Has the IRS revoked your nonprofit status?

Fun or Not So Fun Fact: A review of the February 10, 2014 IRS nonprofit revocation list shows 2,620 names were added this month alone.

The Pension Protection Act of 2006 directed the IRS to revoke the tax exemption of any nonprofit that is required to file an annual information return but failed to do so for three consecutive years. Revocation is automatic and mandatory under the law.

As a result hundreds of thousands of exempt organizations had their tax-exempt status revoked. Many were smaller organizations that were not aware of the 2006 law change that required all exempt organizations (except churches) to file annual returns, regardless of how small their annual receipts may be.

We're small...do the IRS rules apply to us?

The short answer is yes.  The rules apply to all organizations that raise funds from the public.  It just depends on what rules we're talking about.  The amount of revenue your club generates will determine which rules it should follow.

During an appointment with one of my individual tax clients this week I took some time to demonstrate Treasurer’s Briefcase. I explained that, for even his small non-profit, Treasurer's Briefcase would be of tremendous value. Along with all of the other benefits of a cloud based record keeping package, I described how providing a platform that can be handed off from one treasurer to another treasurer helped to provide a consistent repeatable process for the organization would make recruiting treasurers easier and make reporting uniform.

He liked the software but then explained, “We’re a small non-profit so the rules don’t apply to us.” The normal half hour interview turned into an hour so I could answer his questions about nonprofits and correct this common misperception.