State Charity Registration Compliance

Date August 9, 2021
Categories
Article Authors

Nonprofit organizations should be aware that many states have registration requirements if they choose to solicit donations within a given state. Since the registration requirements vary from state to state, including where to register and what documents are needed, we have organized the following summary for states that many of our clients solicit donations in.

Florida

Nonprofit charities seeking to solicit contributions in the state of Florida should head to the Florida Department of Agriculture and Consumer Services (FDACS). Rules relating to solicitation are regulated by the Solicitation of Contributions Act. When filing with the state of Florida, an organization needs to either fill out the Small Charitable Organizations/Sponsors Application or register with the FDACS. If an organization meets the following requirements, they can file a small charitable organization/sponsor application and avoid a registration fee:

  1. Revenue less than $25,000 during the previous year

  2. Did not compensate individuals for fundraising activities nor individuals who serve on the board

  3. Does not use third-party professional to help with fundraising


During the year, if the organization meets any one of the requirements listed above then they must register with the FDACS within 30 days of failing to meet one of the requirements above. When registering with the FDACS, the initial filing must have all answers responded to. Registration fees are based on the organization’s financial data in the previous year that is submitted with the registration. If the organization is new and has no preceding financial information, a budget must be submitted with the registration. The registration must be renewed annually on the initial date of compliance. The FDACS mails out renewal statements to recipients.

New Jersey

Registration for charitable solicitation in New Jersey occurs on the Attorney General’s website under consumer affairs. It is mandatory to file online. Rules relating to solicitation are regulated by the Charitable Registration and Investigation Act. There is a $10,000 annual gross contribution threshold for filing with New Jersey and if the organization does not meet the threshold nor utilize a professional fundraiser, then they do not need to file with the state to be compliant. Organizations under the $10,000 threshold do not have to file but may choose to do so, pay a registration fee, and renew their registration annually. These organizations are not entitled to a renewal extension of time to file. Charities who do not file with the state when they are under the gross contribution threshold must file within 30 days of meeting the $10,000 gross contribution within a given year. Charities who meet the annual gross contribution threshold will:

  1. File either the short or long registration form, depending on the gross contributions received

  2. Include the required supporting information requested

  3. Pay a registration fee that is dependent on the gross contributions received


Charities must renew their registration annually and within 6 months of the charities’ year-end. Additionally, extensions can be requested for the registration renewal if an organization receives contributions exceeding $10,000.

Ohio

Registration for charitable solicitation in Ohio occurs on the state’s Attorney General website. Organizations must use the online system on the website for their initial filling and subsequent annual filings with the state. The state of Ohio requires organizations to register with the state prior to soliciting contributions. Rules relating to solicitation are regulated by the Ohio Charitable Trust Act or the Charitable Organizations Act. New organizations have up to 6 months to register with Ohio, but they still must register before soliciting contributions. After the initial registration, annual filings follow the IRS due dates for form 990. For example, an organization with a 12/31 year-end must file its form 990 and annual charity filing by May 15th. If an extension has been granted for the form 990, the state will honor the extension for the annual filing as well. Registration fees are dependent upon either the organization’s assets or the contributions received.

The state of Ohio does have some exceptions to these rules available for qualifying religious organizations, exemptions from the above rules are looked at on a case-by-case basis. If a charitable solicitation believes they are exempt they must create an online account and request the exemption, which will be reviewed by the Attorney Generals office.

Pennsylvania

Registration for charitable solicitation in Pennsylvania occurs on the Department of State website for Pennsylvania. Rules relating to solicitation are regulated by the Solicitation of Funds for Charitable Purposes Act. The state of Pennsylvania requires that organizations who would like to solicit from Pennsylvania residents file BCO-10, Charitable Organization Registration Statement. Organizations may file their initial filings and subsequent renewals online or by mail. Renewal registrations are automatically extended and are due no later than the 15th day of the eleventh month following the organization’s year-end. Initial registration is required if the following occurs:

  1. A person compensated by an organization wants to solicit contributions for said organization. Registration must occur before this happens.

  2. If an organization receives more than $25,000 in gross contributions. Initial registration must occur within 30 days of meeting this threshold. No person may be compensated for soliciting in this scenario.


In addition to filling out form BCO-10, supplementary information requested on the form must be submitted along with a registration fee. The registration fee is determined by the organization’s gross annual contributions.

Please reach out to the Nonprofit Solutions Group for information on additional state registration requirements, or if you would like more information on how HBK can help them comply with these requirements.

Speak to one of our professionals about your organizational needs

"*" indicates required fields



What are you doing on December 3rd?

Date November 25, 2020
Categories

Article updated November 2024.

Most of us know about Thanksgiving Thursday, Black Friday, and of course, Cyber Monday. In 2023, 34 million people participated in a day of giving on the Tuesday after Thanksgiving called Giving Tuesday. So, what exactly is Giving Tuesday?

Giving Tuesday started in 2012 as a special day to kick off the “open giving season.” It was a simple idea and has become a global movement that encourages us all to make a difference. This year, more than ever, this international day of philanthropy and generosity will help many charities continue to do great things in their communities. In its first year Giving Tuesday generated $10 million in donations. In 2023 that number rose to almost $3.1 billion, with over $13 billion raised since inception in 2012. The statistics from 2023 are fascinating:

  • 90 countries and 300 communities participated in 2023
  • There was a 34% increase in recurring giving
  • For 2023 participants 36% of donors gave money, 20% gave goods, 18% volunteered
  • 25% of giving is done between Giving Tuesday and year end.

Despite the current economic and political environment donations have continued to flow. Many donors accelerate donations rather than waiting until year-end as they typically do. For that group we all talk about, those 18-34 who know about #Giving Tuesday, 82% of them participated in 2023.

Maybe you are one of the fortunate ones this year and you have some extra to give. Maybe you have a few favorite charities or maybe you’re a novice in making donations. Let your dollars make a difference. Be smart about doing your homework first. Here are a few things to remember:

Is the organization a registered public 501c(3) organization? This is easy to check by going to the IRS website tax-exempt organization search. The IRS Tax Exempt Organization Search Tool provides a lot of information on listed charities such as:

  • Is the organization tax-exempt and eligible to receive tax-deductible charitable contributions?
  • Has the organization had its exempt status revoked?

41 states also require state registration and most have charity directories.

If you itemize, remember donations to 501c(3) organizations are still tax  Contact your tax advisor to help plan your charitable giving if you are seeking a deduction for 2024.

Get to know one or more of the big watchdog groups. Groups like Charity NavigatorCharity WatchBBB Wise Giving Alliance, or Guidestar (now called Candid). These independent organizations will help you make sure your donation is to a real charity that uses your donation well. You should research to find a charity with a proven track record of success.

Know who you are giving to before you click the “Donate Now” button. So many charities have similar names and it is confusing to donors. A google search will help locate a charity’s website to help validate it is the charity you are looking to support. Remember most nonprofits have a .org website rather than a .com site.

“Give Local.” We all talk about the success of many main street communities of the “Shop Local” movement. You should also “Give Local”. Think about what you value and where you’d like to make a difference. Look around your community and you’ll see so many wonderful charities suffering now. Long lines at food banks, theater groups that are still shuttered, teachers without classroom supplies, and churches with fewer pews filled due to capacity limits all need your help. On Giving Tuesday, yes, I’ll support my alma mater but I’ll also support my local soup kitchen. It’s heartwarming to be able to see and feel my dollars at work.

Giving Tuesday is about encouraging people to do good in any way they can. Maybe it’s giving money, but maybe it’s giving your time, talent, energy, or expertise. Maybe, it’s just about being kind to someone. With no money required, everyone can participate. This is the year to join in this movement. I know what I’ll be doing on December 3rd; Do you?

Speak to one of our professionals about your organizational needs

"*" indicates required fields



Deductions for Charitable Contributions Require Documentation

Date February 17, 2020
Categories
Article Authors
HBK CPAs & Consultants

People support charitable organizations for philanthropic reasons. But they are also motivated by the tax deduction afforded by the U.S. Tax Code. To substantiate a donation and take the related deduction, a donor is required by the IRS to acquire and keep “contemporaneous written acknowledgement” from the charitable organization. Depending on the amount and type of donation, the required documentation comes in various forms. Practically speaking, charitable organizations are responsible for knowing what type of information must be provided to their donors, though the onus is on the donor to keep the documentation and meet any other recordkeeping requirements.

Generally, contemporaneous written acknowledgement issued by the charitable organization must include the following, as applicable:

  • The amount of cash donated
  • A description of any non-cash property donated
  • A statement and good faith estimate of the value of any goods or services related to the donation of cash or property (if the donor received more than a de minimis item—that is, an amount too small to merit consideration)
  • Acknowledgement if the organization provided intangible religious benefits
  • A description of out-of-pocket expenses incurred by the donor and whether the donor received goods or services in exchange for out-of-pocket expenses

The organization must provide the written acknowledgment when it receives a single donation of $250 or more from a donor. It can be provided at the time of the gift, or once for the entire tax year. The organization is not required to acknowledge separate donations of less than $250 each, even if they total more than $250 for a tax year. However, charitable organizations often send an annual statement to donors reporting their total donation for the year, regardless of the amount.

The IRS does not require organizations to follow a prescribed format for the written acknowledgment. It can be paper-based, such as a statement, letter or postcard, or electronic. To qualify as contemporaneous, a written acknowledgment must be received by a donor before the earlier of the date the donor files their original federal tax return for the year the contribution was made, or the due date, including extensions, for filing their tax return for that year.

In addition to documentation obtained from a donee organization, a donor is also required to maintain written records that include the following:

  • Name and address of the organization
  • Date and location of the contribution
  • Description of the property
  • Fair market value of the property (or cost, if elected)
  • Details regarding contributions of partial interests of property, if applicable
  • The terms of any conditions associated with the contribution
  • For separate contributions of $500 or more, details of how and when the property was acquired and the property’s cost or basis (Cost basis is not required for donations of publicly traded securities.)
  • For separate contributions of $5,000 or more, a qualified appraisal to be obtained and attached to the income tax return

There are also other forms and documentation required for donations of property, such as artwork, securities, vehicles or inventory. Click here to view the chart that summarizes the IRS’s rules for substantiation and documentation.

Donors typically expect to maximize their tax deductions for charitable contributions. Proper documentation is the primary requirement established by the IRS to take the deductions. Organizations can help their donors satisfy this requirement by ensuring they issue the proper acknowledgment.

Organizations or donors with questions about the documentation or substantiation requirements can contact an HBK tax advisor.

Speak to one of our professionals about your organizational needs

"*" indicates required fields



IRS Blocks States’ Attempt to Circumvent SALT Deduction Cap

Date August 27, 2018
Categories
Article Authors
HBK CPAs & Consultants

The IRS has recently issued proposed regulations here which clarify that the IRS is utilizing a substance over form approach for all states that are attempting to circumvent the $10,000 state and local deduction cap under the Tax Cuts and Jobs Act (TCJA) through charitable giving strategies.

Under the TCJA taxpayers are limited in their Schedule A deductions for all state and local income, sales, and property taxes such that these cannot exceed $10,000 ($5,000 for married filing separately). Prior to the TCJA there was no limitation on the amount of state and local taxes you could claim.

New York, New Jersey, Maryland and Connecticut in an attempt to fight the new $10,000 cap on state and local tax deductions, have legislation in place in an attempt to bypass this limitation. The suggested workaround for many of these states involved variations on a state and local charitable fund that taxpayers could make payments to in satisfaction of their state and local liabilities. These payments would then be re-characterized as a fully deductible charitable contribution completely bypassing the $10,000 cap on state and local deductions under the TCJA.

The IRS has now issued new rules that will block states’ attempts at circumventing this deduction cap. The IRS warned taxpayers back in May that they would be looking into state-approved maneuvers to avoid these new federal limits, especially those that involved charitable organizations and charitable giving. The proposed regulations state that whenever a charitable gift is given, if the taxpayer receives anything in return the Fair Market Value (FMV) of what you receive must not be included in your total charitable deduction. This is a well-established principal that the IRS is now applying in the context of state work around charitable funds. When a taxpayer makes a contribution to one of these workaround charitable funds, they are expecting a benefit in return, the state or local tax credit in return for their contribution. The IRS will now be looking at the receipt of these benefits as quid pro quo, and taxpayers will not be permitted to claim the full value of the deduction. The proposed regulations state that the amount that would otherwise be a deductible charitable contribution must be reduced by the amount of state or local tax credit received or expected.

For example:

If a taxpayer contributes $20,000 to a state charitable fund in lieu of paying their state property taxes, and receives a $13,000 state credit for that donation, for federal income tax purposes that taxpayer would only be permitted to deduct $7,000 as a charitable deduction. The remaining quid pro quo $13,000 is disregarded.

Additionally, if you were to receive or expect to receive a state or local tax deduction that exceeds the amount of your FMV contribution, your charitable contribution deduction must be reduced. The proposed regulations also include a de minimis provision that allows a taxpayer to disregard the value of their state or local tax credit if that credit does not exceed 15% of their payment or 15% of the FMV of the transferred property.

The IRS has also proposed that these regulations apply to all contributions made after August 27, 2018. This means the IRS may challenge contributions made before today.

If there are any questions on this or any other tax matters please contact a member of TAG.

Speak to one of our professionals about your organizational needs

"*" indicates required fields