By TRACEY DRURY
tdrury@bizjournals.com | 716-541-1609

Small nonprofits at risk of losing their tax-exempt status for failure to file with the IRS have been given a reprieve until fall.

The Internal Revenue Service this week offered organizations a one-time relief program, giving them until Oct. 15 to file the required information and preserve their status.

More than 1,400 such organizations exist in Western New York, ranging from American Legion posts to professional associations and fraternal organizations. Others include business or social groups such as the New Millennium Group and community organizations such as the Orleans County Historical Association. Statewide, there are nearly 21,600 nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009.

A prepared statement at IRS.gov includes guidance on how to come back into compliance, along with the names and last-known addresses of these at-risk organizations.

"We are doing everything we can to help organizations comply with the law and keep their valuable tax exemption," IRS Commissioner Doug Shulman said. "So if you do not have your filings up to date, now's the time to take action and get back on track."

According to IRS information, the remedy for those affected is simple: The smallest organizations that would normally file an e-postcard need only supply eight information items electronically by Oct. 15; while those eligible for Form 990-EZ will find information on a voluntary compliance program, which requires them to file their delinquent annual information returns by Oct. 15 and pay a compliance fee.

Some listings on the site may be out of date, however. La Leche League Buffalo looked into its status several months ago, filed an e-postcard with the required information and received confirmation from the IRS. But it remains on the IRS list posted this week. The same is true of the Amherst Players.

Other groups confess they never knew the law changed: In the past, groups with revenues under $25,000 were not required to file at all with the IRS. And since many of these small organizations have no paid staff and change volunteer board members annually, sometimes addresses are no longer valid or the notification from the IRS about the changes in the law just never made it to the intended recipient.

That's likely what happened with the Buffalo Niagara Event Professionals, says chapter President Bobbi Scott, who says it was not even on her radar screen.

"It definitely didn't hit our P.O. box," says Scott, manager of events and hospitality at Shea's Performing Arts Center.

The group, with 43 members and an annual budget under $5,000, has rarely taken advantage of its tax-exempt status and doesn't receive many donations, she says. Instead, it operates more as a business networking group.

The Greater Buffalo Youth Ballet discovered its address was out of date while looking at the IRS site this week.

"We have changed our address but thought that was sent in a while ago," says James Waddell, executive director, who also was unaware the filing requirements had changed. As recently as 2005, the organization filed its information with the IRS but stopped after revenues fell below $25,000.

Many other groups on the list have changed their name and are filing under the new name, or become inactive or now operate as part of another organization. That includes the Dunkirk Chamber of Commerce, which is now part of the larger Chautauqua County Chamber of Commerce. For these groups, sometimes it's just easier to let the tax-exempt status lapse, rather than go through the expense and energy of dissolving the organization.

The relief announced this week is not available to larger organizations required to file Form 990 or to private foundations that file Form 990-PF. Those organizations that fail to act will lose their tax-exempt status. The IRS will publish a list of these revoked organizations in early 2011.

The revocation penalty follows the implementation of the Pension Protection Act of 2006.The law required that beginning in 2007, all tax-exempt organizations - other than churches and church-related organizations - must file an annual return with the IRS; and that those which fail to file for three consecutive years automatically would lose the federal tax-exempt status.

Those that do lose their exemption will have to reapply with the IRS to regain tax-exempt status.

Any income received between the revocation date and renewed exemption may be taxable.