American Legion Post 20 in Milton was one of the organizations recently informed its tax-exempt status had been revoked.
Robert Moore, spokesman for Post 20, said he heard June 17 through friends that Post 20 was on the revoked list.
“It came as a complete shock,” said Moore. “I open all the mail we receive, and I never got anything from the IRS about this.”
Gregg Semanick, spokesman for the Internal Revenue Service, said tax-exempt organizations other than churches and church-related organizations are required to file annual notices with the IRS. If they fail to file the paperwork for three straight years, they automatically lose tax-exempt status.
Moore made several phone calls to the IRS to find out what he had to do to regain Post 20’s status. He said he found out Post 20 had been revoked since May 2010. He said if that’s true, the Post did not file the proper taxes for 2010; the post would be subject to corporate taxes if its tax-exempt status was revoked.
Moore said he became very upset and called Sen. Tom Carper’s office in Wilmington to express his concerns. He is now working with Carper’s office on letters to send to the IRS on Post 20’s behalf.
In order to appeal the revoked status, the IRS requires organizations to pay $100; the regular filing fee is $400. In addition to filing paperwork and paying the fee, organizations have to show what safeguards they will put in place to prevent future status revocations.
“I feel like I’ve cost my Post $100, and we just don’t have that kind of money,” Moore said. “We are veterans that have served, and we really don’t need this.”
Once the organization’s status is revoked, the group must apply to have its status reinstated. The proper forms must be filed and a fee paid to the IRS.
“There is no way for the IRS to determine if an organization is defunct or is simply not filing returns as required,” said Semanick. “This is one objective of this law, to screen out those organizations that no longer are in operation and to require organizations that are in existence to file in order to keep the IRS records current.”
Semanick said once the IRS approves the application, the status will be reinstated, going back to the date when it was revoked. If the organization is not reinstated, then it is responsible for paying federal income taxes.
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It's not like this was a secret. For many years tax exempt organizations have had to file for these exemptions. The great majority have complied and have no problem. It's only those few organizations who are oblivious who are in trouble.
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