Once your organization has been granted its 501(c)(3) status, it can apply for grants, conduct fundraising activities, seek donations, and administer programs. However, obtaining tax-exempt status with the IRS and your state is not a “get it and forget it” situation; it requires organizations to meet annual IRS and state filing requirements to report on their activities and financial status.
What are Florida’s Reporting Obligations for 501(c)(3) Charitable Organizations?
While all 501(c)(3)’s must follow the same federal laws for filing with the IRS, each state’s laws vary. In Florida, 501(c)(3) charitable organizations must report to the Department of State, Department of Agriculture and Consumer Services, and the Department of Revenue.
With the Department of State, a 501(c)(3), must (1) maintain a registered agent responsible for receiving legal documents such as service of process for the entity and (2) file an annual report to maintain your organization’s “active” status. Failure to file an annual report by the third Friday of September will result in the administrative dissolution or revocation of the business entity on Florida records.
Pursuant to Florida’s Solicitation of Contributions Act requirements, a 501(c)(3) organization is required to submit an application to the Florida Department of Agriculture and Consumer Services. The Act also requires a 501(c)(3) to renew its registration annually (by the registration anniversary date). Renewals may be filed up to sixty days prior to the expiration date.
Additionally, a 501(c)(3) must register for state tax accounts, in addition to filing and paying state-level tax returns with the Department of Revenue.
What are the Record-keeping Requirements for a 501(c)(3) Charitable Organization?
In order to remain compliant, it is important that the organization keep the following records:
- Form 1023 – a copy of the organization’s application form to the IRS for tax-exempt status;
- IRS Determination Letter – a copy of the organization’s letter determining its 501(c)(3) status;
- Organizational Documents – the articles of incorporation, bylaws, Tax ID number, and amendments of the 501(c)(3);
- Governance Records – the corporate minutes and resolutions;
- Financial Records – income statements, cash flow, balance sheets, checkbooks. The organization’s finances should be aligned with a specified period of time, either the calendar year, from January 1 to December 31, or fiscal year, which runs for 12 months and ends on the last day of any month not December.
Are there Any Prohibited Activities for a 501(c)(3) Charitable Organization?
Once an organization has been granted 501(c)(3) status, it is prohibited from engaging in the following activities:
- Non-Exempt Purposes – An organization must adhere to the rationales for its exemption, as stated in its bylaws and articles of incorporation. For example, if an organization’s purpose is to provide job training, but instead provides nursing services, the organization is not in compliance;
- Private Interests – Since an organization’s activities must be directed toward its exempt purpose, its activities should not serve private interests. Donated funds, materials or value must be used toward the programs, activities, or salaries;
- Inurement – An organization is prohibited from employing its income or assets to benefit insiders;
- Lobbying – An organization’s lobbying activities cannot be more than an insubstantial part of its overall activities;
- Politics – All 501(c)(3) tax-exempt organizations are prohibited from participating in political campaigns on behalf of or in opposition to candidates running for public office;
- Unrelated Business Income – An organization cannot earn too much income generated from unrelated activities.
If you have a charitable organization and are looking to ensure you are fulfilling all compliance requirements, it is highly advised you speak with an experienced business attorney to help you and your business stay on the right track.