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 an Alaska nonprofit corporation. Then you apply for tax-exempt status from the IRS and the state of Alaska. Here are the details.
First, you need to form a nonprofit corporation under Alaska state law (Alaska Statutes Chapter 10.20).
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.
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.
You create your nonprofit entity by filing articles of incorporation with the Corporations Section, Division of Corporations, Business, and Professional Licensing and paying the $50 filing fee (as of July 2020). Your articles must include basic information such as:
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:
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.
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.
Your first board meeting is usually referred to as the organizational meeting of the board. The board should take such actions as:
After the meeting is completed, be sure to create minutes that accurately record the actions taken by the board.
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).
Apply for an EIN via the IRS website. An EIN is a unique tax number for your nonprofit, which you will use on your state and federal tax filings, exemption applications, bank accounts, and other government filings. The application is free, and you will receive your EIN immediately after you submit your application online.
Obtain a business license from the Alaska Division of Corporations, Business, and Professional Licensing. As of July 2020, the fee for the license is $50 per year. Your local government might require additional licenses or permits. Check with your town or city's licensing division to determine the requirements for your organization.
Within six months after the state approves your articles of incorporation, submit your initial report. To keep your nonprofit in good standing, file your biennial report every other year by July 2. You may file the report online or mail in a paper copy to the state. In the reports, you will provide basic information about your organization, including the organization's name, registered agent, and names and addresses of board members.
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:
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.
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.
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.