Info You Can Use: Beware Non-Profit Identity Theft

Non-Profit Law Blog editor Gene Takagi encourages all non-profits to take note of a recent investigation by Forbes magazine that uncovered someone redirecting non-profit registrations to a post office box in Las Vegas. The majority of the registrations have been for religious organizations, but the weakness in the IRS’ system could be exploited to hijack nearly any non-profit’s registration.

Someone has hijacked the tax identity of more than 2,300 tiny or defunct nonprofits, apparently taking advantage of a hole in a new electronic Internal Revenue Service filing system to list the same person as a charitable official at the same mail box drop in Las Vegas.

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A search on Melissa Data of nonprofits in that zip code produced 2,370 listings. A random spot cross check by Forbes of dozens of them on the official IRS site listed Alexander and the N. Rainbow Blvd. address in every instance. The nonprofits originally were located elsewhere all across the country.

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Another nonprofit listed by the IRS as being led by William Alexander out of Las Vegas is Godsline Ministries. The clothes-donation charity used to be located in McMinnville, Ore.–and died there about seven years ago, according to Rob Rabon, who ran it with his then-wife. “It only lasted two or three years,” he said. “We went to the state and filed papers dissolving it.”

Yet the IRS proclaims Godsline alive and well, with the same tax identification number as when the Rabons ran it.

The problem has its roots in the recent requirement that non profits making less than $25,000 file a statement to that effect. If you recall, there was a big panic last year that these small non-profits would lose their status because they were unaware of the requirement. Since these small entities don’t have a lot of resources, the IRS endeavored to make it easy for them to verify their status with a simple postcard or online filing.

Because so few details are required in the filing, there isn’t a lot of verifiable data being supplied to the IRS. This makes it easy to slip in and replace the authentic organization. The Forbes articles notes that the names of the small non-profits in danger of losing their status were published in an attempt to make people aware of the impending change, but in fact may have been serving to let fraudsters know which organizations were vulnerable to identity theft.

About Joe Patti

I have been writing Butts in the Seats (BitS) on topics of arts and cultural administration since 2004 (yikes!). Given the ever evolving concerns facing the sector, I have yet to exhaust the available subject matter. In addition to BitS, I am a founding contributor to the ArtsHacker (artshacker.com) website where I focus on topics related to boards, law, governance, policy and practice.

I am also an evangelist for the effort to Build Public Will For Arts and Culture being helmed by Arts Midwest and the Metropolitan Group. (http://www.creatingconnection.org/about/)

My most recent role was as Executive Director of the Grand Opera House in Macon, GA.

Among the things I am most proud are having produced an opera in the Hawaiian language and a dance drama about Hawaii's snow goddess Poli'ahu while working as a Theater Manager in Hawaii. Though there are many more highlights than there is space here to list.

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