Thousands of Minnesota Nonprofits Set to Lose Tax-Exempt Status Under New Law

According to data released by the Urban Institute's National Center for Charitable Statistics, more than 4,100 Minnesota nonprofits remain on the so-called "doomsday" list of organizations at risk of losing their tax-exempt status for failure to file federal tax returns, the Minneapolis Star Tribune reports.

Due to a provision included in the Pension Protection Act of 2006, all nonprofits must file tax returns — a change from the past, when only those earning more than $25,000 a year had to do so. On its Web site, the center has posted a list of the 293,000 nonprofits across the country that failed to meet the May 17 deadline to file; the list can be searched by city name or ZIP code. In Minnesota, the list contains more than a dozen chapters of the AAUW (formerly known as the American Association of University Women), a dozen student fraternities and sororities, four chapters of the American Ex-Prisoners of War, and groups ranging from the Highland Park Little League to the Chinese American Dance Theater.

Although Minnesota's numbers are high, the state had the nation's biggest surge in tax filings before the May deadline, according to Minnesota Council of Nonprofits public policy assistant Jeff Narabrook. It is unclear whether the IRS will accept late filings, but at least some IRS officials have said they would not revoke an organization's nonprofit status if it could prove it was unaware of the new law.

National Center for Charitable Statistics assistant director Katie Roeger said it's critical to disseminate information about the law because an organization's tax-exempt status enables it to raise money tax-free and allows donors to write off a portion of their contributions. "We're telling people to take a look at the new list," said Roeger, "and if you know anyone involved in any of these organizations, let them know."

Jean Hopfensperger. "4,100 Nonprofits Still at Risk of Losing Tax Exemption." Minneapolis Star Tribune 07/01/2010.