part 4 in a 4-part series about Church Tax Exemption

Depending on where your church is, there may be a state nonprofit filing requirement. This is different from incorporating, getting federal 501c3 nonprofit status, and your sales tax exemption.

I’ve seen two different reasons for state nonprofit filing requirements, depending on the state:

1. Nonprofit Listing

Unfortunately, there have been enough bad apples out there to create a need to double check nonprofits. Many states require  nonprofits to get permission to solicit donations. They usually make the list of approved nonprofits available on a state website. Even though, in my experience, some states don’t draw a hard line of this for churches, it’s usually as simple as sending a copy of the Articles of Incorporation or federal 501c3 Determination Letter to the state’s Attorney General.

States I’ve found that do it this way: OH, KS (optional)

2. Corporate Taxation

In a lot of states, for-profit corporations pay taxes on their corporate profits. One state doesn’t grant any nonprofit organization an automatic exemption from corporate taxes, even if you’ve gone through the process of filing for your federal 501c3 exemption. I’ve received distress calls from more than one church planter that got a letter from the state’s Franchise Tax Board that said, “Since you didn’t register as a nonprofit, we will now begin to tax your income [tithes & offerings]. And you owe us back taxes to the time you started. Please send your check to…”

States I’ve found that do it this way: CA, NC, NY, TX, UT

None of the Above

In Tennessee, I experienced a sort of back-end registration requirement. Their Attorney General wanted to ensure that assets were transferred to another nonprofit when a church dissolved. But otherwise they didn’t have any state nonprofit filing requirement up front.

States I’ve found that don’t require special filing: AZ, GA, KY, MI, MO, ND, NV, NM, PA, TN, VA, WV, WY

Disclaimer

I haven’t worked in every state, so these lists aren’t exhaustive. And states may change their requirements from time to time, so be sure to double check with your state. When you do, be sure to look at both the Department of Revenue and Attorney General’s requirements.