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New law could strip small nonprofits' tax-exempt status

Pastor Francis J. DeBenedetto, Jr. never thought his tiny nonprofit could lose its tax-exempt status.

DeBenedetto, who runs the Senior Citizens Aid Association out of his Selden home, spends his time raising a few thousand dollars a year in food and donations he gives to needy Long Islanders.

But a new law that requires small nonprofits like DeBenedetto's to file annual tax returns, or else face the loss of their nonprofit statuses, came as a surprise. "I never knew we had to do anything else," he said. "And my wife, she makes sure I do everything."

An extension to the deadline the IRS announced Monday now gives nonprofits that missed their deadline until Oct. 15 to file their tax returns.

The National Center for Charitable Statistics calculates that around 890 small 501(c)3 groups on Long Island are in danger of losing their tax-exempt status under the law, which requires the IRS revoke the nonprofit status of organizations that haven't filed a tax return at least once in the last three years.

A list of nonprofits for which the IRS has yet to receive returns can be found at its website,

"The last thing we at the IRS want to do is to have these groups lose their tax-exempt status because they haven't filed a short, simple form," said Doug Shulman, IRS commissioner.

Despite an extensive public information campaign from the IRS about the change, many nonprofits contacted by Newsday still say they hadn't heard of the new requirement to file.

"The smallest ones, they don't have the infrastructure to keep these things current or pay attention" to tax law changes, said Jon Small, government relations consultant for the Nonprofit Coordinating Committee of New York. A study this month by the charitable statistics center found that communication to smaller nonprofits can be more difficult, since they often are run by ever-changing teams of volunteers.

Jean Valente, treasurer of Beyond Our Borders, a St. James nonprofit that raises money for local and international causes, said she had heard about the change, but didn't think it applied to her small group. Besides, she said, she relied on her accountant to take care of any new requirements.

"I kind of felt the accountant would pick up on it," said Valente, whose group is behind in its filings. "I'll be calling him."

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