After you form a nonprofit corporation, you must file reports with state and federal agencies to keep the organization in good standing and to avoid penalties. Your organization’s filing requirements will depend on the state where you formed the nonprofit, your fundraising activities, and whether your organization is exempt from state and federal taxes. If you fail to submit the required filings, the government might impose fines, take away your state and federal tax exemptions, dissolve your nonprofit, or do all three.
Most states require nonprofits to file annual or biennial reports with their business regulatory agency, such as the Secretary of State. In the report, you confirm or update information such as your organization’s address, registered agent, and names of directors. Some states charge nonprofits a fee to submit the filing. Review our 50-state guide on forming a nonprofit for more information about state filings.
If your organization obtained a fundraising permit, check with the licensing agency to determine if and when you must file reports or renew. The type of report you will file will depend on your state’s requirements, total revenue, and fundraising activity. For example, when you obtain a permit to conduct a raffle, bingo game, or other gambling event, your state might require you to submit a report on how much money the event brought in, and a certification that your organization used the money for a charitable purpose.
In some states, if your organization brought in little or no revenue, you will not have any reporting requirements, while if you brought in significant revenue (such as over $50,000), the state agency might request detailed financial reports of your expenses and sources of income. If you fundraise across state lines and registered in more than one state, be sure to check with each state agency with which you registered.
Your federal tax reporting requirements will depend on whether the IRS recognizes your organization as an exempt organization, meaning it is not responsible for federal income tax. When it comes to tax-exemption, nonprofit corporations fall under one of three categories:
Nonprofit corporation without tax exemption: You can form a nonprofit corporation without obtaining a tax exemption, which means your organization will be responsible for filing and paying taxes as a corporation. You can read more about corporation taxation here.
Nonprofit corporation that applied for and obtained tax exemption: If your organization applied for and obtained tax exemption from the IRS, you must file annual returns to maintain your exemption. Depending on the amount of your organization’s gross receipts, you must file Form 990-EZ, 990-N, or 990.
Nonprofit church: Churches automatically have tax-exempt status, and in most cases, organizers of churches do not have to apply for tax exemption or file annual returns with the IRS. It’s a good idea to check with a tax attorney or accountant to verify your church’s requirements because, as explained below, your nonprofit could face serious penalties for failing to file required returns.
The tax filing obligations explained above may be only part of your nonprofit’s federal tax reporting requirements. Many factors can complicate your tax obligations, such as whether your nonprofit earned money from activities unrelated to your organization’s charitable mission (which you can read more about here). Consult with an accountant or tax attorney for specifics, or check out our book Every Nonprofit’s Tax Guide.
The state where you formed your nonprofit might require you to file annual state tax returns. The forms you must file will depend on your gross revenue and exempt status. If your nonprofit does not have exempt status, you will likely file and pay taxes as a corporation; while if you have an exempt organization, you will typically submit an informational return. If your organization obtained exemptions from sales or property tax, you might be responsible for additional tax returns or renewal forms to maintain those exemptions. Review our 50-state guide on forming a nonprofit to learn more about the filing requirements in your state.
Your nonprofit and might face serious penalties for missing your annual filings. If you fail to file state reports, the state might impose fines, and after a period of noncompliance (such as three years), dissolve your nonprofit.
If you fail to file a required federal form 990, the IRS may impose a penalty of $20 for each day it is late (generally capped at 5% of your organization’s gross receipts). If you miss three consecutive years of filing, the IRS will automatically revoke your tax-exempt status. After the IRS revokes your federal tax exemption, the state will likely also revoke your tax exemption. Following revocation, your organization will be responsible for corporate income tax at both the federal and state level, which can be a significant amount of money. If you find yourself in this position, it is best to consult with an attorney.