Required Annual Filings to Maintain an Organization’s Tax-exempt Status
Nonprofits have certain state and federal filing requirements. On the state level there is annual registration fees with the department of corporations to keep the corporation in good standing. Also, in Florida Form DR-5 must be filed with the State to render the organization exempt from state taxation. One major factor that affects which filings are required on the federal level is how much the organization earns. If the organization earns less than $50,000.00 ($25,000.00 prior to 2010) then the organization may be eligible for a streamlined annual filing to the IRS. If the organization earns more, however, then the annual filing becomes more cumbersome and complex.
Also, which IRS form to file annually is dependent upon whether the organization is a public charities or private foundations. The level of public involvement in their activities distinguishes private foundations and public charities. Public charities usually receive a greater portion of their financial support from the general public or the government. Such charities also typically have a greater involvement with the public. A private foundation is usually controlled by members of a family or by a small group of individuals. Private foundations also derive much or all of its support from investment income. For the first five (5) years a 501(c)(3) is in existence, it is automatically classified as a public charity, however, thereafter the organization must submit certain documents to the IRS to keep their public status. If a charity converts into a private foundation, the annual filing requirements become more cumbersome and may be subject to certain other excise taxes. Accordingly, it is important to adhere to operational formalities to ensure you maintain your intended classification (public charity or private foundation).
Learn more about nonprofit corporations:
- Overview of Nonprofit Organizations
- Incorporating the Nonprofit Corporation
- Types of Tax-exempt Organizations
- Qualifying as a 501(c)(3) for Tax-exempt Status
- Required Annual Filings to Maintain the Tax-exempt Status
- Termination of 501(c)(3) Exemption Status
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