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750+ area nonprofits lose tax-exempt status

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By Cornelius Frolik, Staff Writer Updated 12:42 AM Saturday, June 11, 2011

About 10,650 of Ohio’s registered nonprofit organizations, including more than 750 based in the Miami Valley, have lost their tax-exempt status because they failed to meet the Internal Revenue Service’s filing requirements.

A Dayton Daily News analysis found that most of the organizations in the greater Dayton area that lost their designation are no longer in operation, but some are active groups the IRS said failed to file the proper paperwork for three consecutive years.

Revocation could mean that donations to those groups may no longer be tax-deductible, and they may have to pay taxes on their revenue.

About 275,000 organizations across the country automatically lost their tax-exempt status for not filing for three years. Before the revocation, there were 1.28 million charitable organizations on the books.

Some local civic groups and police and fire unions were among those who lost their tax-exempt status, according to the IRS.

Representatives from these organizations contacted by the Daily News said they were surprised to learn that they were on the list the federal agency published this month.

“I know at one time we were listed on there, and we had to file some additional paperwork that wasn’t required previously, but that should have been all corrected,” said Adam Howard, secretary and treasurer of the International Association of Fire Fighters Local 1235 in Fairborn. “I thought we had gotten that all taken care of.”

GuideStar, a database of nonprofit groups that contains financial filings, indicates that IAFF Local 1235 filed a 990 form for 2009. No other returns for the union are listed.

Similarly, the database indicates the Fraternal Order of Police Lodge 48 in Fairborn and the IAFF Local 2150 in Kettering both filed 2009 forms, but it shows no others. GuideStar does not always show up-to-date financial forms.

IAFF Local 2150 President Dave Parker said his organization’s inclusion on the list has to be a mistake, because they learned about the filing rule last year and hired an accountant to help them comply with the law.

Until 2007, nonprofit groups with annual revenue less than $25,000 did not have to file IRS documents.

But under a provision of the Pension Protection Act of 2006, the IRS was ordered to revoke the tax-exempt designation of all groups that failed to file an annual information return with the IRS for three years.

The law took effect in 2007, meaning groups began failing to meet the filing requirement in 2010. In preparation of the change, the IRS said it issued many notices to small, long-time nonprofits that were unaccustomed to filing with the agency. The IRS said it gave these groups extra time to file.

The vast majority of the organizations whose designations were revoked were already defunct, said Jennifer Jenkins, IRS spokeswoman.

“This is the first comprehensive review of tax-exempt organizations under the law,” she said. “This is the first time that defunct organizations are being removed en masse from the list of tax-exempt organizations.”

Organizations can regain their tax exemptions by filing with the state and paying a fee, Jenkins said.

Contact this reporter at (937) 225-0749 or cfrolik@DaytonDailyNews.com.

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