State Requirements Vary Greatly
Some states do not require nonprofits to file an annual or periodic report at all (New York, North Carolina and Oklahoma), while others require it for domestic nonprofits, but not foreign nonprofits, such as Minnesota. In Alabama and South Carolinaa filing with the state department of revenue is required, but only if the nonprofit filed Form 990-T (Exempt Organization Business Income Tax Return) with the Internal Revenue Service. In Mississippi, voluntary filing is available but not required unless the state requests a Status Report. Some states require initial and either annual or biennial filings (California, D.C., Iowa, Nevada, New Mexicoand Vermont), while others just require a biennial filing (Alaska and Nebraska). In the case of Texas, a periodic report is required every four years, but only if requested by the Texas Secretary of State. In New Hampshire and Ohio quinquennial (every 5 years) filing is required. In Pennsylvania, decennial filing is required in 2021, but only if no other filings have been made in the past 10 years, or unless the corporate officers change in Pennsylvania, in which case an annual report is due by April 30th in the year following the change.
Forms and Due Dates
Though the forms used in most states are similar or the same as the forms used by for-profit corporations, some states require a state-specific form for nonprofit, not-for-profit, nonstock or exempt corporations. As for completing these forms, there is a lot of uniformity in the information that needs to be reported (address, names of contacts at the company, officers and directors, registered agent, etc.), but in a few states, like Maryland, financial information must also be reported. Most states provide online filing systems for annual and periodic reporting, but a handful of states require filing via a paper form.
Due dates vary and are based on mandated state deadlines, a nonprofit’s fiscal year end, or when a nonprofit incorporated or qualified with the state. For nonprofits that are qualified in most states, be prepared to file corporate annual and periodic reports throughout the year. States are not at all uniform on when these filings are due…deadlines litter the entire calendar. Below is a sampling of these state deadlines:
- Last day of anniversary month: California, Connecticut, Idaho, Indiana, New Jersey, Nevada, South Dakota, Virginia and Washington
- Last day of 2nd month following filing month: Colorado
- Prior to 1st day of anniversary month: Illinois
- First day of anniversary month: Wyoming
- 15th day of 6th month following fiscal year end: Kansas
- End of quarter in which nonprofit was originally filed: Hawaii and Wisconsin (domestic only)
- Every 5 years on last day of anniversary month: Ohio
Most states are sympathetic to the mission of nonprofits and either discount or eliminate the annual report filing fee. Some states charge no fee at all, but still require annual report filings (Arkansas, Idaho, Maryland and Minnesota), while most other states (approximately 33) charge $25 or less per filing, with the majority of the remaining states charging $50 or less. The District of Columbia and Florida are notable exceptions, with fees of $82.50 and $61.25, respectively. Payment of these fees in most states can be made online with a credit card and most states also accept paper filings accompanied by a check.
As you can see from the above summary of state annual or periodic report filing fees, annual corporate compliance filing fees in most states are relatively inexpensive. In a few states, however, financial penalties can be much higher, and the consequences of failing to maintain corporate compliance can be far more costly.
Consequences of Non-Compliance
Fortunately, in most states a small financial penalty, usually $25 or less, or no financial penalty is assessed when nonprofit corporations file late or fail to file an annual or periodic report. However, California charges a $250 penalty, plus interest, likely as a result of the large number of nonprofits in California and the financial chaos that exists in that state. Other notable states are Delaware with a $100 penalty for filing late and West Virginia with a levy of $125.
It is imperative that nonprofit organizations fulfill all state corporate compliance obligations in a timely manner. Compliance is not an option; it’s the law, and noncompliance or late filings can be costly in many ways. As discussed above, for corporate compliance, the monetary penalties in terms of late fees and interest are low in most states, but the more damaging consequences of noncompliance include:
- Loss of good standing and ability to conduct business in a state
- Suspension, revocation, or administrative dissolution
- Loss of right to use the nonprofit’s name
- Loss of access to courts
- Damage to the nonprofit’s reputation which can result in a decrease in donations
Keeping up with the ever-changing requirements and differences from state to state in nonprofit state corporate compliance can be quite a challenge. Adding state nonprofit charitable solicitation registration compliance to the mix (a subject addressed in a previous article) adds a further level of complexity for attorneys, paralegals and compliance officers.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.