LIMERICK PA – More than 190 area charitable groups – 78 of them located in municipalities from Limerick east to Norristown, and covering everything from religious bodies to foundations that help worthy students pay for college – are in jeopardy of losing their federal tax-exempt status because they failed to file necessary paperwork with the Internal Revenue Service during the past three years, the government agency said.

The problem, the IRS acknowledges, is that groups in trouble still may not know the paperwork is overdue.

However, it’s giving them until Oct. 15 to make amends, by sending what the agency considers relatively brief forms to cover its reporting needs. That will allow groups to keep their exemptions, on which contributors rely to deduct donations when filing annual income tax returns.

A loss of tax-exempt status certainly could put a crimp into these charities’ fund-raising efforts. It also could impact thousands of area residents who support the causes or beliefs of, or who benefit from, the organizations’ efforts.

The IRS’ lengthy list of local groups facing revocation of their exemption includes 21 from Phoenixville, 16 from Collegeville, 12 from Harleysville, nine from Royersford, six from Spring City, five from Schwenksville, four from Kimberton, two from Limerick, and one each from Parkerford, Rahns and Zieglerville.

See a list of all affected area groups, compiled from the complete and most recently available (dated June 30, 2010, and downloaded Monday, Aug. 9) IRS information, here.

Some listed organizations may no longer be operating. Some may have merged with other groups. Some may have resolved their issues with the IRS after June 30 but have not yet been removed from its list. Unfortunately, according to area accountants, most are still in business as one- or two-person groups with limited or no staff or budget, and who haven’t paid attention to the IRS’ rules.

Their problems stem from a Congressional bill known as the Pension Protection Act of 2006, which took effect in 2007. As part of an attempt to encourage growing charitable organizations to be held financially accountable, federal legislators ordered non-profits with gross incomes of less than $25,000 annually to file a report every year with the IRS. It’s known as Form 990.

To ensure non-profits complied, the legislation carried a penalty: those who didn’t file for three consecutive years risked losing their tax-exempt status. Sure enough, three years after the law took effect, the IRS has come knocking on the doors of the delinquents. The IRS video above, hosted at its YouTube account, explains the requirements.

Nationwide, the agency is reported to have sent more than a million letters to non-filing non-profits, reminding them of their obligations. Because so many are in trouble it even created postcard-sized short forms that can be electronically filed.

Groups that lose their exemptions can have them reinstated, but at an average cost of several thousand dollars. Because the law does not give the IRS any discretion in its enforcement, an agency spokesman added, those who do not comply will lose their exemptions early in 2011.

Editor’s note: The Post thanks Chris Huff, a member of the writing team for The Pulse! – the blog of Pottstown advocacy group Code Blue – for suggesting this story and contact sources. If you’ve got a story idea or tip we should explore, e-mail The Post.

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