IRS Error Mistakenly Revokes Tax-Exempt Status of Horizons Church

An error on the part of the Internal Revenue Service nearly caused the Macomb Township-based Horizons Church a whole lot of headache when its tax-exempt status was revoked last week.

On June 8, the Internal Revenue Service of 11 Macomb Township-based nonprofit organizations, Horizons included, after the groups failed to file legally required annual tax forms.

But in the case of Horizons Church, this loss of tax-exempt status was not the fault of the church. 

"They classified my church only as a public charity, which almost never happens, but the IRS paperwork was wrong on how they filled out tax-exempt status," said Dan Mastrogiacomo, of Horizons Church.

Mastrogiacomo expressed shock when Macomb Patch contacted him last week to inquire about Horizons' inclusion in the IRS' list of some 275,000 nonprofits across the country whose tax-exempt status has been revoked under the terms of the 2006 Pension Protection Act.

According to the terms of the PPA, the IRS required all organizations, regardless of annual revenue, to file annual returns and do so for three consecutive years or risk its tax-exempt status being automatically revoked.

Mastrogiacomo, who believed his church had been classified by the IRS as a church–and thus not held to the same filing requirements as nonprofit–realized a mistake had been made somewhere and set out to contact the IRS.

"I wasn't able to get a hold of the IRS for a few days, but I talked to their law office this morning (June 16) and it sounds like it all worked out for us," Mastrogiacomo said. "Within next month they will re-instate our tax-exempt status."

Classified as only a public charity, and not a church, Horizons was held to the terms of PPA.

"They classified us as a public charity, which is fine, but we're not just a public charity," he said. "As a church, we don't have to hold tax-exempt status with the IRS. Legally, as a church, when people give those tax contributions, those contributions are tax exemptible to them, because the classification for a church is a little different."

Despite the confusion, Mastrogiacomo said the church is still in good standing with the IRS and will be reinstated as a tax-exempt entity shortly.