Taxes coming up - be careful with non-profit deductions & don't commit fraud unknowingly!!

I came across a non-for-profit 501.c.3 that has been taking donations for over 5 years while it's non profit status has been revoked, for non-filing of their annual 990 form. Since their status has been revoked they continued to operate the same, taking donations and either telling people they are still a 501.c.3 or not correcting people when they mention donations or their non profit status, etc. I wanted to be a volunteer based on their non-profit status and wanted to work with them along with another 501.c.3 I work with, and after 3-4 long conversations, I was never told or corrected when mentioning their non profit status.

The problem with this is when people donate money, goods or services and they claim the value of these on their tax returns as a write off, they are unknowingly committing tax fraud, and if you are audited, you will be held liable for this fraud and have to pay the penalties and interest. This doesn't even mention the fact that there is the opportunity lost of giving the money, goods or services to an actual non profit, where you could get this deduction and where a true non-profit would benefit.

There are a few things that people should know about non profits. One is that most of them, those making over $50,000 in revenue/donations per year, have to file an annual 990 which will show how they spend their money, how much employees get paid, what the president/CEO & board members get paid, and basically where the money goes. So you can basically see if the organization is spending 90% of their donations/revenue on employees and 10% or less on the "cause", or if they are actually doing what their mission statement says. There area few different 990's, some much longer and more detailed and it varies by the size of the organization (size in revenue).

You also need to verify that the organization's non profit status is current and not revoked. A non-profit will have their status revoked after failure to file a 990 for 3 years & the revocation usually takes about 3-9 months to happen - then they have time to file the 990's to get their status back w/o penalty. The problem is that many don't file the forms to catch up and they continue to operate illegally as a non profit.

IRS site to find current status of charity (note, they could be 3-4 years into revocation before this is posted, so it doesn't help unless they charity is deep into the process - but at least it can help a little)

apps.irs.gov...

This site will allow you to view old 990's to see how the company spends their money

projects.propublica.org...

Your state also requires a filing, probably with the Secretary of State. That's another place to check.

Yes, good point. The reason I didn't mention that is when I checked the company I was wondering about, it didn't even show up as a business - it showed "no record" - which seems odd b/c it has been around for 18 years. If the company looses their status, it will stay on the IRS site, but seems it is completely dropped off from the state sites - which would at least show you they are not active. This may vary by state, some may keep records longer but my state doesn't seem to which I think is a bit of a problem.

Schuyler, I updated that thread you posted in after doing some more research, if you have any interest in it.