Nonprofits are subject to Federal and State compliance laws. While most nonprofits are aware of their Federal filing requirements, many aren't aware of their state filing requirements. Listed below are the compliance requirements for a nonprofit.
- Records Maintenance
- Federal Information Return
- Corporate Tax Exemption
- Sales Tax Exemption
- Charitable Games License
- Filing of State Financial Reports*
- Charitable Solicitation Registration**
- Current Demographic information for board members.
What are the Federal penalties for failure to comply with the disclosure requirements for exempt organizations tax documents, and who must pay them?
Responsible persons of a tax-exempt organization who fail to provide the documents as required may be subject to a penalty of $20 per day for as long as the failure continues. There is a maximum penalty of $10,000 for each failure to provide a copy of an annual information return. There is no maximum penalty for the failure to provide a copy of an exemption application.***
What are the State penalties for failing to register?
If you don’t register (or timely renew your registration) in a state where you are required to, you are breaking that state’s law and you could be subject to fines and other penalties. These fines can be substantial, with some states charging as much as $5,000 in fines PER VIOLATION. Additionally, the state may order your nonprofit to cease soliciting donations within the state until you have registered there. ****
Criminal Liabilities
Knowingly failing to comply with Charity Registration Laws could have a board member facing felony laws.
*Required for every state that you solicit in.
**Required for every state that you solicit donations from even via mail.
***(Copied directly from the IRS website.)
****Nonprofit Fundraising Registration: Nolo's 50-State Digital Guide.
