State Registration Required for Nonprofits

Non-profit organizations soliciting donations within a specific state may be required to register with that state in order to maintain compliance while soliciting donations. Maintaining compliance can be burdensome, and often complicated, depending on how many states an organization is required to register with. Generally, an organization meets the definition of soliciting if they are asking for a donation using any type of medium. Common examples are asking friends and family to donate through social media or texting, mailing out letters at the end of each year asking for donations, and having a donate button on your organization’s website. Organizations should be aware of their state’s charitable solicitation registration requirements, along with any other states they are actively soliciting donations in. Not all state requirements to register are the same, and fees for registering vary from state to state. Understanding if you meet the requirement to register with your state and the registration process itself is helpful to avoid future penalties, loss of the exemption, negative publicity, and potential legal action against your organization.

In general, the following types of organizations are typically exempt from registering with their state: hospitals, religious organizations, some schools, and organizations that only receive donations from their members. Other ways organizations may be exempt is if they fall below a gross revenue or donation threshold, have a limited number of donors, and more. In some states the exemption is automatic, but other states require organizations to file for an exemption from registration, and these filings may be required yearly. If you are unsure whether your organization is exempt from registration, an HBK nonprofit specialist can help guide you. Registrations are important because they are public information, and donors use this information to verify that an organization is compliant. Registration usually occurs with the State’s Attorney General or their Secretary of State.

The registration process typically involves filling out a state-specific form, supplying supporting documentation, and paying a registration fee. Supporting documentation usually includes the information provided when starting a non-profit organization, such as the organization documents and the IRS determination letter. Additionally, organizations will generally need to supply current financial information and a listing of the organization’s board members. Once registered, an organization may have to file yearly to maintain its registration. Each state has its own due date for registration, so it is important to review the registration requirements for each state an organization is operating in on a regular basis.

Currently, there is no uniformity of charity registration rules across states. Therefore, awareness of the varying requirements is imperative to ensuring an organization remains in compliance. For additional information or questions please contact your HBK tax advisor.

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About the Author(s)

Teal Strammer, CPA
Teal is a senior associate in the Sarasota, FL office of HBK and began her career with the firm in 2016. She specializes in tax preparation and assurance services for not-for-profits. Additionally, she has experience with employee benefit plans, construction, manufacturing industries. Tax preparation services include individuals, businesses, trusts and estates. She is also part of HBK’s REVEAL team leading recruiting efforts for the Sarasota office.

Ashlynn Reeder, CPA, MST
Ashlynn Reeder is a Manager in the Naples, Florida office of HBK CPAs & Consultants. She has been with the firm since 2015, specializing in nonprofit organizations, individuals, trusts, and estates. Ashlynn is the leader of the firm’s Tax-Exempt Organizations Tax Specialists Group, which serves as a resource to the firm and directly supports HBK’s Tax Advisory Group.

Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.