June 9, 2011

In compliance with the Pension and Protection Act of 2006, the Internal Revenue Service has revoked the tax-exempt status of more than 270,000 nonprofit organizations that had not filed IRS Form 990 or 990-EZ for each of the past three years. In Kentucky, 3,180 nonprofit organizations were included on that list.

Prior to the 2006 law, the IRS did not require small nonprofits to file annually. In May 2010, the Kentucky Nonprofit Network, housed in the University of Kentucky College of Agriculture, launched a statewide awareness campaign to spread the word about the filing deadline. At that time, 4,194 Kentucky nonprofits faced the costly and time-consuming prospect of losing their status as tax-exempt organizations if they did not act by Oct. 15.

"We anticipate that most of the organizations on the list are no longer active," said Danielle Clore, director of the Kentucky Nonprofit Network, saying that in some instances, organizations may have merged with another nonprofit or may be a disbanded local chapter of a larger organization.

Revocation of tax-exempt status will impact organizations in a number of ways, according to the Kentucky Nonprofit Network's national partner, the National Council of Nonprofits. They will have to pay federal income tax for the time period in which they are no longer tax-exempt, and donors will not be granted tax deductions for their contributions. It could also mean that state tax exemptions that were based on their nonprofit status could be revoked as well.

"The Kentucky Nonprofit Network provides resources for organizations whose status may have been impacted," Clore said. "We alert our members of critical information that can affect their tax-exempt status, and we encourage all nonprofits to join our mailing list to receive the most up-to-date information."

For a complete list of Kentucky nonprofits that have lost their federal tax-exemption and for more information about how this will affect these organizations or how to reapply for tax-exempt status, go to the Kentucky Nonprofit Network website, http://www.kynonprofits.org/ or contact them at 859-257-2542. Any nonprofit whose tax-exempt status has been revoked can reapply, though it is a time-consuming and expensive process. The IRS is providing transition relief for small organizations, including a reduced user fee and retroactive reinstatement. Organizations that think their tax-exempt status was revoked in error can call the IRS's toll-free number, 877-829-5500 or write them at Internal Revenue Service, Exempt Organizations Determinations, P.O. Box 2508, Cincinnati, OH 45201.