Fayette County

More than 3,000 Kentucky non-profit groups lose tax-exempt status

From a dairy herd improvement group in Adairville to a regional tourism organization in Zachariah, 3,180 non-profit groups in Kentucky have lost tax-exempt status after failing for three consecutive years to file annual information reports with the Internal Revenue Service.

A list provided by the IRS includes school athletic booster groups, fraternities and sororities, organizations that raise money to fight diseases, volunteer fire departments and community improvement groups across the state, including 298 in Lexington.

A non-profit is an organization that has claimed tax-exempt status. Non-profits that lose their tax-exempt status must pay federal income tax and could lose state tax exemptions that are based on their non-profit status.

Donors to those groups will not be given tax deductions for their contributions, according to Danielle Clore, director of the Kentucky Nonprofit Network, which is housed in the University of Kentucky College of Agriculture.

"We anticipate that most of the organizations on the list are no longer active," Clore said.

IRS officials also said in a statement that they think the majority of the 275,000 groups in the United States whose tax-exempt status was revoked as of June 9 are defunct.

In some cases, a group might have merged with another non-profit or might be a disbanded local chapter of a larger organization, Clore said. Some groups on Kentucky's list no longer had a working telephone number.

Twelve organizations, including the Society for Neuroscience, Bluegrass International Affairs, and Women in Medicine, listed addresses at the University of Kentucky. But UK spokesman Jay Blanton said that it "appears in most cases, these organizations are not affiliated with UK."

"They are organizations, like fraternities and sororities, that for mailing purposes, probably, use UK addresses," Blanton said.

Officials of some of the groups on the list that still operate in Kentucky said this week that they would apply for reinstatement.

"As soon as it was brought to our attention that it had lapsed, we started to investigate," said Christie Redmond Jouett, the current board chairwoman for the Dubois Community Center, which provides programs for children in Mount Sterling. "We are taking proper steps to get reinstated."

Jouett said the building that houses the center has been closed since last year, when a wall collapsed, and the board is reorganizing.

Karen Winn, interim executive director of the U.S. Pony Club in Lexington, told The Associated Press that the group is working to restore tax-exempt status to several subsidiary clubs.

Jim Dupree, a spokesman for the IRS, said in an interview that groups can reapply for tax exempt status by filing an application. The groups also have to pay a fee of between $100 to $850.

"We are working with smaller groups to help them with that process," said Dupree.

Donations that contributors have made to a group on the list prior to the publication of an organization's name on the list remains tax-deductible, he said.

Before Congress passed the 2006 Pension Protection Act, the IRS did not require small non-profits that had gross receipts of less than $25,000 to file information returns. Now, the law requires automatically revoking the tax-exempt status of any organization that failed for three straight years to file the required returns.

Groups on the list were warned in 2010. Those on this revocation list did not file in 2007, 2008 and 2009.

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