A Last Chance for Charity: 300,000 Non-Profits Risk Losing Tax-Exempt Status

Charities and other tax-exempt, non-profit businesses, though distinct from the human-owned for-profit companies I represent, do play a vital role in the humanity of our society. Since stewardship of our Colorado community is one of my concerns, I wanted to add my voice to the warnings to small non-profits that have been granted a tax-exempt status by the Internal Revenue Service:

                               Check this list, NOW!

Traditionally, very small tax-exempt entities were also exempt from annual IRS filings. That changed a few years ago, although many organizations apparently didn’t get the word. The IRS has identified (or potentially misidentified) some 300,000 non-profits, 5,500 of them in Colorado, that have blown their filing requirements.

If you are associated with a tax-exempt non-profit, especially a smaller organization that hasn’t had the advantage of a professional staff or advisors, you should see if the IRS has included your organization on its list of offenders—just click here. If you find your group made the list, you have until October 15, 2010 to take corrective action. From the IRS:

Two types of relief are available for small exempt organizations — a filing extension for the smallest organizations required to file Form 990-N, Electronic Notice (e-Postcard) , and a voluntary compliance program (VCP) for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.

Small organizations required to file Form 990-N simply need to go to the IRS website, supply the eight information items called for on the form, and electronically file it by Oct. 15. That will bring them back into compliance.

Under the VCP, tax-exempt organizations eligible to file Form 990-EZ must file their delinquent annual information returns by Oct. 15 and pay a compliance fee. Details about the VCP are on the IRS website, along with frequently asked questions.

After the October 15 deadline, the IRS will revoke the tax-exempt status of an organization remaining on the list. Since it’s that tax-exempt status, not the non-profit status, that allows contributions to be tax deductible, donors to those groups will lose the ability to claim those deductions when the IRS subsequently publishes its final listing of revoked exemptions.

For more information, I recommend this detailed article from Peter Nagel through the Colorado Bar Association, and, in a sign of the times, the IRS has a YouTube video on the subject.

Cuba Conquers

This is a cause for celebration, not concern. In the very first week of this blog I posted Cuba Invades. I’m pleased to now update that post. Cuba is a Guide Dog for the Blind--officially--he graduated from “Puppy College” this past weekend. When I first wrote about Cuba he was a Guide Dog hopeful, a puppy-in-training, and his trainer was my law partner, Barb Wells.

Cuba with Barb, May 2009

Cuba’s course through Guide Dog Training varied a bit from Barb’s first two puppy-trainees, Army and Larabee, and her current, and fourth, dog Pavarotti (No, Barb doesn’t name them; they come from the breeder with their names.) Cuba’s socialization and preparation for formal Guide Dog training was a partnership between Barb, who started the process, and Min, a high school student in Utah who finished it.  Cuba is one patient dog—going from a law firm to a high school had to be a trip. Now Cuba has been paired with a new partner, Cathy, as he begins work in the real world.

Cuba with Cathy, September 2010 (Barb's photo)

Being a business law firm, our meetings tend to be, well, pretty much all business, but as I like to say it’s human-owned business. A story, a passion, or a concern that helps connect client and attorney on a personal level is a good thing. Sometimes it’s as basic as the efforts of our respective businesses, law firm and client, to move ahead in a challenging economy. Sometimes it’s a dog.

Congratulations Barb on another job well done.

Labor Day 2010: We’ve Got Work to Do

The slow recovery continues to press, and depress, America. In my world of the human-owned business, far from Wall Street, labor (organized and not) and management are suffering alike. The announcement of 67,000 new private sector jobs—coming, as they always do, mostly from human-owned companies—is a small encouragement as the Labor Day weekend begins.

Of the major national holidays Labor Day gets the prize for muddled meaning. Maybe our wistful good-byes to summer get in the way, but not many folks will pause to consider why we have a national day-off to celebrate labor. Too many of the few that do think about it will fall into two camps that generally despise each other.

The U.S. Department of Labor tells us that Labor Day “is dedicated to the social and economic achievements of American workers. It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country.” The DOL doesn’t tell us that Labor Day was rushed through Congress by President Grover Cleveland to appease America’s labor movement a mere six days after his controversial use of federal troops forcibly ended the bloody Pullman strike that paralyzed rail traffic, and thus the country, during the summer of 1894.

Cleveland’s gesture didn’t work for him—his Democratic party was slaughtered in the 1894 midterm election—or help the labor movement that much either. Many needed reforms, such as reasonable working hours and safe working conditions, now taken for granted would not be enacted for decades--decades that would include the infamous Triangle Factory fire and Colorado’s own Ludlow Massacre.

So maybe a lesson in working for change is among Labor Day’s messages to modern America. Change is slow and uneven, so take a long view. We seem to need a crisis, or even crises, to move change along, so don’t waste an opportunity when it presents itself. Change is ongoing process, so don’t be disheartened when it takes us awhile before we get it right.

There’s not much the average American worker or average American business owner can do to change the macro economy. Those of us fortunate enough to have jobs can, however, do much at a micro level, in our own businesses, that cumulatively will change our nation’s circumstances. We can improve our companies to the point where each can add one, ten or even fifty new hires. That’s how those 67,000 jobs were created from in August.

There are about 30 million small businesses in our country. If only five percent of us (that 5% includes you and me, right?) committed to improving our companies so that by New Year’s Eve we can hire at least one person, that’s 1,500,000 new jobs. If we do that, then maybe the other 95% and the Wall Street types will drop the bunker mentality and join us.

So enjoy the day off; we’ve got work to do.

I’ll close with my own farewell to summer: some favorite photographs from the last 3 months.

Butterbeer!