Small Charities Face Friday Deadline to Keep Tax Status

Under federal law, tens of thousands of small charities will automatically lose their tax-exempt status if they fail to meet a Friday deadline to file required forms with the Internal Revenue Service.

“The October 15 deadline is the last chance for many small charities to comply with the law,” said Douglas H. Shulman, the Commissioner of Internal Revenue.

After the IRS announces early next year which small groups have lost their tax exemptions, organizations will have to reapply to the IRS for new exemptions by filing some complicated paperwork, pay a fee of up to $850, and wait as their paperwork is processed.

Groups will be liable for income taxes on money they receive from donors during the time that they are without their tax-exempt status. And donors won’t be able to take charitable-contribution deductions for their gifts until the tax exemptions are restored.

Congress passed a law in 2006 to help the IRS keep better track of the smallest charities, which did not previously have to file returns regularly, and determine which ones no longer exist.

Organizations with annual revenue of $25,000 or less must file the Form 990-N, also known as the e-Postcard, which is a simple, eight-item document.

Lois G. Lerner, who oversees the IRS office that monitors charities, said small tax-exempt groups need to understand that the October 15 deadline is final for both nonprofits and the tax agency. “This is an automatic revocation: The IRS is not revoking you, the statute is revoking you,” she said.

For details on all aspects of the filing deadline for tax-exempt organizations, go to the IRS’s Web site.