Applying for nonprofit status operates according to state law. Following formation, your organization may then qualify for certain tax exemptions, which may be pursued first at the federal level and then at the local level. Knowing what forms you need to file, and the content that needs to be in the forms, will help ensure you avoid delays in the establishment of your nonprofit.
The first step in applying for nonprofit status is incorporation. In most states, the form you will need to file to complete this task is known as the Articles of Incorporation. Typical information that must be included in the Articles is the name and purpose of your nonprofit, which must be for a reason other than generating profit. You must also include the names and addresses of your initial directors and registered agent, and the location of your office. Once complete, this form is generally filed with the Secretary of State, along with the payment of a filing fee.
Once the Articles have been filed, your nonprofit is considered officially formed. If your organization furthers a specific educational, scientific, charitable, or religious purpose, the next step is to apply for federal 501(c)(3) tax exempt status from the Internal Revenue Service. This step requires you to complete and file IRS Form 1023, which must contain more detailed information than required by the Articles. Specifically, the application requests the salaries of your directors and staff, an accounting of all of your assets, and requires you to indicate where property owned by your nonprofit will go upon dissolution, which must be to another tax exempt entity. If your application is approved, the IRS will send you a confirmation letter. Your organization will then be considered exempt from federal income taxes, and those who donate to your organization may receive a deduction on their individual tax returns for amounts donated.
State Tax Forms
After receiving the IRS confirmation letter, you may then pursue state level tax exemptions. In many states, simply including the confirmation letter with your tax return is sufficient to take the state income tax exemption. However, additional forms are often required for both sales and property tax exemptions. Sales exemption forms are often short and straightforward, requesting information similar to the Articles but requiring you to attach certain paperwork such as the operating budget, your company bylaws, and other supporting documentation. Once complete, sales exemption forms are usually filed with the state comptroller's office. A typical property tax exemption form requires you to indicate the location of real estate owned by your nonprofit, any information on how you are using the property and if you have a lease agreement with any other individuals or business. These forms are often filed with your local county assessor.
Most nonprofits rely on donations from the public for their continued survival. If you will be soliciting donations, you may be required to file additional forms with the state before you conduct any fundraising outreach. These forms usually require you to specify how you will be conducting your solicitation efforts, such as by mail, telephone or in person, and whether your nonprofit has been disciplined for unlawful solicitation activities in any state in the past. In states that do not require advance filing before solicitation, you may nonetheless be required to file a form if you utilize the services of a professional fundraiser. These forms are generally very short, sometimes requiring as little as the name and address of the fundraiser.
References & Resources
- Digital Media Law Project: Articles of Incorporation for Nonprofits
- Internal Revenue Service: Form 1023
- Digital Media Law Project: Forming a Nonprofit Corporation in Florida
- Texas Comptroller of Public Accounts: Texas Application for Exemption - Charitable Organizations
- Maricopa County Assessor: Tax Exemption Claim Form
- State of Michigan: Department of Attorney General: Initial Solicitation Registration Form
- State of Vermont: Office of Attorney General: Notice of Solicitation
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