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Are we required to renew our nonprofit (501(c)(3)) status? With the state? With the IRS?

Section 501(c)(3) status is recognized by the Internal Revenue Service for federal income tax purposes and the states are not involved. 501 (c)(3) status does not have to be “renewed.”

But under the new provisions of the Pension Protection Act of 2006, a small charity that is not required to file a Form 990 because its gross receipts are below the threshold for filing will be required to file a new statement that it continues to exist. Any charity required to file the new report or a tax information return will lose its exempt status  if it fails to do so for three consecutive years.  The report is not so much a renewal as a confirmation of continued activity.  (See Ready Reference Page: “Small Nonprofits Must File E-Postcard to Retain Exemption.”)

Many organizations receive an “advance ruling” that they qualify as public charities rather than private foundations when they receive their original letter of recognition of exemption. Those organizations must subsequently prove to the IRS that they have sufficiently broad sources of support to qualify as public charities on the basis of their first five years of income. But the question is whether they are public charities or private foundations, not whether they are 501(c)(3) exempts. (See Ready Reference Page: ‘Calculating Public Support.”)

Some states require periodic reports to maintain corporate status within the state and failure to do so can cause lose of corporate status. Some require periodic renewal of charitable exemption for sales or other taxes. Check with a knowledgeable attorney in your state.

Rev. 6/25/2007

Article Archives >> To the Point

State Charitable Solicitation Statutes: Everything You Wanted to Know But Were Afraid to Ask
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Charities that seek contributions nationally must typically register in 39 states and the District of Columbia before starting to solicit. Furthermore, for-profit fundraisers are also required to register and file their contracts and other documentation with many states. Since many states are increasing their enforcement efforts to ensure that charities and fundraisers are complying with initial and annual registration requirements, it's important that charities and fundraisers abide by these statutes.

Program materials include an extensive review of the statutes and their provisions, plus a copy of the Uniform Registration Statement for multi-state filings. Purchasers will receive an e-mail receipt that includes a link that will take them to the product download. The download is a pdf file. Learn More

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