Following up on Thursday’s post, IRS Strips Tax-Exempt Status From 275,000 Nonprofits: Chronicle of Philanthropy, Mistakes in IRS List Cause Headaches for Some Nonprofits:
Nonprofits around the country have found both alarming and reassuring news as they have reviewed the list of 275,000 groups whose tax exemptions the IRS revoked on Wednesday. The IRS took action against charities that, it says, failed to file required paperwork for three consecutive years.
But the list is misleading in places, with some well-established groups listed that have, in fact, filed their paperwork. On the list were the names of some of the biggest and most well-established colleges in the United States, George Washington University and the University of Michigan at Ann Arbor. …
In the case of George Washington, for example, officials think the IRS meant to list a student group, says Candace Smith, a university spokeswoman. She noted that the IRS gave a federal employer identification number that did not match the university’s. “The university continues to be a valid tax-exempt organization, and our exemption is not at risk of being revoked,” she said.
The University of Michigan’s identification number also did not match, another sign of a mistake.
In both cases, and in the cases of other mistakes on the public list, the names were likely truncated versions of a much longer name, says Lois G. Lerner, director of the agency’s tax-exempt organizations division. The IRS’s list limits the number of characters that can appear in an organization’s name. As a result, fraternities and sororities that are affiliated with a university, for example, might appear publicly under the name of the university.
Nonetheless, the mistakes on the list angered tax experts. “I don’t think the list has done much for the charitable sector. The IRS has created an enormous waste of time and resources, and clearly there doesn’t seem to have been any judgmental review of even a sampling of the list,” said Marcus S. Owens, a Washington lawyer who formerly headed the IRS’s tax-exempt division. He said he worried that the process of creating the list every year, and fixing the mistakes, would now cause “a workload issue for the IRS and the sector.” …
There are many possible reasons a well-known charity in good standing might appear to be on the list. A search of the list for “United Way” turned up 69 organizations with those words in the name. But those groups aren’t currently affiliated with United Way Worldwide, said Bill Meierling, communications director for the organization. “No accredited local United Ways are included on the IRS list,” Mr. Meierling said. “All organizations included on the list that employ the United Way name are former members or independent groups which were never a part of United Way Worldwide.”
