Paperwork problems jeopardize nonprofit status of several Broome organizations

Like hundreds of other area nonprofits, Union Volunteer Emergency Squad was in jeopardy of losing its nonprofit status.

The reason? Failing to file paperwork with the Internal Revenue Service.

"I honestly don't know why it wasn't sent in," said UVES Executive Director Matthew Fellows.

UVES is joined by hundreds of nonprofits in the Southern Tier who were flagged by the IRS as organizations that haven't filed their 990 forms -- paperwork required for nonprofits -- by an Oct. 15 deadline, meaning they could lose their nonprofit
status.

If that happens, the agencies could be required to pay taxes -- and perhaps more significantly, donors would find their generosity was no longer tax deductible.

The 990 forms verify to the IRS that the nonprofits are still in operation.

In 2008, the IRS established a new form -- the 990 -- to be filed annually by nonprofits. For those with an income of less than $25,000, the form was a 990N, said Kevin Stadelmaier, legal advisor for the New York Council of Nonprofits Inc.'s Buffalo office.

Over the decades, as groups were added to the IRS's nonprofit database, there was no mechanism to remove those that were no longer active. The 990N was established as a device to recognize which small nonprofits were still operating and which had
ceased to exist.

"The real reason why the law was enacted was to kind of cull out these nonprofits ... that were no longer conducting tax-exempt activities," Stadelmaier said.

For smaller organizations -- those with incomes of less than $25,000 -- filing with the IRS isn't a typical function, which is why they might have missed the new requirement, Stadelmaier said.

"They didn't realize they were required," he said. "They might have gone years and years without filing anything."

At UVES, the error was noticed recently, Fellows said. Actually, it was the IRS that noticed. Since then, the organization sent in its missing 990 forms.

"We had some internal issues that we self-reported," Fellows said. "Everything has already been sent in."


Each year, UVES has an independent audit performed by its accounting firm. The audits showed the bills were paid and the forms were filled out, but no red
flags went up about the missing 990s because UVES paid to have them completed and assumed they had been filed properly, said Fellows, who has been with UVES for the past year.

When contacted by the IRS, the first thought was the federal agency was at fault.

"We thought it was an error at first," Fellows said.

UVES is not alone. The Broome County Sheriffs Benevolent Association, Boys & Girls of Western Broome Foundation Inc., New York State Electric & Gas Foundation Inc., several American Legion posts from Bainbridge to Owego, various union branches and a host of other organizations and associations failed to file by the Oct. 15 deadline, according to the IRS.

Contacting nonprofits on the list was nearly impossible for this newspaper. Telephone calls were not returned, while others couldn't be contacted because they didn't have listed phone numbers and had only Post Office box addresses. Some of the
nonprofits on the IRS list include:
* Maine-Endwell Booster Club Inc.
* Endicott Rotary Foundation Inc.
* International Association of Fire Fighters in Johnson City
* Tioga County Industrial Development Corp.
* Vestal Lions Club
* Broome County Sheriff's Foundation
* Vestal Youth Football League Inc.
* Dress for Success - Binghamton
* City Rescue Mission Inc. in Binghamton

Also on the list is Binghamton Crime Stoppers, which is a participating member of Crime Stoppers International. The organization had invalid e-mail addresses on its web site regarding fundraising, publicity and general information. An e-mail and
telephone message sent to the website's administrator was not answered.

Crime Stoppers, which offers rewards to help solve area crimes and works alongside area police departments, failed to file with the IRS for the past three years, meaning the do-good organization might not be able to stay in operation as a nonprofit.

Not being able to contact nonprofits, some of which have addresses filed decades ago with the IRS, is another reason why some missed the deadline to file, said Kelly Mathews, chief operating officer and senior vice president of financial, accountability and compliant services with New York Council of
Nonprofits Inc.

"Getting the word out to a lot of those very small organizations -- it was probably difficult to find some of them," she said.

Though the IRS and groups like NYCON had extensive educational promotions regarding the new procedures, many smaller nonprofits, including those no longer in existence, weren't kept in the loop, Mathews said.

"I think a lot of organization, particularly the smaller guys, weren't aware of the filing requirements," she said. "Historically, there was nothing for those little
guys to report with." Read more here.

Nonprofit Resources Regarding the Oct. 15 Deadline

Time is running out for small nonprofits facing loss of tax-exempt status because they have not filed Form 990-N or Form 990-EZ for three consecutive years. The deadline for the IRS's one-time filing relief program is October 15, 2010. After that, nonprofits that are required to file a 990 and whose filings are at least three years in arrears will automatically lose their exemptions. To regain tax-exempt status, they will have to apply to the IRS all over again, a process that can take several months and requires payment of fees. To help you make sense of the rules and regulations surrounding this program, GuideStar is offering you a few resources:

• GuideStar Resource Center: includes articles and links to keep you updated in this ongoing process.
• IRS Communications Toolkit: includes facts outlining the situation, a list of organizations IRS records show are at risk, a YouTube video, and a widget for posting on Web sites.
• Guide Star Charity Check: includes information on exemption status of organizations and is updated as more information from the IRS becomes available.
  

One-Fourth of Nonprofits Are to Lose Tax Breaks

The NY Times reported that As many as 400,000 nonprofit organizations are weeks away from a doomsday.

At midnight on May 15, an estimated one-fifth to one-quarter of some 1.6 million charities, trade associations and membership groups will lose their tax exemptions, thanks to a provision buried in a 2006 federal bill aimed at pension reform.

“It’s going to be an unholy mess once these organizations realize what’s happened to them,” said Diana Aviv, president of the Independent Sector, a nonprofit trade group.

The federal legislation passed in 2006 required all nonprofits to file tax forms the following year. Previously, only organizations with revenues of $25,000 or more — or the vast majority of nonprofit groups — had to file.

The new law, embedded in the 393 pages of the Pension Protection Act of 2006, also directed the Internal Revenue Service to revoke the tax exemptions of groups that failed to file for three consecutive years. Three years have passed, and thus the deadline looms.

Read more here.

2 Free Webinars Offered by IRS on the 990

The NY Council of Nonprofits' national partner, the National Council of Nonprofits, is offering two FREE webinars for you and your board members!

Get Ready, Get Set, Go! IRS Filing Requirements for Charitable Nonprofits
Two national webinars: February 23 and March 23, 2010

Register Now

Are you prepared for this year's tax filing deadline? Did you know that tax-exempt organizations could have their status revoked for not filing the annual Form 990? The National Council of Nonprofits will host two free webinars presented by the IRS for nonprofit organizations to learn about the resources available and answer questions about filing your IRS Form 990.

These webinars will include:

• Critical steps to take now in order to protect and preserve your tax exemption.
• Review of the filing requirements for nonprofit, tax-exempt organizations, and the consequences of not filing (or filing an incomplete) Form 990-series return. Tax-exempt organizations now stand to lose their tax-exempt status if they do not file the Form 990, 990-EZ, or 990-N (e-postcard) for three consecutive years-these revocations will begin in 2010).

"Learn from the Experts: What Forms Must Nonprofit, Tax-Exempt Organizations File to Meet IRS Requirements and Preserve Tax Exempt Status?"

Tuesday, February 23
3:30 pm - 4:30 pm Eastern

• What forms are tax-exempt organizations required to file with the IRS annually?
• What information is required to be reported on the forms?
• Why your organization may need to file NOW, so that it won't lose its tax-exempt status
• How to file complete, accurate returns to avoid IRS penalties.

There is no charge for nonprofit organizations or their board members for these webinars. Advance registration is required by February 22, 2010.


"Hear from the IRS: What The IRS Has Learned After One Year With the Redesigned Form 990"

Tuesday, March 23
3:30 pm - 4:30pm Eastern

• What trends has the IRS observed in the first season of redesigned Form 990 filing?
• What mistakes are most commonly being made by nonprofits on the redesigned Form 990?
• What can a nonprofit do to streamline the filing process?
• What are the answers to frequently asked questions about completing the 990?

There is no charge for nonprofit organizations or their board members for these webinars. Advance registration is required by March 22, 2010.

IRS Offers New Online Mini-Courses on Redesigned Form 990

StayExempt.org, which provides online IRS educational resources for tax-exempt organizations, now features five new mini-courses on the redesigned Form 990. These mini-courses provide information on preparing to file the new Form 990 as well as a walk-through of the entire form and frequently used schedules.