IRS: Over 6,000 Maryland Organizations No Longer Tax-Exempt
Attorney General Gansler and Secretary of State McDonough Urge Donors to Take Precautions When Donating
MD ( June 9, 2011) - The Internal Revenue Service (IRS) has published a list of non-profit organizations that have had their federal tax-exempt status automatically revoked for failing to file an annual information return or notice with the IRS for three consecutive years, and over 6,000 Maryland organizations are affected. (The full list is available on the IRS website: http://www.irs.gov/charities/article/0,,id=240099,00.html.) While many organizations may appear on this list simply because they are inactive, others may be continuing to operate. Accordingly, Attorney General Douglas F. Gansler and Secretary of State John P. McDonough are urging Marylanders to check this list before donating, and urging Maryland non-profit organizations to make sure that their filings are up-to-date.
“Maryland's non-profit organizations provide vital services to a broad spectrum of Marylanders, and they rely in large part on donations to do the good work they do.” Attorney General Gansler said. “It's for this reason that we want to make sure donors' tax-exempt donations reach only active non-profit organizations and are not diverted to inactive or non-compliant groups,” he explained. Secretary McDonough added, “With this IRS list, donors can make sure their donations are going to the right places, and organizations can determine whether they need to take steps to get reinstated with the IRS.”
Marylanders who are involved in non-profit organizations should make sure their organizations are not on this list, and non-profit organizations themselves should do likewise. If your organization is on the IRS list, the IRS has provided guidance on how to apply for reinstatement of tax-exempt status, including retroactive reinstatement. It has also announced transitional relief for certain small tax-exempt organizations that allows them to regain their tax-exempt status retroactive to the date of revocation and pay a reduced application fee of $100 rather than the typical $400 or $850 fee. (Full details are available on the IRS website: http://www.irs.gov/newsroom/article/0,,id=240239,00.html?portlet=7.) Organizations that find themselves listed should be aware that they may be in violation of the Maryland Charitable Solicitations Act if they continue to represent that they are able to accept tax-deductible donations while they remain out-of-compliance with IRS requirements.
Donors should always take precautions before donating to a non-profit organization. When making choices about how and where to donate, donors should remember to always follow these three rules:
- Check with the Maryland Secretary of State's Office at 1-800-825-4510 or www.sos.state.md.us/charity/charityhome.aspx before donating, to be sure the non-profit organization is registered.
- Never agree to give money over the phone or to a door-to-door solicitor. Ask the caller or solicitor for written information about the organization and read it before making your decision.
- Find out what percentage of your donation goes to the organization's mission. Non-profit organizations must file reports with the Secretary of State disclosing this information.
More information about ways to donate wisely can be found in the Attorney General's consumer guide to charitable donations (available on the Office of the Attorney General website: http://www.oag.state.md.us/consumer/tip42.htm) and in the FTC guide to avoiding charity fraud (available on the FTC website: http://www.ftc.gov/bcp/edu/microsites/charityfraud/).
If you have any further questions concerning a non-profit organization, call the Charitable Organizations Division of the Maryland Secretary of State's office at 1-800-825-4510 or the Attorney General's Consumer Protection Division at 1-888-743-0023.