Most tax-exempt organizations know they must file an annual information return (Form 990) with the Internal Revenue Service and they may be liable for tax on its unrelated business income (Form 990-T). However, often overlooked by many tax-exempt organizations are state and local filing requirements. Here is a list of some that might apply:
- Make sure your organization has filed its articles of incorporation, and any subsequent amendments, with the State Secretary of State. Some states require that a report be filed annually or biennially to remain in good standing. In addition, be sure that the information concerning your organization’s statutory agent is kept current with the Secretary of State.
- Many states regulate public charities such as IRC Sec. 501(c)(3) nonprofit organizations and most states require that certain charitable organizations register with the state Attorney General in addition to an annual filing requirement.
- If your organization conducts activities in other states, (i.e. physical location, employees, solicitation of charitable contributions), know the filing requirements for those states. A nonprofit organization may be subject to charitable solicitation and reporting requirements in its city as well. Contact the appropriate city department to determine whether its jurisdiction has such a requirement.
- If your organization conducts charitable gaming activities, it may need to apply with the applicable state regulatory agency.
- Most organizations are aware that they must file a Form 990-T to report the organization’s unrelated business income (UBI). However, many states and cities have their own separate filing requirement for UBI. Many states have a filing requirement that is similar to the federal Form 990-T, however some states require that an organization file a corporate income tax or franchise tax return. Some cities also impose a tax on the UBI of exempt organizations.
- If your organization sells merchandise, it may be subject to state sales tax filing requirements.
- State Unclaimed Funds/Escheat laws require organizations with unclaimed property (i.e. uncashed checks, unclaimed accounts, etc.) for an extended period of time turn that property over to the state. The state acts as custodian of the funds until they can be returned to the rightful owner. All states have unclaimed property laws; dormancy periods vary from state to state.
To learn more or for assistance, email Rea & Associates.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.