Plugin says GZIP not active

Installed plugin and clicked button to enable gzip. I got the message that gzip was enabled. But the error message from the plugin was still displayed (that gzip was NOT active). I dismissed the message (clicked on the link to dismiss it) and the plugin when back to the status saying that gzip was not active.

I looked at the htaccess file and it has been modified, so why is gzip not working and why does the plugin think it is not active?