TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, August 15, 2018

How Many Nonprofits Are There?

Nonprofit Quarterly:  How Many Nonprofits Are There?: What the IRS’s Nonprofit Automatic Revocation and 1023-EZ Processes Left Behind, by Michael Wyland:

From the middle of 2010 to the end of 2017, the IRS revoked the tax-exempt recognition of more than 760,000 nonprofit organizations for failing to file Form 990 returns. More recently, it has implemented the 1023-EZ process, which makes applying for federal tax-exempt status easier. What effect have these changes had on the numbers of nonprofits in our sector? Are there marked differences in trends vis-à-vis 501(c)(3)s and 501(c)(4)s?

This first-of-its-kind analysis is informed by two key data sources. The first is the Internal Revenue Service Data Book, the annual compendium of IRS statistics published since 1863—specifically, the data contained in Tables 24, 24a, and 25 of the Data Books from 2007 through 2017. The second data source is the IRS’s automatic revocation data, downloaded from the IRS website. A single ASCII file contains all automatic revocations made since 2010. ...

Two findings without an explanation are: (1) the changes in the number of 501(c)(4) organizations between 2010 and 2017; and (2) the extraordinary number of 501(c)(4) groups that were automatically revoked in 2017. ... Chart 4 shows new tax exemption application determination activity and automatic revocation and reinstatements for 501(c)(4) groups between 2010 and 2017.

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