New tax rule could snag small non-profits

Many of Red Wing's smallest non-profits stand to lose their tax-exempt status, a potential disaster for small organizations, if they fail to meet a new tax rule by Saturday.

A federal law passed in 2006 requires for the first time this year non-profits making less than $25,000 to file tax forms called 990s. Non-profits that don't meet this new rule will lose their tax-exempt status, which is often critical for small organizations.

But many non-profits aren't aware of the rule change, and the deadline for filing is midnight Saturday.

"We were caught off guard," said Cory Plein, of the Red Wing Amateur Baseball Association.

The baseball association wasn't alone. Nearly 30 Red Wing-based non-profits hadn't met the new requirement as of May 1. And some 4,400 non-profits across the state were in the same boat, according to a news release from the Minnesota Council of Non-profits.

Plein, who heard about the new requirement from a friend, told the R-E he was working on the baseball association's 990 on Monday.

Organizations that have their tax-exempt statues revoked can get it back, but it will be costly. According to the Minnesota Council of Non-profits, organizations will have to pay $750 to reapply.

"It would be an expensive distraction for small volunteer groups to have to come up with $750 to reinstate the tax status they thought they already had," Jon Pratt, the organization's executive director, said in the press release.

According to MCN release: Organizations can check their status at the Urban Institute's searchable database of organizations that are required to but have not filed their 990 as of May 1.

To file, the head of the organization complete the form online through an approved IRS 990N e-file provider at http://epostcard.form990.org/. If the organization has been terminated, the IRS should be notified through this form.

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