How to keep your Minnesota Nonprofit Compliant

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

(Read our guide to learn how to form a nonprofit in Minnesota.)


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 corporate income taxes.


B. State sales tax exemption

To apply for a sales tax exemption fill out Form ST16, Application for Nonprofit Exempt Status – Sales Tax.

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.

If your organization expects to pay $500 or more for the year in taxes on unrelated business income, your organization must pay a quarterly estimated tax on the unrelated business income using Form 990-W.

3. Maintain a Registered Agent

Any nonprofit that has incorporated must have a registered agent who has an office address in Minnesota. If your registered agent, or their office address, changes, you must file a Change of Registered Office/Registered Agent form 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 Minnesota Secretary of State requires nonprofits to submit an annual renewal form each year, which is due by December 31st. 

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

5. Pay the Minnesota Franchise Tax

The Minnesota Franchise Tax is only due if your organization has unrelated business income. If you need to pay Minnesota Franchise Taxes, you may file using form M4NP. The filing deadline is 4.5 months after the end of your organization’s fiscal year.

You may file the M4NP online or via mail. Read more about the Minnesota Franchise Tax on the Department of Revenue’s website.

6. Apply for Permits and Licenses

Minnesota nonprofits typically don’t need a state-level business license. They may, however, need to obtain a permit or license at the local level. You may want to review the Minnesota e-License Portal to learn more about business licenses in Minnesota.

If your nonprofit plans to host charitable games, including bingo and raffles, you will need to apply for a permit or license through the Minnesota Gambling Control Board. Access their website for more details.

7. Charitable Registration

Charitable Minnesota nonprofits will be required to register with the Minnesota Attorney General unless they are eligible for an exemption. If you’ve registered as a charity, you will also need to submit an annual report to the Attorney General each year.

Access more information about charitable registration on the Attorney General’s website.

8. Employees

If your organization will have employees you must do the following: 

Register with the Minnesota Unemployment Insurance unit - Complete your registration online and access the official Unemployment Insurance Employer Handbook for more information. 

Register for a tax ID with the Department of Revenue - If you haven’t done so already, register for a Minnesota Tax ID for your employer withholding account. Contact the Department of Revenue with any questions you might have pertaining to your business account.

9. 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 Minnesota guide.

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