(WICHITA, Kan.)—Thousands of non-profits across Kansas may lose their tax exemption. It's all because of a change in IRS rules that many people didn't know about. But since so many are out of compliance, the IRS is offering one more grace period.
"I pray and I stuff," Reverend Peggy Elliott says as she puts donations requests into envelopes. Donations are the only way her ministry Balm of Gilead survives. "It is life to the ministry, literally the blood line," she said. But her work in the community was at risk because of a change with the IRS. "People didn't know the law changed. But when you say you're not in compliance with the IRS, that is a little embarrassing to me," she said.
She was one of 3,700 Kansas non-profits unaware they had to file a tax return to keep their tax exemption. Before if you made less than $25,000 a year it wasn't required. But in 2006, the law changed and the grace period ran out this year.
Since so many organizations are still out of compliance, the IRS is offering more time to correct the problem. Non-profits have until October to get everything filed. "You need to clear that up, otherwise you stand to lose a lot," Elliott said. That's because without a tax exemption, donors won't get to write off their contributions. "If we don't get donations we can't exist whatsoever."
Elliott has already filed the paperwork and received notice from the IRS that she's in good standing. That information isn't reflected yet on the IRS list. Elliott says that's frustrating but she at least has letter to show donors that her tax exemption stands.