9 Steps to Keep Your Nonprofit Compliant
To maintain a 501(c)(3) nonprofit corporation, you must:
- Select Your State
- 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 Employees With the State
- Comply With Public Inspection Rules
Step 1. Select Your State
To learn more about keeping your nonprofit compliant in a specific part of the US, select your state below:
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- Washington D.C.
- West Virginia
Step 2. Apply for Exemption From State Taxes
A. State Income Tax Exemption
Once your organization receives your 501(c) determination letter from the IRS, it is typically automatically exempt from corporate income taxes. However, some states require nonprofits to send proof of receipt in order to be exempt from state income taxes.
B. State Sales Tax Exemption
Whether your nonprofit qualifies for any state sales tax (or other state-specific business tax exemptions) depends on the state. Many states require nonprofits to submit an application requesting exemption, while other states automatically offer exemption to nonprofits. Check with your state’s tax department for more information.
Step 3. 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)
When is Form 990 due?
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 December 31, Form 990 is due on May 15.
NOTE: If an organization fails to file Form 990 for three 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.
Step 4. Maintain a Registered Agent
In most states, any nonprofit that has incorporated must have a registered agent (also known as a statutory agent, resident agent, or agent for service of process) who has an office address in your state.
If your registered agent, or their office address, changes, you must file with your state’s business services division so that your formation documents may be updated.
Failure to notify the state of this change may subject your nonprofit corporation to termination.
Step 5. File Periodic Reports
Some states require nonprofit organizations to file annual, biennial, or other periodic reports in order to maintain compliance. Check with your state’s business services division to determine whether your nonprofit must file periodic reports.
Failure to file the appropriate reports may subject your organization to termination.
Step 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.
Can I charge members of the public for copies?
Yes, you are permitted to request a reasonable amount to procure copies of requested documents.
If requested, how much time do we have to produce the documents?
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.
Do I actually need to provide physical copies of the requested documents?
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 more about forming a nonprofit, check out our How to Start a Nonprofit guide.