Nonprofits Beware: The IRS is Watching You On-Line

The IRS has announced its intention to consider revoking the tax exempt status of nonprofit organizations that link to political campaigns or lobbyist groups on their Web sites.

There are currently no guidelines as to how tax exempt organizations should conduct themselves on the Internet. The IRS is trying to determine if new rules are necessary, or if existing rules can be applied to organizations with an Internet presence.

Some nonprofit organizations will probably benefit from a little guidance in this area. Others claim new guidelines might inhibit their ability to function on the Internet. "Voter and civic education is being called into question here," says Internet strategist Steven L. Clift, who runs the nonprofit Minnesota E-Democracy project, where Web sites link viewers with voter education material, including candidates' Web pages. "Although the IRS may be looking to keep national organizations in line, this could sound the death knell of local nonprofits on the Net."

Whether or not new rules are created, all organizations should remember that their on-line presence is not private, and the IRS is apparently watching carefully to make sure nonprofits maintain their tax exempt status in cyberspace.

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