The Internal Revenue Service cleaned house this week by striking hundreds of thousands of nonprofits from its list of those with tax-exempt status.
Dozens of nonprofits in the Mid-Columbia lost that status, which allows them to avoid paying tax on revenues and allows donations to be written off on donors' tax returns.
But it isn't necessarily because they did anything wrong. Most of the nonprofits who lost their status simply aren't around anymore, such as the now-defunct Prosser States Day Inc. nonprofit that once oversaw the annual small-town festival.
Jim Milne, executive director of the Prosser Chamber of Commerce, explained that the nonprofit was formed years ago for the purpose of putting on the celebration, which allows Prosser residents to celebrate their states of origin and see how far their neighbors have traveled to live in the Mid-Columbia.
But the chamber eventually took over running the festival, and the nonprofit corporation no longer is active.
Sometimes, nonprofits are formed for a particular purpose and dissolve once that purpose is complete, such as the former Uptown Improvement Corp., also on the IRS's list.
Frances Finfrock, who keeps clippings related to the Uptown Shopping Center's history in Richland, said a newspaper article showed the nonprofit was formed in the late 1960s so business owners could come together to make improvements to the shopping center and its parking lot.
It hasn't been active for a long time, and in fact, current business owners formed the Uptown Business Improvement District several years ago to pay for improvements.
A 2006 law requires all nonprofits to file an annual report known as a Form 990 -- sort of like the tax returns individuals and businesses file each year.
The law automatically revokes the tax-exempt status -- or "501(c)(3)" in tax lingo -- of any organization that doesn't file for three consecutive years.
But filing the forms is a relatively new process for small nonprofits, for whom the annual report became a requirement in 2007.
The federal agency says most of the nonprofits on the list are defunct, but is aware some small groups may not have caught on to the requirements yet, so it mailed out notices to about 1 million nonprofits last year that hadn't filed and gave them a five-month extension to get their paperwork in.
"During the past several years, the IRS has gone the extra mile to help make tax-exempt groups aware of their legal filing requirement and allow them additional time to file," IRS Commissioner Doug Shulman said in a written statement. "Still, we realize there may be some legitimate organizations, especially very small ones, that were unaware of their new filing requirement. We are taking additional steps for these groups to maintain their tax-exempt status without jeopardizing their operations or harming their donors."
Some small organizations that missed the deadlines can apply to have their tax-exempt status reinstated retroactively, and can pay a reduced fee for the application.