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Tax-Exempt Status Could Hinge On Filing Deadline

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Tax-Exempt Status Could Hinge On Filing Deadline

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Tax-Exempt Status Could Hinge On Filing Deadline

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LYNN NEARY, host:

And speaking of a possible bureaucratic nightmare, more than 200,000 small nonprofits could lose their tax-exempt status if they don't file a new tax form by Monday. The problem is, many of these groups may not know they have to file.

NPR's Pam Fessler reports.

PAM FESSLER: Here's what happened: Congress passed a law in 2006 that requires nonprofits with revenues of $25,000 or less to start filing federal tax forms for the first time. The law said if they fail to do so three years in a row, their tax-exempt status would be revoked immediately. Many nonprofits face that deadline on May 17th. And Tim Delaney, head of the National Council of Nonprofits, is worried.

Mr. TIM DELANEY (President and CEO, National Council of Nonprofits): The concern that a lot of people have is that many smaller nonprofits - a PTA, a local little league - will even be aware of this change in the law.

FESSLER: He says these groups are often run informally, by volunteers. He and others have been trying to get out the word, but they don't really know how well they're doing. Experts say many small nonprofits might not be filing because they no longer exist. In fact, one reason for the new law is to help the IRS get a better idea just how many nonprofits there are in the U.S., something no one really knows for sure.

Charities that fail to meet the deadline can reapply for tax-exempt status. But Delaney says it's a lot easier to fill out the eight question form now.

Mr. DELANEY: To basically send a flare up to the IRS: Yes, we still exist. We're still functioning. This is how you can reach us. And it's pretty much as simple as that.

LUDDEN: And the IRS says even if a group's tax exemption is revoked, donors can still deduct any contributions they make until the official revocation notice is posted early next year.

Pam Fessler, NPR News, Washington.

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