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Q&A #166 – Are new nonprofits required to file BOI reports under the Corporate Transparency Act?
While the Corporate Transparency Act (“CTA”) exempts most tax-exempt organizations from the requirement to file beneficial ownership information (“BOI”) reports, there has been some confusion about whether these exemptions apply to new organizations that were just recently formed. A careful reading of the CTA statute and regulations strongly suggests that most newly formed nonprofit organizations are exempt from the BOI reporting requirements, even if their tax-exempt status has not yet been formally approved by the IRS.
VIDEO: What is a Registered Agent? | Nonprofit Glossary
SE4N's Benjamin Takis provides a short summary of what a “registered agent” is, why state law requires nonprofit organizations to name a registered agent if the organization is incorporated in the state or doing business in the state, and who can serve as a registered agent.
Q&A #149 – Can a nonprofit use a DBA or trade name?
Like any other business or entity, nonprofit organizations are permitted to conduct their activities under a “trade name” (often referred to as a fictitious name, “doing business as,” or “DBA”) so long as the name is properly registered in the relevant states and reported on the Form 990, charitable solicitation registrations, and other required filings, and the name is available to use without infringing on the trademark rights of others.
Q&A #142 – Can a home address be used when incorporating a new nonprofit?
Virtually all states requires that nonprofit corporations designate a street address (and not a P.O. box) as their principal office in the state and/or the office of their “registered agent.” It is generally permissible to use a residential address for this purpose, although some jurisdictions may have special permitting or zoning requirements. However, there are several disadvantages to consider.
Q&A #140 – How do nonprofits report a name change to the IRS?
A formal name change must be reported on the organization’s next Form 990 or 990-EZ by checking the “name change” box in Column B on the left side at the top of page 1 and including a state-certified copy of the amendment to the organization’s Articles of Incorporation. Form 990-N filers must instead send a letter or fax with this supporting documentation to the IRS Exempt Organizations Division.
Q&A #139 – Does a nonprofit name change require an amendment to the governing documents?
A nonprofit organization may generally change its name either by amending its Articles of Incorporation and other governing documents, or, alternatively, by registering a “trade name” in the applicable states, often referred to as a fictitious name, “doing business as” name, or “DBA.” While amending the governing documents is not required, it is usually the recommended approach to minimize confusion.
Q&A #129 – Are 501(c)(3) organizations automatically exempt from state corporate income tax?
Organizations that receive IRS approval of 501(c)(3) status are almost always eligible for exemption from state corporate income tax, subject to exceptions for certain types of revenue. However, the process varies widely depending on the state and you should not assume that the exemption from state corporate income tax is automatic. In some states, this exemption automatically applies upon IRS approval of 501(c)(3) status and no additional steps are required. Other states require a separate application to be filed.
Q&A #127 – What happens when an organization’s nonprofit corporation status is revoked?
Revocation of an organization’s status as a “nonprofit corporation,” which is often called “administrative dissolution” or “termination,” has numerous consequences that warrant immediate attention, but this is separate and distinct from revocation of federal tax-exempt status. Thus, revocation of an organization’s nonprofit corporation status does not mean that its 501(c)(3) status has been revoked.
Q&A #126 – Are 501(c)(3) organizations automatically exempt from sales and use tax?
A nonprofit organization’s eligibility to qualify for exemption from sales tax (and a related tax called “use tax”) is determined by the laws and procedures of the applicable state, but in general IRS approval of 501(c)(3) status does not result in automatic exemption from sales and use tax. 501(c)(3) status is often a prerequisite for exemption from sales and use tax, but most states have a separate detailed application process for this exemption. Further, in many states the sales and use tax exemption has rigid criteria and not all 501(c)(3) organizations will qualify.
Q&A #76 – Is Form 990, Schedule B donor information required with my organization’s state charitable solicitation registrations?
The answer should be no, for now. This past summer, the Supreme Court invalidated California’s requirement to include unredacted Form 990, Schedule B donor information as part of its charitable solicitation registration law in Americans for Prosperity Foundation v. Bonta, No. 19-251 (July 1, 2021). Prior to this decision, California was one of a handful of states that required this donor information, along with New York, New Jersey, and Hawaii. All except for Hawaii have since explicitly suspended this requirement in response to Bonta, and Hawaii has not yet clarified its position.
![EBOOK: Nonprofit Legal Basics Primer [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/4dd69115-399e-461e-a23f-20a65c6608b8/tsvetoslav-hristov-iJ-uantQb9I-unsplash.jpg)
EBOOK: Nonprofit Legal Basics Primer [SUBSCRIBERS-ONLY]
This 48-page primer provides an overview of the key areas of nonprofit law governing 501(c)(3) organizations, including federal tax law requirements, state nonprofit corporation and tax law, fundraising laws, and employment law basics. This primer is tailored for organizations that are incorporated and operated in the District of Columbia, but many of the subject areas are useful for organizations based in other states.
Q&A #6 – Are there legal restrictions on my company’s ability to raise money for charity?
The main issue to consider is compliance with State “charitable solicitation registration” laws.” These laws, which have been enacted in about 40 States, are basically consumer protection laws aimed at protecting the public against being scammed by fraudulent fundraisers or illegitimate charities. These laws generally apply to anyone raising money for charitable purposes (with a few exceptions).