Small enough to fail?

| 22 Feb 2012 | 01:52

IRS housekeeping effort threatens hundreds of local groups that raise funds for community causes Once common as squirrels, the quail is a rare sight in North America. Not in Goshen, N.Y. From October to February, a hunting club called the County Seat Conservation Club stocks private properties with bobtail quail and Ring-necked pheasant for its 150 members to hunt, using bows or guns, sometimes even dogs. It’s been happening for 80 years. The Junior Woman’s Club of Jefferson Township, N.J. holds events and raffles to support the food pantry, a kindergarten safety program, the fire department and a veterans’ hospital. The 19 homeowners who make up the Colby Water Company in Andover, N.J., meet once a year to decide on dues and to pay their water bill. These three groups are among hundreds of non-profits in the area in jeopardy of losing tax-exempt status for not having filled out a 990-N form in three years. Without tax exempt status, the club would have to pay income tax on member dues and funds raised, and donations to the groups would not be tax deductible. Congress changed the reporting requirements for small non-profits in 2006, so the IRS could sort out the mess of non-profits in its database, many of which had dwindled into oblivion over the years. What’s at stake? Nonprofit status allowed the Ogdensburg, N.J. Historical Society to apply for a $50,000 grant that paid for its museum. It saves a Byram seniors group as much as $150 on every outing they take. And it enables a retired Monroe-Woodbury, N.Y. teacher to fund a $2,500 scholarship for a high school runner in the name of her colleague, who died more than 15 years ago. These groups’ events - whether once a year or the first Monday of every month - populate church bulletins and school newsletters and newspaper calendars. And the groups count on you for support - whether it’s stuffing a dollar in a glass jar at a convenience store counter, buying six raffle tickets for the price of five outside of the supermarket, or paying for a ticket to a local show.

A nonprofit is an organization that’s not taxed on its cause-related income. People who donate to the group can claim a tax deduction. To become a nonprofit, a group has to go through state and federal review, and receive a letter from the IRS with its unique tax exempt number -- a process that anyone who has been through is loathe to repeat.

None of these new IRS rules is meant to be punitive, said Woody Levitan, of Middletown, N.Y. accounting firm Levitan, Yegidis & Associates. The IRS has done mass mailings, but as the deadline approaches, many small nonprofits have yet to hear about the requirement. Those who don’t file in time will face fees, headache, loss of income, and in the worst case, said Levitan, will go out of business. Haven’t you heard? Straus News e-mailed, wrote or called every non-profit in its coverage area that appeared on the IRS list. In the case of the County Seat Conservation Club, volunteer treasurer Jean Paul-Vallet did receive a form from the IRS, but didn’t know where to find the club’s Taxpayer Identification Number. Vallet asked the club’s old-timers, but “no one was quite sure if we had one. I was going to try to do that and it kind of slipped my mind.” Word has traveled, but rather like the first transatlantic radio communication, which in 1901 transmitted a fuzzy Morse code letter “S” from England to Newfoundland. A board member of the Friends4Michael Foundation in Monroe saw an item in the local business news in her Virginia hometown. Kara McGrew, of Helping Horseshoes Therapeutic Riding in Newton, N.J. heard a rumor. She expected to get some sort of official notification. Like the vast majority of the groups on the list Straus News contacted, McGrew said she never heard from the IRS. “This is the first I’m hearing of it, but I’m not surprised,” said Lonnie Kanter, volunteer treasurer of the Colby Water Company in Andover, which serves 19 homes and holds one meeting annually to decide on dues. “We’re so small and so out of it. It’s not like we get contributions. We pay our own water bill, maintenance of the system, water testing, repairs to the well. There’s no profit. I’m not aware we’ve ever filed a tax return.” Bob Goldsack, president of the Pike County, Pennsylvania-based Taxpayers United Association said he knew of no notification from the IRS and was not aware that the filing rules had changed. Goldsack, who is a long-time school board member and former president in the DV School District, said the nonprofit Taxpayers United usually winds up with about $100 in its account at the end of the year. The $3,000 to $4,000 it raises in a given year goes to scholarships in the district. He said he planned to make the organization aware of the situation and take action. Vaughne Hansen, affiliated with the Virginia Kidd Science Fiction Foundation in Milford, which promotes science fiction history and the history of it in Pike County - which is considered to be the cradle of science fiction. They also promote arts and history in general. Hansen felt the organization would have been notified and was not aware of the federal ruling. What’s all the fuss about tax-exempt status? The existence of 1.6 million registered non-profits might lead one to believe that starting one is easy. Not so. “All the paperwork I did,” gasped poet Daniela Gioseffi, when told her baby was on the IRS list. Gioseffi worked with the Association for Nonprofits’ lawyers to found the Skylands Writers & Artists Association, then passed it off when she and her husband moved back to New York City. After getting off the phone with a Straus News reporter, Gioseffi penned an e-mail to the club’s current president: “Please do not let all my work, which cost me over a thousand out of pocket in expenses, and hours of professional, unpaid labor to found a 501(C)3 for SWAA, Inc. go to ruin and waste. I sued to get grants from Sussex County Arts Association and from the N.J. Council for the Humanities with which I paid writers and artists honorariums to help literary and artistic culture bloom in the Southwest corner of [North] Jersey.” “Nonprofit status was hard to come by,” said Wasco Hadowanetz, appointed town historian of Ogdensburg by five consecutive mayors. Twenty-five years ago, it took him a year to get the Ogdensburg Historical Society its designation, and then for five years that designation was temporary. Losing tax-exempt status would have prevented the historical society from applying for a grant it is considering. Grants are its bread and butter: the old schoolhouse-turned museum, with two old fire trucks downstairs, is the result of a $50,000 state grant. The Byram N.J. Seniors Club saves as much as $150 per group outing in taxes they didn’t have to pay. So last year, first vice president Pat Rafferty applied for a second tax-exempt number in New York State, for expeditions like the upcoming Oktoberfest trip to Pomona. It wasn’t a done deal: the Stanhope, N.J. seniors have run into stone walls trying to get their tax-exempt number, said Rafferty. She filled out all the paperwork, sent in the previous year’s audit, and got that precious number. Now that she’s got it, she’s not taking kindly to anyone thinking about taking it away. “I don’t understand why they’re giving us such hard time when the most we ever carry is $10,000,” she said. “I don’t know where they’re coming from.” Too much to ask? Too much to lose. Christine Cocca, president of the Junior Woman’s Club of Jefferson Township, finds it troubling that the IRS is holding very small organizations to the same requirements as, say, the American Cancer Society. Her group holds events and raffles to support the food pantry, a kindergarten safety program, the fire department, a veterans’ hospital, and a handful of international causes like Kiva, which arranges micro-loans to entrepreneurs in high-poverty areas around the world. Volunteers rotate into leadership roles every few years. “We don’t have accountants,” she said. The Goshen group, the County Seat Conservation Club, has “really cast a wide net, to bring generation after generation to appreciate what we have in Orange County, the open space, wildlife, what being an outdoors-person is all about,” said Thomas Pahucki, a long-standing club member and Orange County legislator whose family often eats rabbit, duck, and turkey he brings home from the woods. In addition to the threat to its IRS status, the group’s hunters are feeling the squeeze of civilization almost as keenly as the animals they hunt. New York law prohibits firing a gun within 500 feet of a dwelling that’s not yours, so each subdivision means fewer hunt-able parcels. As Pahucki said: “We would lose a part of Orange County if this club was not able to retain its status.” Research and reporting also by Barbara Gref of the Community Reporting Alliance, Jennifer Carey and Alicia Baldino. What nonprofits need to know Our organization is on the list. What now? Most organizations can catch up simply by filing the 990-N by Oct. 15. Some with greater assets will have to pay a fee of up to $500 for delinquent filing. What happens if we miss the Oct. 15 deadline? For many organizations, tax exempt status is key to staying afloat. If your organization misses the deadline, the IRS will take away its tax exempt status. To get it back, you will have to file for it again, pay a filing fee and wait for approval. Gaining tax exempt status is a detail oriented process that can take several months and can be done with or without a lawyer’s help. Our organization is on the list by mistake. What do we do? It may be your mistake or it may be the IRS’s mistake, but to avoid automatic revocation, every organization on the list must file or contact the IRS.

Nonprofits that may be in jeopardy of losing tax-exempt status How they got here -When we learned small nonprofits around the country were in jeapordy, Straus News launched a major outreach program to alert our community. To avoid causing undue concern, we did not simply re-print the IRS list.This is what we did: -Checked the IRS list of at-risk tax-exempt organizations for organizations in our region. About 300 groups in our region were on the original list. -Checked the IRS list against a list of at-risk organizations from the independent nonprofit information center GuideStar. The GuideStar list excluded certain groups, like those that are chapters of a parent organization. -Removed from the list those groups that are chapters of a parent organization, because the parent organization is responsible for filing returns. For example, we left the Penn State Women’s Network of Andover off the list because it is a chapter of the Penn State Alumni Association. -Called, e-mailed and/or wrote a letter to every organization from our region on the updated list. -Removed from the list those organizations for which we found a 990-N in the IRS database on Aug. 17. People we quote in our story may be from organizations that do not appear on our list, because those organizations filed after we spoke. -Kept on the list organizations that said they had recently filed, but for which no 990 was found in the IRS database as of Aug. 17. We ended up with a list of about 200 organizations. This is not a complete list. Inclusion does not mean that a nonprofit has engaged in an illegal act.

I thought we didn’t have to file because we gross under $25,000. What changed? It used to be that smaller organizations did not have to file an annual return. Congress required the filing as part of a 2006 law which went into effect for the 2007 tax year. That same law mandated that organizations failing to file for three years in a row would automatically lose their tax-exempt status. What is a 990, and where do I get one? A 990 is a tax return for charitable organizations. The 990-N, for nonprofits grossing $25,000 or less, is simply an update of address, contact and other basic information. It takes about five minutes to e-file. Go to Why is our church or synagogue on the list? Religious groups don’t have to file an annual return. If your church or synagogue is on the list, it may be misclassified. Check with the IRS to determine whether you need to be reclassified. Our nonprofit is defunct, but on the list. Can we simply do nothing? Yes, but only if the organization has no assets. Better yet, there is a formal process for dissolving an organization, which must be followed for those organizations which have assets. Your organization’s bylaws will have a section that discusses dissolution. We filed recently. Why is our name still on the list? If you have filed but still see your organization on our list, don’t worry. It simply means the IRS had not processed your form by Aug. 20, when we last updated our list. If you filed after July 26, your organization will continue to appear on the IRS list at, which was published on July 26 as a one-time service and will not be updated. Here's the Full List of Non Profits in jeopardy of losing tax exemption status: Andover Street Thunder Harley Davidson Motorcycle Club Of Northwest NJ Inc Green Township Sporting Club The Colby Water Company Frenches Grove Water Co Inc One Degree Inc Nikis Felines Enjoying Lives Of Value Rescue Inc Skylands Writers & Artists Association Inc Augusta Sussex County Agricultural Society Little Oak Learning & Developmental Center Inc Blooming Grove, N.Y. Morning Glory Sunrise Productions Inc Golden One Triumph Production Inc Branchville Playback Fund Inc The Old Winchester School Inc Nfp Sussex County Homestead Auxiliary Inc New Jersey State Meat Goat Association Culver Lake Property Owners Assn Kittatinny Lake Club Inc HAmpton Area Citizens For Youth Corporation Country Theatre Of Sussex County Budd Lake Mt Olive Township Historical Society Inc Mt Olive Cemetery Association Revelation Ministries International Inc Lake Hopatcong Boating Association Inc Mount Olive Perspectives Inc Central Valley Chemical Fabrics & Film Association Wilson Memorial Track Club Hudson Valley Figure Skating Club Inc Richard W Wilson Scholarship Fund Inc Chester Project Believe Foundation Player Baseball Of Orange County Inc Chester Sports Fund Inc Heritage Riding For The Handicapped Foundation Orange County Right To Life Committee Dingmans Ferry Dingmans Ferry-Delaware Township Historical Society Franklin Franklin Civic Support Club Ladies Involved For Everyone Inc New Jersey State Assembly Association Of Surgical Technologists Fredon Fredon Emergency Rescue Squad Goshen Orange Regional Medical Center Auxiliary Southeast NY Intergovernmental Water Supply Advisory Council Mid-Hudson Horse Trails Association Inc Goshen Drama Co Ltd David Ekstein Foundation Inc Batterers Intervention Program Inc Dependent Care Alliance Inc Orange County Sheriff Association County Seat Conservation Club Inc Greenwood Lake Greenwood Lake Chamber Of Commerce Incorporated Greenwood Lake Gaelic Cultural Society Inc Lake Community Center Inc Hamburg Sussex County Hockey Association Hardyston Hardyston Extraordinary Education Foundation Hewitt Tae Kwon Do Competitors Association West Milford Building Fund Corp Upper Greenwood Lake Volunteer Ambulance Corp Womens Auxiliary Fred Ferbers Habitat New Jersey Inc Greenwood Lake Watershed Management District Inc Upper Greenwood Lake Tax Payers Association Lake Hopatcong Penn-Jersey Rail Coalition Inc Family Leisure Times Inc Jefferson Township Chamber Of Commerce Lakeland Senior Citizen Club Of Jefferson Twp Hearts And Hands Of Jefferson Inc Jefferson Sports League Inc Milford Friends Of Pike County Virginia Kidd Science Fiction Foundation Womens Empowerment League Taxpayers United Association Monroe Abraham & Leah Foundation Foundation For Psychic Energetic Research Ltd Leizider Family Charitable Remainder Unitrust Lev Tov Inc Ohel Yosef Inc Pine Tree Homeowners Assoc Inc Rotmar Foundation Sharri Chemlu Inc Veuhsesuh Hayushor Vehatov Inc Lake Region Italian American Charitable Association Chesed Yibuna Inc Toishia Bunim Inc Adoption Group Of Orange County Inc Congregation Minchas Aharon Yafa Inc Gemach Yosef Inc Lindeman Scholarship Inc Sacred Heart School Fund Monroe-Washingtonville Girls Softball League Inc Uta Of Kj Bc Inc Hope For The Gifted Foundation Inc Mds Excel Inc Monroe Arts Council Regional Learning Center Inc Lake Region Italian American Civic Association Inc Families OF Monroe Community 9-11 Fund Talmud Torah Habeein Yakir Inc Friends 4michael Foundation Inc J A Kahan Foundation Inc Keser Malchus Bnos Yoel Inc Newton Gentle Passages Care Inc Harmony Foundation Hampton Township Rotary Club Endowment Inc Newton Fire Museum Inc Roxbury Rifle And Pistol Club Inc Christophers Friends Kittatinnny Craftsmen Sussex County Animal Shelter Inc Sussex County Br Of NJ Society For Prevention Of Cruelty Of Animals Sussex County Society For The Preservation Of Historic Landmarks Yellow Frame Cemetery Association Inc Berkshire Valley Square Club Inc Gratitude House Inc Newton Area Scholarship-Leadership Fund Helping Horseshoe Therapeutic Riding Club NJ Pony Breeders And Owners Inc Lake Iliff Community Club Sussex County Womens Forum Kittatinny Midget Football Incl Oak Ridge Cross Roads Soul Care Inc Dirt Runners Radio Control Car Club White Rock Lake Association Inc Ogdensburg Ogdensburg Historical Society Inc Sparta Sussex-Warren Arts Foundation Inc Ladies Fire Auxiliary Of The Sparta Township Volunteer Fire Department Pequannock Thunder Baseball Club Inc Sparta Educational Foundation Inc (*Not The Sparta Education Foundation) Sparta High School Booster Club Of New Jersey Sussex County Emergency Response Team Inc Youth Employment Service Of Sparta Inc Gfwc Sparta Juniorettes Dob Project Inc Deliverance Jesus Is Coming Community Development Corp Inc Power Of God Ministries Management Company Inc Rev Charles C Cassidy Parochial School Endowment Inc Lake Mohawk Tennis Club Cameo Productions Limited Stanhope Millennium Harvest Ministries Waterloo Foundation For The Arts Inc Lackawanna Sportmen Inc Family Memories Foundation Inc Lenape Valley Womans Club Wrestling Bridge To Peace Lake Lackawanna Swim Club Byram Township Senior Citizen Club Inc Sussex Mackenzie Foundation Tri -State Youth Safety & Shootingsports Education Foundation Inc Sussex Help Center Inc Sussex County Cooperative Milk Producers Association Sussex Wantage Lay Ecumenical Council Turnstyles Media Inc Vernon Council For The Arts Inc Friends Of The Old Clove Church Inc Tuxedo Medico Educational T V And Radio Foundation Inc NYC Patrol Users Group Inc Unionville Water-Wise Council Of New York Inc Vernon Jean China Road Gun Club Inc Lake Conway Community Association Incorporated Vernon Township Cultural Society Center For Families With Special Needs Inc Vern Neighbors Helping Neighbors Wanaque Mount Eveergreen Cemetery Assoc Warwick Womens Auxiliary New York Assoc Plumb Heat Cooling Contractors The Orange County Association For Learning Disabled Incorporated American Rescue Inc Foundation Attacking Cancer Of The Testicle House Of Contemplation Inc Primate Rescue Inc Educational Video Productions Inc Goodwill Hook & Ladder Co Ladies Auxiliary Mount Alverno Residence Corporation Pee Wee Football League Of Warwick NY Ltd Warwick Baseball Club Vernon Township Bicentennial Committee Washingtonville Blooming Grove Rod & Gun Club Inc Center For Authentic Learning Inc Sullivan Pilots Club Inc Washingtonville Police Athletic League Washingtonville Centennial Celebration Inc West Milford Martha-Mary Ministries Skyways Aviation Inc Lakeland Germania Club Inc German American Club Of North Jersey Inc Gordon Lake East Homeowners Assoc Inc Mount Glen Lakes Association Inc West Milford Township Education Foundation Inc West Milford Township Library New Building Foundation Brian P Parrello Scholarship Fund Ree-Gals Inc Peace River Mission Families First Inc