February 07, 2012

IRS Makes Finding Charity Status Easier

The Internal Revenue Service has developed an online database of 400,000 nonprofits that have lost their tax-exempt status for failing to file tax returns.

Previously, the IRS released information about groups that had lost their tax-exempt status only by state, which made it difficult to find groups by other criteria. The new Exempt Organizations Select Check is updated monthly and is on the same Web page as the agency's main database of all nonprofits that can accept tax-deductible donations.

The tax agency in June unveiled a list of 275,000 organizations that had lost their tax-exempt status for failing to file tax returns for three consecutive years. Since then, about 125,000 more have been added to the list.

Most of the groups—63 percent—were charities. Eleven percent were nonprofit advocacy groups, and 7 percent were social and recreational clubs.

Groups can apply to get their tax-exempt status reinstated, but even if they regain charity recognition, their names stay on the list of those that have lost their tax exemptions, says Lois G. Lerner, director of the IRS tax-exempt organizations division.

“Organizations are going to stay on the list for now and forever,” Ms. Lerner said during a Webinar conducted by Independent Sector, a coalition of charities and foundations. “The list is the IRS’s historical record, and we will not be taking names off unless we find that they were erroneously put on the list.”

That poses a challenge for anyone wanting to find out if a charity's tax-exempt status has been lost and then reinstated, which would require searching both databases. But The Chronicle has developed a shortcut: a database, below, that includes only the 3,500 groups that appear on both lists.

So far, about 9,500 of the 400,000 groups that lost their exemptions have applied for reinstatement, Ms. Lerner said.

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