The IRS continues to have problems with the nonprofit database it publishes. For the second month running, it posted a message like the following (the red is theirs)
Please Note: Programming for the EO BMF was recently updated. Unfortunately, an error occurred when the changes were implemented causing the system to pull incorrect data for the FOUNDATION and PF_FILING_REQ fields. The data in both of these fields should be disregarded. These two errors impact all files. We will let you know when the problem has been resolved.
The IRS problem impacts the information that sites like CharityCheck101.org can give the public about charities. At the moment, it appears to only impact whether a charity is shown as a public charity or a private foundation.
Why does private foundation status matter to a donor?
The tax deduction benefits of donating to private foundations are generally more limited than for other charities.
- Donors generally can deduct up to 50% of their adjusted gross incomes for contributions to Section 501(c)(3) organizations (“charities”).
- Many private foundations are Section 501(c)(3) organizations. Donors, however, generally can deduct only up to 20% of their adjusted gross income for contributions to private foundations.
I’m hoping the IRS database folks will get this sorted out soon, so we can resume bringing you accurate information about private foundation status.