Some Area Non-Profits Lose IRS Status

Two weeks ago officials at received a strange notice from the Internal Revenue Service informing them the pool no longer qualified as a non-profit entity.

However, they know that the pool does not qualify for non-profit status. Since 1995, the pool has been owned by the Burr Ridge Park District, a government agency, which is not eligible for non-profit status.

“It’s not been a non-profit for a long time,” said Jamie Janusz, superintendent of finance for the park district. “I suppose someone in the IRS finally began to check on all the non-profits out there.”

At one time Woods Pool did fall under the umbrella of a non-profit organization known as the Woods Pool and Tennis Club, LLC. The organization, which was essentially a homeowners group, owned the swimming pool. However, the neighborhood pool was expensive to operate, so the association asked the park district to buy it. After several rounds of deliberation, Janusz said the board of commissioners opted to buy the pool. Prior to the sale the park district did not have a swimming pool, she said.

Woods Pool is not the only entity in Burr Ridge to receive a similar letter. Nine other non-profit organizations were told their tax-exempt status was being revoked.

In 2006 the IRS changed reporting rules for non-profit organizations raising less than $25,000 annually. Prior to the rules change those non-profits under the $25,000 threshold were not required to file annual returns. But starting in 2007 those organizations were expected to file returns. Michael Devine, an IRS spokesman, said more than 500,000 letters and notifications were sent out to those non-profit agencies that were impacted by the rules change. Under the law the non-profit agencies lost their status if they did not file a tax return within three years.

Each new tax cycle, Devine said the IRS sent out new notifications to the last known address of each non-profit in danger of losing its status. When the three-year window closed, Devine said the IRS began the process of revoking non-profit status. So far the IRS revoked non-profit status from 275,000 organizations.

“Most of those we believe just don’t exist anymore,” Devine said. “We believe they ceased to function and failed to contact us about it.”

That may be the case for several of the affected non-profits in Burr Ridge. Contact information is unavailable online for most of the 10 organizations on the IRS list. Devine said that’s a good indication those organizations no longer exist. Those organizations include Dennis J. Kiley Foundation, James R. Figliulo Family Foundation, Robert M. and Kim M. Figliulo Family Foundation, and the George and Jennifer Ward Family Foundation.

But, Devine said if they do exist, the organizations need to contact the IRS to reapply for non-profit status.

That’s what Illinois Environmental Balancing, a Burr Ridge subsidiary of National Environmental Balancing, intends to do.

Bulley would not speculate on why or how his organization failed to follow through with the changes in the IRS code.

“I guess the only thing we can do is reapply,” said spokesman Dan Bulley.