Block Yeshiva among nonprofits losing tax-exempt status in national IRS review

By Repps Hudson, Special to the Jewish Light

Louis and Sarah Block Yeshiva High School of St. Louis, which operates Orthodox schools for boys and girls, lost its tax-exempt status earlier this year as part of a national Internal Revenue Service review of non-profits.

According to the IRS’s website, the federal tax-collecting agency revoked the tax-exempt status of about 275,000 non-profits nationwide in June because they had failed to file the Form 990, Return of Organization Exempt from Income Tax, as required by law.

In Missouri, nearly 8,397 non-profits all over the state have lost their tax-exempt status and must file new papers with the IRS to requalify.

Block Yeshiva High School officially learned of its revocation on Aug. 15, said board president Shulamith Simon. She said the school was advised by the accountant it had hired several years ago that it did not have to file the 990 forms. The last form the high school filed was in 2004.

The school is in the process of reapplying for tax-exempt status, Simon said.

“I don’t know of any reason we wouldn’t qualify,” she said.

As it turns out, the accountant’s advice to Block Yeshiva was wrong. Because the school did not file the forms with the IRS for three consecutive years, it came to the attention of the IRS, as did thousands of other small non-profits around the United States.

Scott Hunt, a tax lawyer with the firm of Armstrong Teasdale, called the number of non-profits caught in the IRS’s review “astounding.”

“I think the IRS recognized that it wasn’t doing a very good job of policing the non-profits,” he said. “Many small ones weren’t required to file tax returns, so they lost track of them.”

A non-profit that had gross receipts of less than $25,000 a year did not have to file a tax return, Hunt said.

Non-profits, many of which are run by volunteers, may have failed to keep their paperwork current, Hunt said. Such a failure may be an indication of other issues that pertain to how well the organization is managed, he added.

Block Yeshiva received $120,000 from the Jewish Federation of St. Louis in 2008 and $95,000 in 2009, according to the Federation’s own 990 forms.

Jewish Federation of St. Louis President Barry Rosenberg said his own non-profit agency was waiting to see if Block Yeshiva files the correct papers and receives IRS approval. The Federation makes its decisions as to how to distributed funds to non-profits it supports after Jan. 1, he said.

“I don’t have any reason to believe the school did anything wrong,” said Rosenberg, adding that any agency the Federation funds must have its paperwork in order with the IRS.

“We want to be sure the beneficiary provides service that is consistent with its mission,” he said.