Is it Time to Review Your Nonprofit’s Registration Requirements?
The new year often finds charities reviewing their progress and priorities for the year ahead. This is also a good time to review your policies, procedures, practices, including making sure you comply with the many nonprofit registration requirements. Here’s a checklist to make sure you’ve got all of your bases covered.
Federal Nonprofit Registration Requirements
Nonprofit organizations with $50,000 or more in gross receipts are required to file a Form 990, Return of Organization Exempt from Income Tax, or Form 990-EZ, Short Form Return of Organization Exempt from Income Tax. Returns are due on the 15th day of the 5th month after the end of your organization’s fiscal year. More details can be found in the IRS’s overview of exempt annual filing requirements.
Late filings can result in penalties and additional tax liabilities for your nonprofit. Organizations that fail to file for three years in a row will have their tax-exempt status automatically revoked.
Remember that your Form 990 filings are available to the public. In addition, Section B, line 11 of the form asks whether your organization has provided a copy of the draft Form 990 to governing body members prior to filing and also to “describe the process used by the organization to review” its Form 990. That’s why it’s a good idea for your nonprofit to include in its policies and procedures a requirement that the board reviews Form 990 prior to filing. The National Council of Nonprofits provides helpful guidance on what board members should look for in reviewing your Form 990 here.
State Nonprofit Registration Requirements
Because the scope and nature of your nonprofit activities may change over time, in addition to ensuring all filings are up to date, you should periodically re-evaluate whether your nonprofit corporation is “doing business” in any new jurisdictions where it may be required to register. We take each type of potential filing in turn below.
Annual Corporate Filings
Most nonprofits organized as corporations are required to file an annual report with their state of incorporation as well any states where they are registered to do business. Failure to file an annual report can result in the corporation losing its good standing with the state, and ultimately administrative dissolution. Annual filing requirements may also be accompanied by required financial disclosures (usually just a copy of your IRS Form 990), but the requirements vary for each state. Additional information is available through most states’ secretary of state.
In addition to registering as a non-profit with the IRS, some states require nonprofits to register at the state level as well. Those states that do sometimes require an annual or periodic renewal of your organization’s state tax-exempt status. Some states also require issuance and periodic renewal of tax-exempt certification. This certification permits nonprofits to benefit from sales and use tax exemptions.
Charitable Solicitation Registration
Nonprofits that solicit funds are required to register with each state in which they solicit funds. That means that if you accept funds from out-of-state donors (hello internet!), you will need to ensure you are registered in every state from which you anticipate receiving funds before the funds are solicited. Charitable solicitation registration is currently required in 39 states and the District of Columbia.
Every year thereafter, your organization is required to renew its registration with each state in which it is registered and continues to solicit charitable contributions. Most states require a completed renewal form and payment of a fee. You may also need a copy of your organization’s most recently filed Form 990, your most recent audited financial statements (if applicable), and in some states a notarized signature on the renewal form.
Each state has its own registration requirements and renewal deadlines. That’s why it’s important to stay up to date on your filing requirements (which can change frequently) and to keep a calendar of the deadlines to renew in each state; late fees add up very quickly!
For a complete list of charitable solicitation registration requirements and those states that require registrations, see our guide here.
If you’re unsure whether your organization needs to file a charitable solicitation registration, or the steps involved in doing so, Caritas Registration, LLC can help. [CTA]
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on corporate, tax, and fundraising regulations nationwide. Ellis also advises donors with regard to major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.