Senator Lundberg is trying to make “political hay” on a non-issue. It is true that approximately 400,000 non-profits lost their status when they did not heed the notices about the need to start submitting annual reports to the IRS. However, as a board member a local non-profit, I know that our treasurer received the notice and found it easy to comply and there was no problem. I continued making the reports after she retired.
Another organization, of which I am a member, did not pay attention to the IRS notice and lost its status. Three years does seem to be an adequate amount of time for compliance, but this organization was one of the 400,000. I assisted in filling out the form for reinstatement and found that while not simple, it was not terribly difficult. The fee for reinstatement was reduced from $400 to $100.
Some of the non-profits that lost their status had ceased to function and needed to be culled from the rolls. Others were not paying attention to their financial business and are now apparently whining about their own mistakes.
The granting of tax benefits to non-profits under article 501c is an important function of the IRS and the agency needs to monitor and regulate the “industry” so that charity really is charity. There have been numerous instances of people taking advantage of the non-profit status for personal gain. I would not agree that the IRS is over-regulating the non-profit groups. The report itself is very easy to do online and it only takes a few minutes.
Senator Lundberg has apparently had some complaints from organizations that lost their status and is now trying to turn this in to an issue of “government overregulation.” I have much more experience in the non-profit world that Kevin Lundberg and will state that strong, efficiently run organizations had no problem with the IRS rules. The others now want Senator Lundberg to bail them out with out having to do the work the rest of us have done.
Lundberg is not looking out for the little guy, he is looking out for Lundberg. Perhaps he should try to do something a bit more useful with his time.
IRS Looks To Make The Non-Profit A Non-Factor
Senator Kevin Lundberg Watches Out For The Little Guy
Loveland, CO., April 27, 2012 – Colorado State Senator and U.S. Congressional Candidate, Kevin Lundberg, has introduced a measure in the Colorado State Senate urging Congress to fix IRS regulations that has revoked the tax-exempt status of a large number of small non-profit charities across the country.
Senator Kevin Lundberg said, “Tens of thousands of non-profits across the country have been put out of business because the IRS changed the rules and didn’t give them proper notice. Congress needs to fix what they have broken.”
Lundberg’s measure urges Congress to fix IRS reporting procedures for small non-profit organizations to ensure that their tax-exempt status would not be unfairly revoked.
Since 2006, over 400,000 non-profit organizations have had their tax-exempt status revoked, many of which because of this poorly executed addition to the U.S. Internal Revenue Code.
In 2005, a report was issued to Congress by the Panel on the Non-Profit Sector and recommended that small non-profit organizations be required to submit an annual report to the IRS. The panel’s recommendation stated that organizations that do not comply within a reasonable amount of time should have their tax-exempt status suspended.
In 2006, Congress adopted the Pension Protection Act that was based in part on the panel’s recommendations. The act requires that an affected organization’s tax-exempt status “be considered revoked” after failing to file a report for three consecutive years, even though the panel’s recommendation was that the organization’s status only be suspended.
The new and unfamiliar filing regulations were poorly executed and poorly communicated. The IRS claimed that they would send notifications to affected organizations prior to any revocation of their status. The truth is that many were not contacted until after the fact, and in some cases had to simply shut their doors because they were no longer in compliance.
Although it is not unreasonable to expect non-profits to submit such a report, it is only fair that they be given proper notice. And in the case that their tax-exempt status is revoked, they ought to be afforded a simple process to become compliant and regain their prior status.
In a society where government entitlement programs are growing out of control, small non-profits provide a valuable service to their communities and should be allowed to operate without undue regulation from the federal government. It is time to send someone to Washington who will focus on protecting our liberty and our freedom rather than eroding the principles of self-responsibility by over-regulation.
The complete measure Senator Lundberg has introduced can be found at: http://www.leg.state.co.us/clics/clics2012a/csl.nsf/fsbillcont/D4605D343E364AAA872579C600650A46?Open&file=SJM003_01.pdf
Colorado State Senator Kevin Lundberg is a candidate for the 2nd Congressional District of Colorado. For more information on Kevin’s campaign visit: http://www.Lundberg2012.com.