New York, Chenango Non-profits' Tax Exempt Status Could Be At Risk

By: Brian Golden

ALBANY – U.S. Senator Charles Schumer has a new feature on his website he hopes will help non-profit groups across the state avoid costs associated with the possible loss of their tax-exempt status.

On June 8, the Internal Revenue Service released a list of 275,000 non-profits nationwide which automatically lost their tax exempt status for failing to file annual reports over a three-year time period, according to the senator. The list included 19,000 organizations located in New York, 6,000 in upstate New York and 34 in Chenango County.

“Little leagues, public libraries, museums, meal programs and other non-profit organizations that are the very fabric of communities throughout upstate New York are at risk of losing their tax-exempt status and paying thousands of dollars in penalties through no fault of their own,” said Schumer. “Whether because of a lost notice in the mail or paperwork errors, no non-profit should needlessly lose their tax exempt status.”

For decades, only large non-profit groups were required to submit an involved annual report detailing their activities, income and expenses, added the senator. The Pension Protection Act, passed by Congress in 2007, changed all that, requiring all tax exempt organizations, including small, community-based non-profits, to file as well.

It’s possible that many of the groups found on the list are no longer operational, according to the IRS, yet IRS Commissioner Doug Shulman admitted that some legitimate organizations, particularly smaller ones, may remain unaware of the new filing requirement.

In Chenango County, both possibilities are a reality, as several of the 36 non-profits listed no longer exist, such as the Norwich Fine Arts Guild, Smithville Community Assistance and Chenango County Tourism, Inc. (it’s now under the umbrella of Commerce Chenango). Other organizations, however, may have already lost their tax exempt status, some without even knowing it.

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Former president and volunteer with the Chenango County Maple Producers Association Reed Baker said he was unaware of the new tax exemption requirements until last week, when he received a notice from the IRS. According to the IRS, any group with under $50,000 in income – such as the local Maple Producers Association – that failed to file tax returns over the past three years may file for the reinstatement of their tax exempt status for a fee of $100. After Jan. 1, 2012, that fee jumps to $850.

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