For the past two decades, the Willtown Community Organization has held dinners, donut sales and other events to pay the bills and keep the lights on at its community center in rural Adams Run.
A few dozen people show up for the nonprofit group's monthly meetings, and its biggest contribution is helping to pay for street lighting in this small, country community, said Bernetha McCanick, the organization's secretary.
The group's ability to raise funds, however, soon could be compromised. The Willtown organization is one of some 3,600 South Carolina nonprofits in danger of losing their tax-exempt status for failing to file financial information with the Internal Revenue Service for the past three years.
Losing that status not only would require organizations to pay taxes on donations, but it could scare off potential donors who no longer would be able to write off gifts on their own returns.
"It could have many negative outcomes," said Mark W. Hanson, an IRS spokesman for the Carolinas.
McCanick didn't realize that federal law had changed a few years back and that her group now was required to file annual financial returns with the IRS. She's not alone. Several nonprofit groups contacted by The Post and Courier were in the dark about the change, despite efforts by the IRS to get the word out.
"I didn't know anything about that," said Elizabeth Letourneau, a Charleston psychologist and a founding member of the South Carolina Association for the Treatment of Sexual Abusers. "We've never had to do that. We're a very, very small group, and we take in almost nothing."
Like Letourneau's association, most of these nonprofits are small groups that raise less than $25,000 in a year's time. They range from VFW halls, Masonic lodges and golf clubs to neighborhood organizations, parent-teacher groups and cemetery associations. There are also a host of niche groups like Miss Wheelchair South Carolina, the Sports Car Club of America, the Homemade Mime Troup, the Mark Twain Journal and the Richland County Sheriff's Posse, according to the IRS.
The federal government used to give these groups a pass on filing annual financial information because they took in so little cash. That changed in 2007. Now, the IRS is obligated to yank groups' tax-exempt status if they fail to file returns for three consecutive years.
The first filing deadline to put that status on the chopping block was in May, but the IRS opted to extend the deadline to October to give groups more time to comply. This is a one-time pass, and it appears a lot of groups could use the extra time. Nationally, 355,000 nonprofits could lose their tax-exempt status, according to a study by GuideStar, an organization that tracks nonprofit finances.
IRS officials said the agency went to great lengths to publicize the change and sent out more than 1 million letters alerting small nonprofits to the filing requirement. Still, a number of groups say they never got the word.
Deidre Pinkney, executive director of New Horizons Counseling Services in Hollywood, said she knew nothing of the change until the newspaper contacted her. "We were never notified," she said.
New Horizons works with a volunteer network of professionals to provide counseling and educational services to at-risk kids in rural areas, Pinkney said. They depend on money raised through chicken dinners and car washes to pay for food and activities for youths. "We take in less than $500 a year," she said. "But the services we provide are priceless."
Some groups named by the IRS challenged their inclusion on the agency's list. Harriett Grady-Thomas, founder and president of the Beach Music and Shag Preservation Society of South Carolina, provided the newspaper with a copy of a tax form she submitted to the IRS this year, the first year that she might break even. And Bev O'Donnell, president of the Jimmy Buffett-inspired Lowcountry Parrot Head Club, said her nonprofit organization always has filed its tax documents as required.
The IRS likely won't hear from some of the groups on the list, as several organizations appear to be defunct or inactive. The Bachelors Society of Charleston is one. Formed by some single guys in the 1950s to throw parties for debutantes, the society grew into a social group that threw parties and held fishing tournaments to raise money for underprivileged children and other charitable causes, former president Cameron Bowles said.
"Most years, we might take in $4,000 and end up spending $5,000," he said.
The group went dormant about two years ago, and the new IRS requirements probably will keep it from surfacing again, Bowles said. "It's kind of a shame they are doing that," he said. "(The group) was something easy for us to do. We did some good and had a good time doing it. But there is no way we could afford to hire an accountant to fill out paperwork year after year."
IRS officials said they have tried to make the process as simple as possible. The smallest groups, those with revenues of $25,000 or less, need only file an online "e-postcard" and provide eight items of information to keep their tax-exempt status.
"The law is the law," Hanson of the IRS said. "But we would like to see organizations that are tax-exempt do what they need to do to maintain that status."
For more information
To find out if your organization is on the IRS list of nonprofits in danger of losing their nonprofit status
For instructions and information on filing the required documents
To speak with an IRS representative about the nonprofit requirements, call
the agency’s special hotline at 1-877-829-5500
Reach Glenn Smith at 937-5556 or email@example.com.