1,842 Hawaii nonprofits could lose tax-exempt status

The Hawaii Alliance of Nonprofit Organizations encourages all nonprofit organizations in Hawaii and especially smaller nonprofits with annual revenue under $25,000, to take simple, immediate steps to ensure they do not lose their tax-exempt status.

Congress passed a law that changed the rules so now all nonprofits must file a form with the Internal Revenue Service. As a result, current government records show that 1,842 nonprofits in Hawaii could face the costly and time-consuming prospect of losing their status as tax-exempt organizations if they do not act. For many small nonprofits with annual revenue below $25,000, that means filing an electronic version of IRS form 990-N (also known as the ePostcard) by May 17. Larger organizations must file Form 990 or 990-EZ.

IRS commissioner Doug Shulman issued a statement saying the agency will issue guidance soon on how charities that missed the deadline can keep their tax-exempt status. In the meantime, Shulman urged charities that missed the deadline to file their 990 postcards as soon as possible.

HANO recommends that people involved in small nonprofits double-check the list from the special link of the Urban Institute’s National Center for Charitable Statistics at nccsdataweb.urban.org/PubApps/990search.php to find out if they are in compliance. “Organizations that lose their tax-exempt status may not receive tax-deductible contributions,” said Lisa Maruyama, HANO president and CEO. “It would be an expensive distraction for small volunteer groups to pay $750 and take the time to reinstate their tax status.” 

For more details, visit HANO’s website at www.hano-hawaii.org or the website of HANO’s national organization, the National Council of Nonprofits at www.councilofnonprofits.org/annual-filings.

The Hawaii Alliance of Nonprofit Organizations is a statewide professional alliance that works to strengthen and unite Hawaii’s nonprofit sector as a collective voice to improve the quality of life in Hawaii.