Local non-profits lose tax exempt status
Thursday, June 16, 2011 8:03 PM
VAN WERT - The first warning for non-profit organizations came a little over a year ago when a change in tax law required all tax exempt organizations to file tax returns with the Internal Revenue Service. The other shoe dropped last week as the IRS revoked the tax exempt status of more than 275,000 organizations nationwide in enforcement of the law, including some Van Wert area groups.
In 2006 when the Pension Protection Act was enacted, the complaint was that small non-profits would not be able to afford the filing fee - between $400-$850 dollars - or the accounting or legal bills if they needed to go outside the organization to fill out the paperwork. Previous to the law, organizations with gross receipts below $25,000 annually did not need to file with the IRS.
Last week, any organization that had not filed tax returns for 2007, 2008 and 2009 lost their tax standing. The law requires the IRS to revoke the tax exempt status after three years of missing reports.
Because of its affect on small groups like 4-H clubs and athletic leagues, the IRS allowed a five-month extension past the deadline last year to give these organizations a chance to prepare the paperwork. This is why federal officials believe that most of the newly revoked organizations have been defunct for some time and only needed to be removed from the government tax exempt list.
That assumption has proved correct in the Van Wert area as the majority of the 17 affected local organizations have disbanded, some for more than a decade.
For instance, Van Wert Area Chamber of Commerce Director Kate Gribble confirmed the Junior Chamber of Commerce has not been active for many years. That same status includes others like the Farmers Mutual Aid Association, Van Wert County Board of Realtors and the Paulding Area Ventures Corporation. More recently, the Wren Historical Society was disbanded as of January 1 of this year with the Village of Wren taking over control of its responsibilities.
More problematic are the organizations that are still functioning and have now had their tax exemption status revoked. The National Association of Letter Carriers, the union for U.S. Post Office letter carriers and a part of the AFL-CIO, had the Delphos, Paulding and Spencerville chapters named on the revocation list. Also losing their exempt status was the Harvey Lewis American Legion Post 346 of Ohio City.
The Convoy Community Foundation was on the tax exempt revocation list as well and that was a surprise to Director Bob Schumm.
"We had two different tax ID's and the wrong one was used when the (tax exempt status) was filed for," said Schumm. "We had to re-file in March and we believed that it was all taken care of." Schumm said they are in the process of verifying what went wrong and will be fixing the issue.
The American Federation of State, County and Municipal Employees union for Van Wert and Defiance also lost their tax exempt status. In Van Wert, this group represents the city's service workers such as the water treatment plant personnel. AFSCME Area Representative John Blessing told The Times Bulletin on Thursday that the unions were moving forward with applications of reinstatement.