Economy

IRS prunes tax exempt organizations

Starting in the late 1980s, with sometimes brutal politics simmering in Colleyville, residents of that community -- some of them enemies -- came together to have a barbecue.

Over the years, the Colleyville Bar-B-Q Cook-Off Association, a nonprofit, went on to raise $178,000 for a community center and library, co-founder Lynn Bural said.

"It soothed over the ills that were so bad," Bural said.

Then somewhere along the line, someone didn't file the right papers. The organization ran into a little trouble. The grills grew cold.

Now the organization is basically dead after the IRS yanked its tax-exempt status in a sweeping move that eliminated 275,000 organizations that failed to follow the rules. Targeted organizations had not filed annual reports for three consecutive years.

The IRS says the vast majority of the organizations were defunct, but it also announced special steps to help any existing organizations apply for reinstatement of their tax-exempt status.

In Texas, more than 21,400 nonprofits are no longer tax-exempt.

Barry Silverberg, president and CEO of the Texas Association of Nonprofit Organizations, said Texas had about 100,000 tax-exempt organizations, including 72,000 nonprofits classified as 501(c)(3), which made donations to them tax-deductible. The nonprofit status of more than 14,100 of those organizations was revoked, leaving roughly 58,000, Silverberg said.

About 2,070 advocacy groups, for which donations were not tax-deductible, also lost their exemption.

Silverberg said the IRS is simply clearing away a multitude of deadwood.

"This is not a story of the big bad IRS. If it was, believe me, we would be" up in arms, he said. "Really the IRS is doing its job and cleaning up."

Read the complete story at star-telegram.com

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