University City

Many nonprofits lose tax status

Tom Strigus started getting alarming letters from local tax attorneys three or four months ago.

The IRS planned to revoke tax-exempt status for the National Kitchen and Bath Association's local chapter if its members didn't act soon.

The IRS was enforcing a 2006 law requiring most tax-exempt groups to file an annual return or notice with the agency. Those that hadn't filed for three straight years, since 2007, would lose their tax-exempt status.

The news came as a surprise to Strigus, a University City resident and the association's treasurer.

"I contacted our corporate headquarters," said Strigus. "We have filed for extensions. We're going through procedures to reinstate that."

The association still operates with tax-exempt status, but nearly 700 organizations in Charlotte and southern Mecklenburg County have been removed from the IRS tax-exempt roster.

The list includes sororities and fraternities at Johnson C. Smith University and UNC Charlotte, and the Carolina Evangelistic Association at Garr Memorial Church, as well as several other ministries and faith organizations. Dozens of community organizations also made the list.

The staff at Garr church is working to reinstate its tax-exempt status, said pastor Randy Briscoe. He said the IRS had incorrectly classified the organization as a public charity rather than a church. The church is waiting for its name to be removed from the IRS list.

"It has caused problems for us," Briscoe said. "People that give us donations have said, 'We can no longer give you donations.' Now I have to contact those people."

The vast majority of tax-exempt groups file annual financial returns, and 85 percent of the 1.8 million tax-exempt organizations were not affected by the revocations, the government said.

The IRS published the names of revoked organizations on its website in early June. Donations to those groups made after the list was released are taxable, spokeswoman Jennifer Jenkins said.

Statewide, 6,363 groups lost their tax-exempt status, records show, including the Military Order of the Cootie of the United States in Fayetteville, the Hickory-based Unifour Citizens for Decency and the Transylvania Citizens Improvement Organization in Brevard.

The IRS said it believes most groups that lost their status across the nation no longer exist, and the agency expressed willingness to work with small groups that want their status reinstated.

"We realize there may be some legitimate organizations, especially very small ones, that were unaware of the new filing requirement," IRS Commissioner Doug Shulman said in a statement. "We are taking additional steps for these groups to maintain their tax-exempt status without jeopardizing their operations or harming their donors."