Filings

Does your nonprofit make online sales to customers in other states? Until recently, states were not able to require out-of-state retailers to collect and remit sales tax solely for online sales. This article reviews recent changes in the law that permit states, within certain limits, to require out-of-state retailers to collect and remit sales tax for online sales.

This article presents general guidelines for Georgia nonprofit organizations as of the date written and should not be construed as legal advice. Always consult an attorney to address your particular situation.

Remember that tote bag you got when you made a donation to public radio? Did you know that the IRS cares about the value of that bag? According to the IRS, if something of value is given to a donor in exchange for the donation (a “quid pro quo”), then the donor can only take a tax deduction for the amount of the donation less the value of the item given. But the IRS makes an exception to this requirement if the item is considered a “low cost article”. If the donor only receives a low-cost article (like a tote bag) in exchange for a donation, then the donor can deduct the full value of the donation. What is a “low-cost article” depends upon the amount of the donation and the cost of the article itself. The IRS adjusts these amounts each year for inflation.

In 2020, if a donor makes a donation of $56 or more and only receives in return a token item with the donee’s logo that costs not more than $11.20 (such as a mug or a pen), then the item is considered a low-cost article and the donor can deduct the full value of his or her donation.

Further, in 2020, if the donor receives something in return for a donation and the cost of that item is not more than 2% of the donation or $112 (whichever is less), then the donor can deduct the full value of his or her donation.

If your nonprofit is providing donors with an item in return for a donation, you will need to determine whether such item qualifies as a low-cost article. If the item qualifies, then it’s a good idea to include the following in your fundraising materials: “Under IRS guidelines, the estimated value of the benefits received is not substantial; therefore, the full amount of your payment may be a deductible contribution.”

If the item does not qualify as a low-cost item then you will need to treat it as a quid pro quo donation and include the additional language in your acknowledgment. See our article, Guide to Sending Acknowledgements for Donations, for guidance on acknowledging quid pro quo donations. In addition, if the item given in return for a donation does not qualify as a low-cost item then the transaction may be considered to be a purchase rather than a donation. For example, if someone pays $20 and receives a t-shirt in return, it looks like the person bought a shirt rather than made a donation. If a nonprofit regularly engages in such transactions, then it may have to pay unrelated business tax on the income from such purchases. For more information, see UBIT: Four Letters Your Nonprofit Needs to Know.

Some counties and cities in Georgia require nonprofits to register for a business license. Find out more about what is required.

The IRS is launching a sweeping effort to advise taxpayers about the importance of doing a “paycheck checkup” as soon as possible to ensure that they are withholding properly from their paychecks. It is highly recommended that employers, including nonprofit corporations, share this information with their employees as soon as possible. Please see this link for an article providing additional information you should share with your employees so they can determine if they are withholding correctly from their paychecks.

In order to protect the public from fraud, most states have enacted laws that require organizations to register with the state before they solicit donations from individuals in that state. The goal is for the public to be able to trust that their donations are going to a legitimate nonprofit organization that will use the money for charitable purposes.

This article explains generally when an organization must register in a state, how to complete the registration process, and what an organization should do when soliciting over the internet. Because each state has its own registration requirements, nonprofit organizations should seek advice from competent attorneys to advise them on their particular situation.

Click here for another article about charitable registration in Georgia.

If you raise money from the general public in Georgia, you may need to make a special filing with the Secretary of State’s office. Here’s a quick review of what you’re required to file, and where.

Because nonprofits enjoy a significant discount on application fees for outdoor festival and alcohol permits in Atlanta, some for-profit entities have asked nonprofits to apply for such permits on their behalf. This article lays out some of the risks nonprofits should consider before agreeing to file for a permit on a for-profit’s behalf.

Complying with charitable solicitation registration, annual renewals and filings, and disclosure statement requirements for multiple states takes a lot of time and requires detailed and dedicated focus. There are many companies that provide this service at a reasonable cost. This is a chart comparing various charitable solicitation compliance companies. Pro Bono Partnership of Atlanta does not endorse any of these companies.

Did you get incorporated in one state and then move your operations?

A nonprofit organization’s tax-exempt status is tied to its incorporation. The IRS decides whether to recognize a nonprofit as tax-exempt under §501(c)(3) of the Internal Revenue Code based on its articles of incorporation and bylaws. If your organization incorporates in one state and obtains its §501(c)(3) status then later decides to move states, the organization should not reincorporate in the new state. The organization should instead maintain its incorporation in the original state (including filing its annual registration and reports) and also register as a foreign corporation in the new state, if required to do so under that state’s law. For more information about registering as a foreign nonprofit corporation in Georgia, please see the article attached.

A nonprofit organization that plans to end its operations should complete certain steps including adopting resolutions and making government filings. An organization that closes without following proper procedures could expose itself to lawsuits from claimants and creditors and IRS enforcement actions. This article provides a broad overview of the dissolution process.