NACOGDOCHES, TX (KTRE) - Each year, non-profit organizations are required by law to file an information return. Failure to do so three years in a row leads to automatic revocation of tax-exempt status. In other words, they're required to pay federal taxes. Many East Texas non-profits find themselves in that situation today.
"The administration for non-profits really is a giant headache," said Karen Swenson, the executive director for Greater East Texas Community Action.
Swenson can say that. Project Turnaround ended up on the Texas list. We let her know. She's confident why it's there.
"Project Turnaround has been under the umbrella of Community Action for years and we have been overseeing that, making certain all of that has been done in the guidelines," she said. "Our school supply drive is a great example of this. We shelter all the money for the Project SOS, then you have all the reporting in the administrative requirements done by Community Action."
Thousands of Texas non-profits, including over a hundred serving East Texas, have had their tax-free status revoked. The Nacogdoches County Sheriff's reserve to even AARP, the very group that offers free tax help, are on the list.
"I wouldn't automatically assume," Swenson said. "I would suspect that some of these people on this list just haven't done all the final paperwork, or in some instances, you've done the paperwork, but somehow they lose the paperwork."
Donors can lose a tax deduction if the issue is ignored. You can check an agency's status on the IRS website and then notify them of the probable oversight.
You can see the list at this website.