Tax return troubles loom for nonprofits

More than 500 charities around Southeast Tennessee and North Georgia have less than 10 days to file tax returns before they lose their tax-exempt status, potentially costing them thousands of dollars to reapply.

As of July, more than 9,300 small community-based nonprofits across Tennessee and more than 8,200 in Georgia appeared to be in jeopardy of losing their tax-exempt status because they had not filed returns for 2007, 2008 or 2009, said IRS spokesman Dan Boone.

A law took effect in 2006 requiring smaller nonprofits - those with incomes under $25,000 - to file annual returns with the IRS, he said.

PDF: Organizations in Tennessee at risk of losing tax-exempt statusPDF: Organizations in Georgia at risk of losing tax-exempt status

Organizations that don't file by Oct. 15 would have to reapply, said Boone.

"In the interim, it's possible they would owe taxes on any income and any donations to the organizations would not be tax deductible to the owner," he said.

The fees to reapply can range from $400 for a smaller organization to $3,000 for a group exemption request, he said.

Officials with several local charities say they were not aware of the law.

Karen Castleberry, former treasurer of the Chattanooga Area Dental Assistants' Society - one of 256 nonprofits on the list with a Chattanooga address - said she wasn't aware of the change and doesn't recall receiving any letters from the IRS notifying her of the new law.

She said she would tell the present treasurer to take care of it.

Rajul Soni, former president of the India Association of Chattanooga, said the group hasn't had an official treasurer for some time. He said the organization usually refers tax-related questions to a member who works for a tax preparation company.

"I didn't know about the law change," said Soni, but he believes the organization has filed a return during the past three years.

"Maybe there was something wrong with our filing for it to not make it into the appropriate IRS reports," he wrote in an e-mail. "I'll have someone follow-up on this and file by [Oct. 15]."

Boone said the IRS has tried to make filing as easy as possible by creating an online form - 990N - that can be filled out in about 10 minutes. The organization has sent more than 500,000 letters to nonprofits to notify them of the change.

Archibold Ferrar, former president of the Chattooga County Historical Society in Georgia, said his organization filed a return about 10 days ago and it was very easy. He said he doesn't know if the group received a letter from the IRS.

"We could have gotten one, but I never saw it," he said.

Other organizations on the IRS list no longer exist.

The Calhoun-Gordon County Humane Society dissolved 10 years ago.

Barbara Kennedy, spokeswoman at Baylor School, said the person who led the American Culinary Federation Chattanooga chapter, which has an address at the school, hasn't been employed there since 2002.

Allen McCallie, an attorney with Miller & Martin, represents several nonprofit organizations.

"From my perspective, the law governing nonprofits has grown ever more complex in the last 20, 30 years," McCallie said.

"It's easy to spend more than $10,000 to establish a new nonprofit and comply with all the new requirements," he said. "Starting, feeding and nurturing a nonprofit is not a casual activity. It is a business activity."


Tennessee total: 9,358

Around the region: 439

* Athens: 15

* Chattanooga: 256

* Cleveland: 73

* Dayton: 11

* Dunlap: 5

* East Ridge: 2

* Etowah: 7

* Fairview: 8

* Hixson: 23

* Jasper: 2

* Ooltewah: 12

* Red Bank: 3

* Signal Mountain: 12

* Soddy-Daisy: 8

Georgia total: 8,261

Around the region: 114

* Calhoun: 16

* Chatsworth: 15

* Chickamauga: 8

* Dalton: 42

* LaFayette: 13

* Rossville: 11

* Summerville: 9

Source: IRS

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