Tax Exempt Filings - EXPLANATIONS

Many states require that organizations register before soliciting funds within the state (even if not the state of incorporation) and file an annual report or renewal.

Many states require nonprofit organizations to file a separate application for state sales and franchise tax exemptions.

Exempt organizations are generally classified as either public or private charities, based on certain conditions at the time of the IRS Determination. As circumstances change, it may be necessary to amend the organization’s tax status.

The IRS requires that any assets of an organization remaining at the time of dissolution be distributed to another organization exempt under the same section of the Internal Revenue Code. Many states’ Attorney Generals oversee this process and require various filings detailing the plan and results of the distribution of assets.