Country Losing Taxes over Profit Making Nonprofits

Posted on November 19, 2021

Country Losing Taxes over Profit Making Nonprofits

Nonprofits that enjoy tax-exemption are earning millions of dollars. That means that the country is losing millions of dollars in taxes. There are many companies that have tax-exempt status when they are not a charity, a school, a hospital, a religious organization etc. and are enjoying millions of dollars of tax-free earnings.

When talks of the fiscal cliff, of raising taxes on the rich and of recession are ripe, this special stature of some of the nonprofit firms sounds incredible. The money the government is losing is incredible yet no action is taken.

The ease with which any firm can obtain the status of tax-exempt is another reason for the growing trend. All you need to do to get a tax-exempt status is to file an IRS application stating the reason for wanting the status. ABS (American Bureau of Shipping) is a nonprofit company that inspects 11,898 vessels annually, has an eight-story office building and gives multimillion-dollar packages and perks to its executives. It does not pay taxes.

On an IRS form, the company dutifully states the reason for being nonprofit as “to promote the security of life and property on the seas”. It is a simple task that gets much benefit. No wonder everybody’s doing it.

“It’s complete rubber-stamping,” says Ken Berger, CEO of Charity Navigator, a watchdog group that is itself a nonprofit. “The IRS and the states are tremendously understaffed.”

With the economy down, the IRS may turn their eyes towards these multimillion nonprofit firms that can easily pay taxes.

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