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One quarter of nonprofits likely to soon lose federal tax breaks

As many as 400,000 nonprofit organizations are weeks away from a doomsday.

At midnight on May 15, an estimated one-quarter of some 1.6 million charities, trade associations and membership groups will lose their tax exemptions, thanks to a provision buried in a 2006 federal bill aimed at pension reform.

“It’s going to be an unholy mess once these organizations realize what’s happened to them,” said Diana Aviv, president of the Independent Sector, a nonprofit trade group.

The 2006 federal legislation required all nonprofits to file tax forms the following year. Previously, only organizations with revenues of $25,000 or more — or the vast majority of nonprofit groups — had to file.

The new law, embedded in the 393 pages of the Pension Protection Act of 2006, also directed the Internal Revenue Service to revoke the tax exemptions of groups that failed to file for three consecutive years. Three years have passed, and thus the deadline looms.

Obama’s NASA blueprint is challenged in Congress

WASHINGTONPresident Barack Obama may have hoped that a speech a week ago at the Kennedy Space Center would sway skeptics to his proposed space policy, but a congressional hearing on Thursday gave little signs that the lines of contention have shifted yet.

Opponents like Richard Shelby, the Republican senator from Alabama where NASA’s Marshall Spaceflight Center has been leading the design of the Ares I rocket that the Obama administration would like to cancel, continued to denounce Obama’s plans. Those plans call for ending NASA’s current Constellation program that was to send astronauts back to the moon and turning to private companies for transportation into orbit.

At a hearing of an appropriations subcommittee, Shelby said that the proposal would abdicate the United States’ leadership in space.

Vatican notified about midwest sex abuse earlier than thought

Documents released in a lawsuit filed Thursday against Pope Benedict XVI show that the Vatican was informed more than a year earlier than previously thought about the case of a priest who molested deaf boys for two decades at a boarding school in Wisconsin.

One victim of the priest wrote two letters to the Vatican’s secretary of state in 1995 asking Pope John Paul II himself to read his anguished letters and “excommunicate” the priest, the Rev. Lawrence Murphy.

Murphy, who died in 1998, admitted to a psychologist hired by the archdiocese that he had molested 34 children when he worked at St. John’s School for the Deaf in St. Francis, Wis., from 1952 to 1974. Church officials concluded that there might have been as many as 200 victims.

The Vatican had previously said that the first notice it had about Murphy was when Cardinal Joseph Ratzinger — now Pope Benedict XVI — received a letter about the case in 1996 from Archbishop Rembert G. Weakland of Milwaukee.

The letter writer, whose name was excised, is now the unnamed plaintiff in the latest lawsuit filed by Jeffrey Anderson, a lawyer who has brought hundreds of sexual abuse cases against the Roman Catholic Church.

The victim said he never received a response.

For United, a deal may still loom

The announcement by US Airways on Thursday that it was ending merger discussions with United Airlines clears the path for rival talks between Continental Airlines and United.

But it also left unanswered questions about US Airways’ long-term ability to compete as an independent carrier, leading to speculation that it might pair up with American Airlines.

A merger of Continental and United would, if successful, create the nation’s biggest network carrier. It would leapfrog Delta Air Lines, which itself took the top spot when Delta bought Northwest two years ago. And it would have a global network as well as domestic hubs that crisscross the United States, from San Francisco to New York, Chicago to Houston.

Airlines have been struggling in recent years as surging fuel prices and a weak economy increased costs and reduced the number of travelers. As the economy picks up, airlines have reported improving business, providing some of the impetus behind the renewed merger talks.

Continental and United came close to a merger in 2008, but Continental walked away at the 11th hour because of concerns about United’s financial health. Since then, United has improved its cash position, aggressively reduced capacity, raised fees and cut costs, analysts said, easing fears about its financial strength.

While a deal could still fall through, the companies have recently exchanged financial information and are discussing a stock-for-stock transaction, according to people briefed on the talks. The top management positions have also been worked out, these people said on condition of anonymity because a deal has not been completed. Glenn Tilton of United would become chairman, and Jeff Smisek of Continental would be chief executive.

“It is highly likely that United engaged in talks with US Airways in order to prompt Continental to negotiate,” said Jeff Straebler, a strategist at RBS Securities. Now, “United will do all they can to close a deal.”

Jean Medina, a spokeswoman for United, said the company “thoughtfully” considers opportunities, “increasingly from a position of strength as United’s performance continues to dramatically improve.”

US Airways’ announcement came as Continental’s executives were on a conference call to discuss the company’s quarterly results.