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Tax Status for Not-For-Profit Organizations at Risk


POSTED: Wednesday, October 20, 2010 - 4:40pm

UPDATED: Thursday, October 21, 2010 - 8:08pm

Many local non-profits are just finding out that they could have their tax exempt status stripped away.

Joe Frandina is the president of the El Paso Hotel and Motel Association and he says he just found out his organization could lose its tax exemption status.

Frandina's organization is not alone, as there are over 500 organizations in El Paso in danger.

"I actually just became aware that we were on a list that was provided by the IRS as one of the organizations that is in jeopardy of losing tax exempt status," Frandina said.

It's an unwelcome surprise that has these organizations scrambling.

"As soon as we found out about it we started researching it. We will be taking appropriate action because we're concerned about it naturally," Frandina said.

Kym Anderson, a local CPA, says that organizations were probably never aware that the law changed, although information has always been available on the IRS website.

"In 2006, there was a law change. It required anyone who brought in $25,000 or less, who was a not-for-profit, had to file a tax return. Before then, they didn't," Anderson said.

And the consequences for these organizations?

"The IRS automatically revokes your tax-exempt status if you haven't filed a tax return if you're required to file in three years. So, that not-for-profit exemption can just go away," Anderson said.

Organizations can re-apply with the IRS for the tax exemption status, but until then, charities may suffer.

"Well, you know all of those wonderful gift-giving opportunities that you have that you can deduct a charitable contribution would go away," Anderson said.

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