More than 1,000 Hawaii charities lose tax exemptions

On June 8, the Internal Revenue Service issued a list of 275,000 nonprofits whose federal tax-exempt status has been automatically revoked, including 1,525 Hawaii organizations, 1,003 of which were charities that were tax-exempt under section 501(c)(3).
 
The announcement of these revocations comes years after Congress imposed an annual filing requirement for all nonprofits and an automatic revocation penalty for those that do not file for three years in a row. Whether or not your organization is on the revocation list, please review the material and help spread the word to fellow nonprofits that may have had their tax exemption revoked, but don’t yet know about it.
 
Click here to view the list of Hawaii nonprofits that have had their tax-exempt status revoked in .PDF format. Click here for an Excel spreadsheet version of the list. In addition, The Chronicle of Philanthropy has a searchable database.

What should a nonprofit do now that it is no longer tax-exempt? The National Council of Nonprofits has developed a special webpage and tip sheet on options available to organizations. Nonprofits that re-apply may request in a letter to the IRS that the reinstatement of their tax-exempt status be retroactive to the date of their original tax-exempt recognition, but the IRS will grant that request only if it determines that there was “reasonable cause” for the nonprofit to have missed the filing deadlines.  

Be sure to carefully follow the instructions on the IRS website for requesting “retroactive reinstatement” of your organization’s tax-exempt status. You can contact HANO for assistance in applying for reinstatement.
 
A nonprofit may raise funds while it is not tax-exempt, but it must be transparent and honestly disclose the fact that it is not currently tax-exempt and, therefore, that contributions to it are not deductible to the donor.
 
Organizations that have had their tax-exempt status revoked may also consider finding a fiscal sponsor, a nonprofit partner that can provide the nonprofit with the opportunity to continue to receive gifts that are tax deductible to the donor. Click here to read about fiscal sponsorship.