How to Keep Your Illinois Nonprofit Compliant

Once you form a 501(c)(3) Nonprofit Public Charity in Illinois, follow this guide to keep it in good standing.

To learn how to form a nonprofit, check out our How to Start a Nonprofit in Illinois Guide.

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8 Steps to Keep Your Nonprofit Compliant

To maintain a 501(c)(3) nonprofit corporation in Illinois

  1. Apply for exemption from state taxes
  2. File Annual Federal Returns for Tax-exempt organizations
  3. Maintain a Registered Agent
  4. File periodic reports
  5. Apply for permits and licenses
  6. Register/Renew Charitable Registration
  7. Register with the Illinois Department of Employment Security
  8. Comply with Public Inspection Rules

1. Apply for exemption from state taxes

A. State income tax exemption 
Once your organization receives your 501(c) determination letter from the IRS, your nonprofit will automatically be exempt from paying corporate income tax. 

B. State sales tax exemption 
To apply for a sales tax exemption, fill out form STAX:1 Application for Sales Tax Exemption. You can fill out this form online or send it in via mail.

2. Annual Federal Returns for Tax-exempt organizations

A. Annual Federal Returns

Most tax-exempt nonprofit organizations are required to file an annual return with the IRS (Check the IRS website for a list of exceptions).

The annual gross receipt amounts for an organization determine which form should be used to file the annual federal return.

‘Gross receipt’ is defined by the IRS as “the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses”

For gross receipts ≤$50,000 — File 990-N
Gross receipts <$200,000 and total assets <$500,000 — File 990- EZ
Gross receipts >$200,000 or Total assets >$500,000 — File 990

For any questions, contact the IRS at

  • (800) 829-3676 (Form related questions)
  • (800) 829-1040 (general information)

FAQ

Q: When is form 990 due?
A: Form 990 is due on the 15th day of the 5th month after the taxable year of the organization comes to an end.

E.g. If the taxable year ends on Dec 31st, form 990 is due on May 15th.

NOTE: If an organization fails to file form 990 for 3 consecutive years, it will automatically lose tax-exempt status.

B. Unrelated Business Income

If an organization has a gross income of ≥$1000 from a trade or business that is not related to the stated purpose of the organization, then it must file Form 990-T to pay tax on that income.

3. Maintain a Registered Agent

Any nonprofit that has incorporated must have a registered agent who has an office address in Illinois. If your registered agent, or their office address, changes, you must file Form NFP 105.10/105.20 with the Secretary of State so that your Articles of Incorporation may be updated.

If you fail to notify the Secretary of State of this change, your corporation may be subject to termination.

4. File Periodic Reports

The Illinois Secretary of State requires all nonprofits to file an annual report. Annual reports may be filed online or nonprofits may mail in Form BCA 14.05.

Failure to file the appropriate reports may subject your organization to termination.

5. Apply for Permits and Licenses

The majority of Illinois nonprofits will not need a general business license. However, some cities and/or counties in Illinois may have their own requirements. Check with your local clerk or government to determine if nonprofits need to apply for local permits and licenses.

6. Register/Renew Charitable Registration

Charitable Illinois nonprofits are required to register with the Illinois State Attorney General’s office. Read more about the requirements on the Attorney General’s website, where you can access the registration and financial report forms as well.

7. Register with the Illinois Department of Employment Security

If your nonprofit will have employees of any kind, you will need to register with the Illinois Department of Employment Security.

Employer registration is easy and can be completed online. You can also access contact details for your local workforce commission on the Illinois Department of Employment Security website.

8. Comply with Public Inspection Rules

To comply with federal regulations regarding 501(c)(3) charities, you will need to release the following documents to any member of the public that requests them:

  • Your organization’s annual returns for up to 3 years after the listed due date (including the following Forms: 990-PF, 990-EZ, 990-T, and 990)
  • Any supporting documents and attachments for the above 990 forms. However, you only need to include the nature of the contribution and the amount contributed for Schedule B.
  • Official IRS paperwork showing your organization is considered to be tax-exempt.
  • Your organization’s application for exemption and all supporting documents submitted with your application (including Form 1023).

Your organization does NOT need to share the following documents and information with members of the public:

  • Any portion of Form 990/990-EZ’s Schedule B that identify who contributors are.
  • Anything considered to be an unfavorable ruling, which can include previous denials of tax-exempt status.
  • Any additional information permitted to be withheld by the IRS, including things such as trade secrets, patents, etc.

Recommended: Inform your employees about their rights and stay compliant by posting labor law posters in your workplace.

FAQ

Q: Can I charge members of the public for copies?
A: Yes, you are permitted to request a reasonable amount to procure copies of requested documents.

Q: If requested, how much time do we have to produce the documents?
A: 
It is ideal to produce these documents within the same working day. However, if your nonprofit has limited office hours due to the time of year, or you don’t have a physical office at all, you should produce the documents within 14 days.

Q: Do I actually need to provide physical copies of the requested documents?
A: If a member of the public as for copies of documents, whether in writing or in person, you are required to make them available.

NOTE: We recommend that nonprofits make these documents available on their website. That way, anyone who might request copies of these documents can simply head to your website to view and/or download them. This will help your organization remain compliant and save time dealing with these requests personally.

To learn more about forming a nonprofit, check out our How to Start a Nonprofit in Illinois guide. To find nonprofits in Illinois, use our Illinois 501(c)(3) Lookup Table.

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