8 Steps to Keep Your Nonprofit Compliant
To maintain a 501(c)(3) nonprofit corporation in Washington 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 Department of Social and Health Services
- Comply with Public Inspection Rules
1. Apply for exemption from state taxes
A. State income tax exemption
Nonprofit organizations are not exempt from Washington business and occupation taxes. Nonprofits are required to pay a combined excise tax each year by January 31st.
B. State sales and use tax exemption
Nonprofits are taxed the same as other businesses operating in the state of Washington.
Few Washington nonprofits will be eligible for use tax exemptions on some goods and retail services that are donated to nonprofits. To learn more about these exemptions, access RCW 82.12.02595 and WAC 458-20-169.
To learn more about taxes pertaining to nonprofits, access the Washington State Department of Revenue’s website.
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 Washington. If your registered agent, or their office address, changes, you must file a Statement of Change/Designation of 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 Washington Secretary of State requires nonprofits to file an annual report each year by the end of your registration anniversary month. You can file your report online or submit it to the address below by using this form:
Secretary of State
801 Capitol Way South
P.O. Box 40234
Olympia, WA 98504-0234
Failure to file the appropriate reports may subject your organization to a $25 delinquent fee or termination.
5. Apply for Permits and Licenses
Nonprofits operating in the state of Washington will need to obtain a general business license. You have three options:
Option 1: Via Mail
Nonprofits may register for a license by completing the Business License Application, located on the Department of Revenue's website, and mailing it and your payment to the Department of Revenue.
Option 2: In-Person
Nonprofits can also apply for a business license in-person at one of the Department of Revenue’s business licensing offices.
Option 3: Online
Nonprofits can also apply for their business license online, through the State of Washington’s Business Licensing Service.
6. Register/Renew Charitable Registration
Charitable Washington nonprofits are typically required to register with the Washington Secretary of State’s Corporations & Charities Division. Registration (and yearly renewal) can be completed online or by mail.
Some charitable nonprofits with less than $50,000 in donations each year may qualify for a registration exemption. Access the Corporations & Charities Division’s Self-Assessment Guide to see if your organization is exempt from registering.
7. Register with Department of Social and Health Services
If your nonprofit will have employees, you will need to register with the Washington Department of Social and Health Services.
To learn more about your responsibilities regarding unemployment taxes, access the Washington Employment Security Department’s 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 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.