Once you form a 501(c)(3) Nonprofit Public Charity in Maryland, follow this guide to keep it in good standing.
(To learn about forming a nonprofit, check out our How to Start a Nonprofit in Maryland guide.)
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8 Steps to Keep Your Nonprofit Compliant
To maintain a 501(c)(3) nonprofit corporation in Maryland you must:
- Apply for exemption from state taxes
- File Annual Federal Returns for Tax-exempt organizations
- Maintain a Registered Agent
- File periodic reports
- Apply for permits and licenses
- Register/Renew Charitable Registration
- Register with the Comptroller of Maryland
- 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, you can then apply for a state income tax exemption. You need to send the following to the Maryland Comptroller of the Treasury:
- A copy of your IRS determination letter
- A copy of your nonprofit’s bylaws
- A formal letter requesting an exemption from the Maryland Comptroller of the Treasury, including an explanation as to your nonprofit’s purpose
- A copy of your nonprofit’s latest financial statements
Legal Department
Comptroller of the Treasury
Revenue Administration Division
110 Carroll Street
Annapolis, MD 21411
Phone: (410) 260-7980
Website: www.marylandtaxes.com/
B. State sales tax exemption
To apply for a sales tax exemption, fill out the Maryland SUTEC Application, which can be found on the Comptroller of Maryland’s website. You can file for a sales tax exemption renewal online, through the Comptroller of Maryland’s website.
ATTN: Central Registration – SUTEC
Comptroller of Maryland
Revenue Administration Division
P.O. Box 1829 Annapolis, MD 21404-1829
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, often called resident agent , who has an office address in Maryland. If your registered agent, or their office address, changes, you must file the Change Principal Office or Resident Agent form with the Department of Assessments and Taxation so that your Articles of Incorporation may be updated. You can complete this form online or send your completed form to:
State Department of Assessments and Taxation
Charter Division
301 W. Preston Street; 8th Floor
Baltimore, MD 21201-2395
If you fail to notify the Department of Assessments and Taxation of this change, your corporation may be subject to termination.
4. File Periodic Reports
The Maryland Department of Assessments and Taxation requires all nonprofits to submit an annual report. Nonprofits will need to submit either the Form-1 Annual Report or the Form-1 Annual Report & Personal Property Tax Return (if the nonprofit owns, uses, or leases personal property).
Annual reports can be completed online through the Maryland Business Express website or you can mail the appropriate form to the Maryland Department of Assessments and Taxation.
Failure to file the appropriate reports may subject your organization to termination.
5. Apply for Permits and Licenses
The majority of Maryland nonprofits will not need a general business license of any kind. However, it’s worth checking with your local clerk of courts to determine if your city or county has specific guidelines that will be applicable to your nonprofit.
6. Renew Charitable Registration
Charitable Maryland nonprofits will most likely need to register with the Maryland Secretary of State if they plan to solicit contributions.
If your organization expects to raise less than $25,000 in charitable contributions each year, you may file the Exempt Organizations Fund-Raising Notice.
If your organization plans to raise more than $25,000 in charitable contributions each year, you need to file Form COR-92.
To contact the Charitable Organizations Division, you can contact them by:
Mail:
Charitable Organizations Division
Office of the Secretary of State
State House, Annapolis MD 21401
Email: Michael.Schlein@Maryland.gov
Phone: (410) 974-5534 or 1-800-825-4510 (within Maryland)
There are very few organizations that are exempt from registering, but you can read more about exemptions on the Secretary of State’s website or contact the Charitable Organizations Division for more information.
7. Register with the Comptroller of Maryland
If your nonprofit will have employees, you will need to register with the Comptroller of Maryland, if you haven’t done so already.
Registration is easy and can be completed online. Through this site, you will be able to register for tax and unemployment insurance accounts. You can also access contact details for your local workforce commission.
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 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.
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 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 Maryland guide. To find nonprofits in Maryland, use our Maryland 501(c)(3) Lookup Table.