Thursday, March 19, 2015

not for profit

Last year, the AAUW group I belonged to lost its "not for profit" tax status. This was frustrating, as our coffers are small (we have about $3000 in a checking account, for funding small scholarships and for incidentals like sending flowers to a funeral when someone in the group dies).

We had to reinstate, because the paperwork (and tax burden) for a group classified as not not-for-profit is worse. We were able to do this in part because a local CPA/attorney did much of the work for us on a pro-bono basis. And we had a retired member with some tax expertise and a real sense of duty and determination to fix it.

Well, some $800 and a ton of paperwork later, we were reinstated. The general impression was that we filed the documents that had been necessary to be filed, but that the national leadership dropped the ball on notifying the IRS about some stuff, and that was why we were dropped.

And then at the meeting last week, a letter, from the National, talking about how so very many not-for-profits have lost their status recently, and had to go through the same thing we did.

(And I was able to quickly find a news story on it. Yeah, Kafkaesque bureaucracy is about right. Our member who did the work reported being on hold with the IRS for three hours one day) And here's another one. Yeah. Toastmasters' groups being dunned by the IRS. Greeeeeaaaattt.

(With a lot of these small groups, it would be a blood-from-a-stone issue. As I said, our assets are maybe $3000, but many non profits are even more shoestringy than that.)

So, apparently, this is a widespread issue. Hm. Someone somewhere got grabby, is my interpretation - or someone, somewhere, realized that Petty Bureaucrat Rules enabled them to have the "fun" of sending out those letters, and they did.

I wonder if they realized how much stress, sadness, and trouble they caused for people? I know we never spoke of the idea of disbanding but some not-for-profits apparently did. And what it cost us in the fines or whatever to the IRS, well, we could have funded one of our small scholarships out of that.

But, gah. Just another example of why people hate bureaucracy, hate centralized leadership where some person who doesn't know the people they're dealing with makes the rules, and hate things like zero-tolerance schemes. (And why some people don't trust government agencies.)

(I also admit I didn't totally appreciate what I interpreted as a slightly whiny tone in the letter, it almost felt like a, "Don't complain to US this whole thing was NOT OUR FAULT." Well, you could have said something six or eight months ago....)


Roger Owen Green said...

Yes, our Friends of the APL group was terrified of that happening because our treasurer (now deceased) failed to file the 990 form for a couple years. We are ZEALOUS about it now.

Ellen said...

My local (actually statewide) knitting guild missed filing its non profit status a couple of years ago (volunteers here, people!) and we just got over spending tons of money and having to rearrange our board in order to get everything up to date. It almost encouraged me (almost but not quite) to read that other non profit boards go through the same problem.