Senator moves to safeguard charities' tax exemption

By Senator Dan Coats

Since 2010, 623 Fort Wayne-area charities and nonprofit organizations have lost their tax-exempt status without adequate notification from the Internal Revenue Service. Across Indiana, 11,600 nonprofits had their status revoked during the same time period.

The reason? Under current federal law, charities and other nonprofits automatically lose their tax-exempt status if they do not file annual information returns – regardless of how much income the organization receives – for three consecutive years.

Originally intended to clear defunct organizations from the government’s books, this automatic revocation is punishing successful charities that are unaware of the requirement. Nationwide, more than 550,000 charities and nonprofits have lost their tax-exempt status over the past four years. Because the IRS does not notify charities as this deadline approaches, many nonprofits discover the problem only after their names appear on a list of organizations that have already lost their status, after it is too late to act. Some never realize it at all.

Read Senator Coats' full article from the Fort Wayne Journal Gazette.