Most nonprofits are 501(c)(3) organizations, which means they are formed for religious, charitable, scientific, literary, or educational purposes and are eligible for federal and state tax exemptions. To create a 501(c)(3) tax-exempt organization, first you need to form a Alaska nonprofit corporation. Then you apply for tax-exempt status from the IRS and the state of Alaska. Here are the details.
Form Your Alaska Nonprofit Corporation
First, you need to form a nonprofit corporation under Alaska state law (Alaska Statutes Chapter 10.20).
1. Choose the initial directors for your nonprofit
In Alaska, your nonprofit corporation must have three or more directors, and three or more incorporators who are 19 or older. The name and address of each member of the first board of directors and each incorporator must be included in the articles of incorporation. The initial board of directors remains in office until the first annual election of directors or for the period specified in the articles of incorporation. If no initial term for the directors is specified in the articles, then the term is one year.
2. Choose a name for your Alaska nonprofit corporation
The name of your nonprofit corporation must be distinguishable from the name of any other organized entity on file or reserved or registered with the state. To search the availability of a name, go to the Corporations Section of the Department of Commerce, Community, and Economic Development website and find the Search Corporations Database. You can reserve a name, which will prevent another nonprofit or business from registering the name while you prepare and file your articles. See the Department of Commerce, Community, and Economic Development website for more information on Reserving or Registering a Business Name.
3. Prepare and file your nonprofit articles of incorporation
You create your nonprofit entity by filing articles of incorporation with the Corporations Section, Division of Corporations, Business, and Professional Licensing. Your articles must include basic information such as:
- the name of the corporation
- the period of its duration, which may be perpetual
- the purpose or purposes for which the corporation is organized
- provisions, not inconsistent with law, which the incorporators elect to set out in the articles of incorporation for the regulation of the internal affairs of the corporation, including provision for distribution of assets on dissolution or final liquidation
- the address of its initial registered office, and the name of its initial registered agent at the address
- the number of directors constituting the initial board of directors, and the names and addresses of the initial directors, and
- the name and address of each incorporator.
See Alaska Stat. 10.20.151 and 10.20.153 for more on what is required in your articles.
The Corporations Section has a fillable articles of incorporation form for nonprofits which you can use to create your nonprofit corporation. You can also complete and file your articles online. Whichever method you choose, be sure to follow the instructions provided.
The articles form available from the state has the minimal information necessary to create a nonprofit in Alaska. It does not include language required by the IRS to obtain 501(c)(3) tax-exempt status. To receive tax-exempt status from the IRS, you'll need to have additional specific language in your articles, including:
- a statement of purpose that meets IRS requirements
- statements that your non-profit will not engage in prohibited political or legislative activity, and
- a dissolution of assets provision dedicating your assets to another 501(c)(3) organization upon dissolution.
For more information on IRS requirements for tax exemption, including sample language, see IRS Publication 557, Tax-Exempt Status for Your Organization, available on the IRS website. Make sure you include both the state and federal tax-exempt required language in the articles you create.
4. Prepare bylaws for your Alaska nonprofit corporation
Before you file your articles of incorporation, you’ll need to have bylaws that comply with Alaska law. Your bylaws contain the rules and procedures your corporation will follow for holding meetings, electing officers and directors, and taking care of other corporate formalities required in Alaska. Your bylaws do not need to be filed with the state -- they are your internal operating manual.
5. Hold a meeting of your board of directors
Your first board meeting is usually referred to as the organizational meeting of the board. The board should take such actions as:
- approving the bylaws
- appointing officers
- setting an accounting period and tax year, and
- approving initial transactions of the corporation, such as the opening of a corporate bank account.
After the meeting is completed, be sure to create minutes that accurately record the actions taken by the board.
6. Set up a corporate records binder
You should set up a corporate records binder for your nonprofit to hold important documents such as articles of incorporation, bylaws, and minutes of meetings. For more information, as well as minutes forms, consent forms, and other resolutions, see Nonprofit Meetings, Minutes & Records, by Anthony Mancuso (Nolo).
Obtain Your Federal and State Tax Exemptions
Now that you have created your nonprofit corporation, you can obtain your federal and Alaska state tax exemptions. Here are the steps you must take to obtain your tax-exempt status:
1. File your Form 1023 federal tax exemption application
To obtain federal tax-exempt status from the IRS, you will need to complete and file IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. This long and detailed form asks for lots of information about your organization, including its history, finances, organizational structure, governance policies, operations, activities, and more. For line-by-line instructions on how to complete the Form 1023, see How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo).
Smaller nonprofits may be eligible to file Form 1023-EZ, Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code. This is a much simpler, shorter form that is filed online. Only smaller nonprofits--those with projected annual gross receipts of less than $50,000 and total assets of less than $250,000--are eligible to use the streamlined 1023-EZ application.
See the IRS website for more information on the Form 1023 and Form 1023-EZ filing requirements.
2. Obtain your Alaska state tax exemptions.
Nonprofits who receive 501(c)(3) tax-exempt status from the IRS are automatically exempt from Alaska’s income tax. For information and filing requirements for exemptions from other state taxes, including local sales or property taxes, check with Alaska’s Department of Revenue.
3. Other state reporting and registration requirements.
Depending on your activities and the size of your organization, you may need to register with the state before doing any fundraising activities. Check the Alaska Consumer Protection website for information and rules about fundraising and registration requirements for nonprofits.