Non Profits And Tax Liability

Non-Profits and Tax Liability

Many of the Unites States' non-profit and charitable organizations are exempt from property taxes, income taxes, and many other forms of personal property taxes. The original intent of these regulations was to allow the non-profits to operate without the worry of raising money to pay for tax expenditures. But as time has passed, and many of the non-profit agencies have grown into political, economic and social giants there has been an ever-increasing demand for accountability.
Many of these non-profits are property owning, big businesses. They generate massive amounts of revenue, but because of their non-profit status, they are exempt from the very tax system that serves to keep them alive. There are many forces at work to keep the non-profits tax exempt, even if the reasons aren't so charitable.
Big business has also entered the non-profit sector of society and economics, and now some of the very charities that were once heavily dependent upon the tax revenue generated, are refusing to share in the responsibility that should be due their communities. Once upon a time, non-profits were the institutions that immediately come to mind when we think about charitable organizations: hospitals, universities, and other public, community service organizations. Most of these organizations operated on shoe-string budgets, and had very little in the way of assets. Today, the scenario has changed incredibly, and although still listed as non-profit, these organizations are generating lots of income. They are now property owners in larger cities, some of the most desired properties belong to non-profit organizations; their facilities are nicer than anything privately owned, and the services are not necessarily provided free.
Today, there are so many classifications of non-profits that is virtually impossible for the average citizen to truly understand a true non-profit organization, from the thinly veiled borderline non-profits. This adds to the confusion, and as the political power of the non-profit organizations has grown, so too has the murkiness surrounding their tax liability. Thanks to the complexity of the situation, and the fact that federal regulations can differ dramatically from state, county, and city regulations, and these municipalities lack the funding to fight the complex situation, most of these organizations are never challenged as to their non-profit status, and no taxes are ever assessed.
Where does this leave our local economies? Often, out in the cold. The non-profit organizations within a city can be extremely numerous when you follow some of the complex guidelines that define "non-profit", and although the non-profit organizations are profiting handsomely from generated income, not necessarily revenue, the city, county, and state do not receive any funding or contribution from the organization.
As mentioned earlier, the political clout of these non-profit organizations has grown right along with their property assets, and you would be hard-pressed to succeed in changing some of the regulations and legalities that could affect the tax status of a non-profit. They have become what are known in Washington as "special interest groups" and their influence is far-reaching. From the religious groups, to the universities and research centers around America, they continue to gain handsomely without sharing in the tax burden. We have school systems that are starved for funding, but the counties and cities within which they operate, have no tax base to support them. We have school systems that also have leadership abuses that drain them of funding. As with their non-profit status, their leadership is questionable. The US tax system and the methods used for classification of organizations, businesses and other legal entities, needs an update urgently. Not only do businesses, profit and non-profit, shirk their tax liability; the government has made it extremely easy to accomplish that end.