One-Time Relief Program Benefits Thousands of Nonprofits Facing Automatic Revocation of Tax-Exempt Status

GuideStar provides valuable tools to help nonprofits, grantmakers, and donors
Release date: August 2, 2010

Washington, D.C., and Williamsburg, Va.—Small nonprofits that have failed to file required annual information returns with the Internal Revenue Service (IRS) for 2007, 2008, and 2009 in compliance with the Pension Protection Act of 2006 (PPA) were recently granted an opportunity to save their tax-exempt status. GuideStar—the leading source of nonprofit information—urges the hundreds of thousands of organizations whose returns were due on or after May 17 and on or before October 15 to comply with the new IRS filing deadline of October 15, 2010, in order to continue providing their vital services.

"The IRS's one-time filing relief program for small exempt organizations is a wonderful opportunity for these organizations to come back into compliance," said Bob Ottenhoff, president and CEO of GuideStar. "To help nonprofits, grantmakers, and donors meet the IRS requirements, we have published a free report, Automatic Revocation of Nonprofits' Tax-Exempt Status: What Nonprofits, Grantmakers, and Donors Need to Know." Authored by Linda M. Lampkin of ERI Economic Research Institute, the report is a one-stop resource that includes the entire PPA background and the steps nonprofits must take to avoid revocation of tax-exempt status.

The IRS statement explains, "Two types of relief are available for small exempt organizations—a filing extension for the smallest organizations required to file Form 990-N, and a voluntary compliance program (VCP) for small organizations eligible to file Form 990-EZ. Form 990 and Form 990-PF filers do not qualify for relief."

Grantmakers in particular are affected by the IRS's new regulations. Payouts made to a charity that has received a revocation letter may subject the grantmaker to excise taxes. GuideStar recommends that before making a payout, grantmakers confirm that grantees have not lost tax-exempt status. A comprehensive due-diligence tool for private foundations and sponsoring organizations of donor-advised funds, GuideStar Charity Check, is 100 percent compliant with IRS regulations for verifying charitable status and identifying supporting organizations. "All grantmakers must enhance and amend their due-diligence processes," stated Mr. Ottenhoff. "Organizations can save time and protect themselves from excise taxes by consulting GuideStar Charity Check before making a grant or distribution."

About GuideStar

GuideStar connects people and organizations with information on the programs and finances of more than 1.8 million IRS-recognized nonprofits. GuideStar serves a wide audience inside and outside the nonprofit sector, including individual donors, nonprofit leaders, grantmakers, government officials, academic researchers, and the media.

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