Nonprofit Compliance Checklist for Iowa

By Jim Thomas

Nonprofit organizations — organizations whose purpose is not to make a profit — are essential members of many communities. As the Iowa Governor's Nonprofit Task Force explains, nonprofits in Iowa "range across the broad spectrum of daily life and include religion, health, social services, education, culture, community development, housing and human rights ... they are vital factors in making Iowa a great place to work and live." Setting up an Iowa nonprofit is not difficult, but you must heed the state regulations regarding formation of your organization. You also must comply with IRS regulation of nonprofits. By following a step-by-step process, and checking off what you need to do at each step, you can ensure you are in compliance with both state and federal law.

File Articles of Incorporation

Iowa code section 504.202 requires you to file articles of incorporation for a nonprofit organization with the office of the secretary of state. The articles must contain all of the elements required by Iowa law. These include a corporate name that is distinguishable from all other names of Iowa corporations, the lawful purpose of your organization, a registered office and agent, the status of members in regard to their voting rights within the organization, and provisions that the IRS requires for federal tax exemption. When all of these elements are stated in the articles of incorporation, submit the articles to the secretary of state's business services office in Des Moines. You will receive a certificate of acknowledgement of your nonprofit organization in return.

Hold an Organizational Meeting

After acknowledgement from the state, hold a meeting to elect directors and officers, adopt bylaws and begin the work of your nonprofit. Although you don't have to file it with the state, Iowa law requires the initial set of bylaws to be adopted by the board of directors. Bylaws should cover the size of the board and how it is to be elected, meeting times, committees, responsibilities of the officers, the fiscal year of the nonprofit and the process of amending the bylaws.

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Obtain Nonprofit IRS Status

To obtain nonprofit status, apply to the IRS by submitting IRS form 1023, which is available on the IRS website. The form requires a statement of the proposed activities of your organization and estimates for a three-year budget. After you receive recognition of your federal nonprofit status from the IRS, you are automatically exempt from Iowa corporate income taxes as well. However, your nonprofit may have to pay sales tax, depending on its activities. Consult the Iowa Department of Revenue to determine whether or not state sales taxes apply to your organization.

Comply With Reporting Requirements

Your nonprofit must file a biennial report and informational updates to the Iowa secretary of state's office. If you fail to do so, you risk the dissolution of your nonprofit. The IRS requires annual reporting in the form of file 990. If your nonprofit has collected income unrelated to the organization's approved activities, federal form 990T must be filed with the IRS and state form 1120 must be filed with the Iowa Department of Revenue and Finance.

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Wisconsin Non-Profit Laws

References

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Although a somewhat cumbersome process, properly registering your organization as a 501(c)(3) nonprofit allows it to benefit from tax-deductible donations and exemption from certain state and federal taxes. Nonprofits are initially formed at the state level, while the Internal Revenue Service regulates 501(c)(3), or exempt, organizations. As such, a nonprofit must pursue both state and federal registration in order to receive the most benefits.

How to Apply for Nonprofit Status in New York State

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Benefits for a 501(c)(4)

If you operate or have management responsibilities within a nonprofit organization, you may want to evaluate whether it satisfies the requirements of Internal Revenue Code 501(c)(4). In the event it does, there are a number of tax benefits of which the organization can take advantage that are only available to nonprofits that obtain tax-exempt status with the IRS.

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