comply with the filing requirements, which he thought he had already done in 2007 and again in 2008.

"We're curious why we were put on this list," McCurdy said. "I thought I was OK. It's very confusing. If they revoke our status now, I'll be very upset."

Jean Serikawa, vice president of the Friends of the Royal Hawaiian Band, yesterday also believed that her nonprofit group is clear with the IRS after its name appeared on the IRS list.

"I think we are in compliance," Serikawa said yesterday. "I presume we're all OK."

The IRS plans to maintain its list of "at-risk organizations" on irs.gov until Friday.

Nonprofit groups that have not filed the required returns by Friday will have their tax-exempt status revoked, Tucker said. The IRS will publish a list of organizations with revoked status in early 2011, he said.

Donors who contribute to "at-risk organizations" are protected until the final revocation list is published, Tucker said.

CORRECTION: Hawaii nonprofit groups can visit www.irs.gov/charities/article/0,,id=225889,00.html to find out if the IRS considers them at risk of losing their tax-exempt status tomorrow. A Page B1 graphic on Oct. 13 listed another Web address.






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