Excerpt taken from article.
The future of nonprofit news organizations has hit an unexpected roadblock in the agency that determines their tax-exempt status: The Internal Revenue Service.
Nonprofit news organizations applying for tax-exempt status are running into long delays as the IRS bundles them together as "precedential" and studies whether they qualify for the status under 501(c)(3). While animal protection and "fostering national or international amateur sports competition" are tax-exempt activities listed in the 501(c)(3) statute
, journalism is not, and the agency's historical position has been that newspapers or similar publications are commercial enterprises.
The burst of activity in nonprofit news in 2008 and 2009 caught the attention of the IRS, says Marcus Owens
, a lawyer with Caplin & Drysdale who used to direct the IRS's exempt-organizations division that decides who gets 501(c)(3) status. The agency processes tens of thousands of nonprofit applications a year from its Cincinnati office. Most are routinely processed in two to three months, but some with novel issues are bundled together and sent to Washington for further study. The IRS flagged nonprofit news because of the increasing applications and because it has historically resisted giving newspapers, or publications that seem like newspapers, tax-exempt status, Owens says. To read more about the IRS scrutiny on nonprofit news organizations' tax-exempt status, click here