Charitable giving is big business in Harvey County with hundreds of millions of dollars spread out over more than 170 charities.
Some of those charities may soon find out if people will keep giving if they can’t deduct the gifts on their taxes.
Changes in IRS regulations could mean 29 non-profit agencies in Harvey County could lose their non-profit status.
Previously, small charities with gross receipts of $25,000 or less only had to file annual paperwork with the state. But regulations changed in 2006 to require even small charities to file an IRS 990 form that includes information on income, assets and expenses.
After a three-year grace period, the IRS is ready to play hard ball. It gave one last extension to allow charities to file the correct forms by Oct. 15 or their non-profit status will be pulled, according to a press release from the IRS.
TaxExemptWorld.com listed 179 non-profit organizations in Newton with an annual income of $256,710, 244 with assets of $143,176,972. The affected organization account for a relatively small slice of that pie.
But those on the list are diverse and some key players in the community.
Some of the agencies that could be affected by the IRS changes in Harvey County include a housing charity, funds that support emergency responder training, the fine arts, local fraternal organizations, a senior organization and sports clubs.
In addition to requiring these non-profits to file paperwork, the IRS will charge a compliance fee.
Charities with incomes less than $100,000 will have to pay a fee of $100. Charities with incomes of between $100,001 and $200,000 will have to pay a $200 fee, and charities with incomes between $200,001 and $499,999 will have to pay a $500 compliance fee, said Michael Devine, IRS spokesman.
If the charities lose their non-profit status, they will have to complete the full application process again with the associated fees, Devine said.
While the charity reapplies, no gifts to the charity would be tax-deductible, he said.
“It is a lot easier to keep your status than to refile,” Devine said.
He said the IRS is trying to work to bring non-profits into compliance by the deadline. Information on the filing requirements and forms are available on the IRS Web site at IRS.gov.
Devine acknowledged not all of the IRS records may be up-to-date. The Kansan attempted to contact all 40 Harvey County non-profits listed in the IRS’ database of non-compliant charities.
It found nine charities in the IRS database that were no longer active. Two charities had changed their names, including the Kansas Learning Center for Health. Officials at another charity, the Warkentin House Association, said the proper forms already had been filed. A number of other charities no longer had current contact information.
Devine said if an organization has dissolved, IRS officials would like to know. Closing out the tax number is a relatively simple process, he said. Information on this process is available on the IRS Web site.
As the deadline for compliance nears, some charities in Newton were shocked to find out they were on the IRS list.
Here is what some local charities said about the new regulations and how losing their non-profit status would affect them.
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Charitable giving is big business in Harvey County with hundreds of millions of dollars spread out over more than 170 charities.
Some of those charities may soon find out if people will keep giving if they can’t deduct the gifts on their taxes.
Changes in IRS regulations could mean 29 non-profit agencies in Harvey County could lose their non-profit status.
Previously, small charities with gross receipts of $25,000 or less only had to file annual paperwork with the state. But regulations changed in 2006 to require even small charities to file an IRS 990 form that includes information on income, assets and expenses.
After a three-year grace period, the IRS is ready to play hard ball. It gave one last extension to allow charities to file the correct forms by Oct. 15 or their non-profit status will be pulled, according to a press release from the IRS.
TaxExemptWorld.com listed 179 non-profit organizations in Newton with an annual income of $256,710, 244 with assets of $143,176,972. The affected organization account for a relatively small slice of that pie.
But those on the list are diverse and some key players in the community.
Some of the agencies that could be affected by the IRS changes in Harvey County include a housing charity, funds that support emergency responder training, the fine arts, local fraternal organizations, a senior organization and sports clubs.
In addition to requiring these non-profits to file paperwork, the IRS will charge a compliance fee.
Charities with incomes less than $100,000 will have to pay a fee of $100. Charities with incomes of between $100,001 and $200,000 will have to pay a $200 fee, and charities with incomes between $200,001 and $499,999 will have to pay a $500 compliance fee, said Michael Devine, IRS spokesman.
If the charities lose their non-profit status, they will have to complete the full application process again with the associated fees, Devine said.
While the charity reapplies, no gifts to the charity would be tax-deductible, he said.
“It is a lot easier to keep your status than to refile,” Devine said.
He said the IRS is trying to work to bring non-profits into compliance by the deadline. Information on the filing requirements and forms are available on the IRS Web site at IRS.gov.
Devine acknowledged not all of the IRS records may be up-to-date. The Kansan attempted to contact all 40 Harvey County non-profits listed in the IRS’ database of non-compliant charities.
It found nine charities in the IRS database that were no longer active. Two charities had changed their names, including the Kansas Learning Center for Health. Officials at another charity, the Warkentin House Association, said the proper forms already had been filed. A number of other charities no longer had current contact information.
Devine said if an organization has dissolved, IRS officials would like to know. Closing out the tax number is a relatively simple process, he said. Information on this process is available on the IRS Web site.
As the deadline for compliance nears, some charities in Newton were shocked to find out they were on the IRS list.
Here is what some local charities said about the new regulations and how losing their non-profit status would affect them.
Habitat
for Humanity
Habitat for Humanity president Gary Hill initially said he was surprised to hear the group was on the IRS list.
“I guess I didn’t know,” Hill said last week. “It’s news to me. I am frustrated.”
However, Hill said Friday local volunteers had contacted the national office, and officials there said their records indicate the correct paperwork has been filed. Hill said the national office is working with the IRS to get the issue straightened out.
Habitat accepts donations of labor and supplies to help low-income families build homes.
Harvey County Habitat has built five homes since it was formed 12 years ago. It has annual contributions of $10,000 to $15,000.
Newton
Community
Theatre
Newton Community Theatre recruits volunteer children and adult actors to present plays in the community several times per year.
Brenda Williams, Newton Community Theatre treasurer, said she was dumbfounded when she found out the non-profit agency was in danger of losing its tax status.
“I don’t know anything. I have never heard we had to file. We pay a $60 fee to the state once a year, but I know nothing about filing with the IRS. I didn’t know we were supposed to.”
Williams said the group has limited income, but takes in charitable contributions for an annual fund-raiser for the Harvey County Homeless Shelter.
“This is rather alarming,” she said.
Harvey County Emergency
Services
Association
Harvey County Emergency Services Association uses donations and member dues to support training for first responders in the Harvey County area.
Russ Buller, board chairman, said the organization does not have much gross income, but the training provided with those funds are vital to the safety of the community.
The organization’s non-profit status also allows the group to apply for and accept grants.
“This has never been an issue before. I’m going to have to look into it,” he said.
“It would definitely hurt,” Buller said of a potential loss of the group’s non-profit status. “It is a challenge to obtain and maintain nonprofit status.”
Buller said he also was concerned about the compliance fee.
“That is $100 we can’t spend on our mission to prepare first responders to make calls and do what we do,” he said.
Buller said, to his knowledge, the group was never informed it had to file forms with the IRS.
“Were we just supposed to know it?” he said.
The IRS sent out 1 million notifications to charities since 2006 to inform them of the regulation changes, Devine said. Information also has been released in national media and forums for non-profit agencies.
“We have done a lot to try to get the word out on the law change,” Devine said.
Walton Fire
Another emergency organization in danger of losing its tax status is the donation fund for Harvey County Fire District No. 1, which covers the city of Walton.
The fire district takes donations and does fund-raisers to raise money for equipment. Three years ago the fire district used funds from this account to replace its defibrillator.
Some years the fund receives a couple hundred dollars, and some years it receives a couple thousand, said Merlyn Johnson, District No. 1 fire chief.
The department’s budget is $42,000 a year, and it is staffed completely by volunteers.
Johnson said any funds to help with equipment purchases are sorely needed.
He said he would look into what forms the fund needed to file with IRS.
“It sounds like I need to get that filed,” he said. “I hadn’t heard about that.”
Sedgwick Senior Center
Sedgwick Senior Center director Donald Cox said he was working on getting the IRS forms filed.
“Yes we’re working on it. We are aware,” he said. “We saw it on the news last week, and we found ourselves on the list.”
Cox said the center has very few donations that people wish to deduct on their taxes.
“I don’t think we had anyone ask for a receipt for the IRS last year. Most people donate pies or money for different events.”
However, Cox said he realizes that might change at any point and the center is interested in keeping its status.
Charitable giving
Sandi Fruit, who is the director of the Central Kansas Community Foundation, which is based in Newton, is also president of the Central Kansas Planned Giving Roundtable.
The Roundtable also is on the IRS list, Fruit said she was ashamed to admit.
The roundtable is a regional organization that encourages estate planning and charitable giving. It gives about $2,000 per year to Harvey County Leave a Legacy to bring in speakers during its annual campaign.
Leave a Legacy encourages charitable giving, especially though estate planning and helps encourage giving to the local foundation.
Fruit said the foundation was looking at the IRS list with interest and trying to locate charitable organizations that may be interested in dissolving but still have money in their accounts.
That money could be managed by the foundation, Fruit said. For more information, contact Fruit at 283-5474.
Threshing Days
A key group in the Goessel Threshing Days is also in jeopardy of losing its status.
The Wheat Heritage Engine and Threshing Club has displays and demonstrations during Goessel’s annual summer festival — Threshing Days.
It doesn’t do much in the public eye. It has a small budget that it uses to keep a storage space for antique tractors in Goessel.
Brendon Nafziger said the group did not want to lose its tax status and would be looking into filing the proper paperwork.
Nafziger said he was not aware of the IRS regulations and wondered why his group had not been notified of the change.
“I am surprised,” he said. “We file with the state of Kansas. I would think that something would have tipped us off.
“This catches me off guard. I didn’t think we had to file anything with the IRS.”
