To maintain a 501(c)(3) nonprofit corporation in Tennessee you must:
1. Apply for exemption from state taxes
A. State income tax exemption
As a nonprofit, your organization will be exempt from paying corporate income tax, state franchise tax, and excise tax.
B. State sales tax exemption
To apply for a sales tax exemption, you will need to apply for a Certificate of Exemption from the Tennessee Department of Revenue.
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 any questions, contact the IRS at
- (800) 829-3676 (Form related questions)
- (800) 829-1040 (general information)
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 Tennessee. If your registered agent, or their office address, changes, you must file Form 401 with the Secretary of State so that your Nonprofit Corporation Charter 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 Tennessee Secretary of State requires nonprofits to submit annual reports each year by the first day of the 4th month after the close of your fiscal year. The overwhelming majority of organizations have a fiscal year end date of December 31st, which means their annual report is due by April 1st.
Access the Secretary of State’s website for details on submitting your annual report online or via mail.
Failure to file the appropriate reports may subject your organization to termination.
5. Pay the Tennessee Franchise Tax
Nonprofits in Tennessee are exempt from paying the state franchise tax.
6. Apply for Permits and Licenses
Since licensing is handled at the local level, Tennessee nonprofits should contact their local clerk’s office to determine what licenses and/or permits may be required for their organization.
7. Register/Renew Charitable Registration
Most charitable Tennessee nonprofits will be required to register with the Tennessee Secretary of State. You may complete both your registration and renewal online or via mail. Access the Secretary of State’s website for more details.
Some nonprofits are exempt from registering. These organizations typically receive under $50,000 per year in contributions or are religious, educational, and healthcare-related organizations. The Secretary of State has a full list of exempt organizations on their website.
If your organization would like to file for an exemption on the basis of the dollar amount your organization solicits, you can submit the application form.
8. Register with Tennessee Department of Labor & Workforce Development
If your nonprofit will have employees, you must register with the Tennessee Department of Labor & Workforce Development. You will need to fill out a Report to Determine Status form to obtain your employer number.
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 identifies 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.
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 asks 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 about forming a nonprofit, check out our How to Start a Nonprofit in Tennessee guide.