To maintain corporate good standing status in most states, nonprofits are required to file annual or periodic reports with the Secretary of State, just like their for-profit counterparts. Though the forms and procedures are similar in every state, there is very little uniformity in how states handle due dates, fees, signature requirements, filing methods (paper vs. online) and additional filing requirements of other state agencies. Though the fees and financial penalties for failing to make these required filings are usually nominal, there are much more damaging consequences for failing to comply. It is imperative that nonprofit organizations fulfill all state corporate compliance obligations in a timely manner. Compliance is not an option; it’s the law, and noncompliance or late filings can be costly in many ways. Aside from the monetary penalties, in terms of late fees and other potential costs, there are more damaging consequences of noncompliance, such as: • Loss of good standing and ability to conduct business in a state • Suspension, revocation, or administrative dissolution • Loss of right to use the nonprofit’s name • Loss of access to courts • Damage to the nonprofit’s reputation which can result in a decrease in donations In the event of revocation or dissolution, usually there is the added expense of reinstatement or requalification, which can easily reach hundreds of dollars in some states. Keeping up with the ever-changing requirements and differences from state to state in nonprofit corporate compliance can be quite a challenge. This program will provide a broad overview of state corporate compliance requirements for nonprofits and valuable reference material that will assist you in meeting these requirements.

1. Nonprofit Corporate Compliance:
Required Annual and Periodic Reports and
the Consequences of Failing to Comply
Ron Barrett
January 9, 2013
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4. Today’s Speaker
Ron Barrett
Vice President of Nonprofit Services
National Corporate Research, Ltd.
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6. Presenter’s Contact
Information
Ron Barrett
VP of Nonprofit Services
National Corporate Research. Ltd.
1100 G Street, NW, Suite 420
Washington, DC 20005
rbarrett@nationalcorp.com
www.nationalcorp.com
linkedin.com/pub/ronald-barrett/a/680/b00

7.  Frequently Asked Questions
 Practical Aspects of Compliance
 Consequences of Noncompliance

8.  Nonprofit, Tax Exempt, 501c, Charity:
 Nonprofit status is a matter of state law, which governs the
organization and creation of the entity
 Tax exemption is mostly a matter of federal law
 All tax-exempt organizations are nonprofits
 Not all nonprofits are tax-exempt
 Not all nonprofits are charitable organizations
 Not all tax-exempt organizations are charitable organizations

10.  How is “nonprofit corporate compliance”
defined?
- Term is broad (Conflict of Interest, Document
Retention, Whistleblower, SarBox, etc)
- Annual or Periodic Reporting to State Corporations Division
of Secretary of State to maintain corporate Good Standing

11.  Why is compliance required?
- Not optional (except in Mississippi)
- Statutes mandate
- Noncompliance has damaging consequences
- Attract charitable donations
- Evidence of stewardship commitment
- Donor due diligence on the rise
- Increased scrutiny of tax-exempt organizations
www.nationalcorp.com

12.  When should compliance occur?
- Annually, Biennially, Periodic
- By or before due date
- Due dates will fill your calendar
- If after due date, before suspension,
revocation or dissolution
www.nationalcorp.com

13. Who must comply?
- All incorporated or qualified nonprofits
- All domestic and foreign nonprofits (few exceptions)
- Does not apply if not incorporated or qualified
www.nationalcorp.com

14.  Where is compliance required?
- Secretary of State or Department of State
- Division of Corporations
- Business Services
- Business and Commercial Services Division
- Department of Consumer and Regulatory Affairs (DC)
- Department of Commerce and Consumer Affairs (HI)
- Department of Assessment and Taxation (MD)
- Department of Licensing & Regulatory Affairs (MI)
- Department of Treasury Division of Revenue (NJ)
- Public Regulation Commission (NM)
- Department of Financial Institutions (WI)
www.nationalcorp.com

15.  What are the consequences of
noncompliance?
- Late fees
- Loss of Good Standing (suspension, revocation, dissolution)
- Possibly bad PR and loss of donations
- Threat of Business Identity Theft
www.nationalcorp.com

17.  Corporate vs. Charitable Compliance
 Some Nonprofits File Both
 Qualification Prerequisite
 Similar Form Names
 Sometimes the Same Office
 Registration Renewal
 Annual Financial Reporting
www.nationalcorp.com

18.  Complexity of Annual Report Filings:
 Delaware . . .Easy
 Illinois, California . . .Complex
 Types of Reports
 Paper vs. Online Filings
 Annual Reports vs. Tax Returns

19.  Annual Report Requirements
 Filing Information Report; update address, names of contact
at company
 Annual Fee
 Disclosure on Annual Report?
 Names, addresses, and phone numbers of officers and
directors/members or managers
 Address of principal place of business
 Registered Agent

20. Initial and/or Annual (most states)
Biennial (AK, DC, IA, NE & VT)
Periodic (NH, OH, PA & TX)
Special (MD, MO, NV & TN)
Voluntary (MS)
Not Required (AL*, NY, NC, OK & SC*)
* required in AL and SC if IRS 990-T is filed
www.nationalcorp.com

21. WHERE DO STATES SEND
REPORTS?
 Registered agent (VA)
 Entity (NM)
 Optional (AZ)
 No formal notification (DE, FL)

22.  Convenience / Access fees
 Immediate acknowledgement vs.
weeks/months to receive
evidence (e.g. AZ 30 - 45 days)
 Expedited service for paper filers

23.  Postmark vs. Online deadline
 Signature block character limits
 List of officers and directors
Complete list required in some
states . . . presents a challenge to
submit online (DE allows for upload)

24. Annual Report vs. Tax Return
 Annual Report and UBIT Return
 AL (Form 20C) & SC (SC990-T)
 Annual Report and Department of
Revenue Filing
 CA Franchise Tax Board Filing
 State Filing Requirements for 990

25. Fees
Free: AR, ID, IA, MD, MN (domestic), VT (no payroll)
Low Cost: ($5 to $40)
AK, AZ, CA, CO, GA, HI, IL, IN, KS, KY, LA, ME, MI,
MT, NE, NM, ND, NH, NJ, NV, OH, RI, SD, TN, TX,
UT, VA, VT, WA, WI, WV, WY
Moderate Cost: ($50 to $125)
CT, DC, DE (foreign), FL, MA (foreign), OR
Potentially Higher Cost: Expedited Rush Service
(e.g. OH - $25 + $100)

26. Due Dates…get out your calendar
 February 1: ND  July 1: AK, OK
 March 1: DE domestic  August 1: AR
 April 1: DC, GA, IA, NE, VT  August 31: MO
 April 15: MD, MT  October 1: MI
 April 30: PA*  November 1: MA domestic
 May 1: FL  December 31: MN
 June 1: ME
 June 30: DE foreign, KY,  Filing Windows: e.g. FL 1/1
RI, WV to 5/1, and KY 1/1 to 6/30

27. Due Dates…get out your calculator
 Last day of anniversary month:
CA, CT, ID, IN, NJ, NV, SD, VA & WA
 Last day of 2nd month following filing month: CO
 Prior to 1st day of anniversary month: IL
 First day of anniversary month: WY
 15th day of 6th month following year end: KS
 End of quarter in which nonprofit was originally filed:
HI & WI (domestic only)
 Every 5 years on last day of anniversary month: OH

28. Signatures
Bylaws authorize Executive Director, Officer,
Authorized Signatory
Listed officer required in some states
Power of Attorney (e.g. Assistant Secretary)
Electronic signature on behalf of signatory
Original signature mostly not required
Notarization not required

29. Beware of Scams
Misleading Annual Report and Compliance
Solicitations
http://www.nationalcorp.com/ncr/service/show/68
Look official and appear to be coming from the state
Unintentional change of registered agent
Review the fine print:
“This product has not been approved or endorsed by any government
agency and this offer is not being made by an agency of the
government.”

31. Sanctions for NOT filing Annual
Reports on a timely basis
Late fees and penalties imposed
Loss of Good Standing
Revocation of authority to transact
business (revoke vs. reinstate)
Suspension or administrative dissolution
Loss of ability to make changes
Loss of right to use name
www.nationalcorp.com

32.  Loss of access to courts
 Default judgment
 Directors may be liable
 Difficulty with contracts & bank accounts
 Bad PR for public charities
 Threat of business identity theft
Grace period is granted in some,
but NOT ALL, states:
COST MAY BE HIGHER THAN PENALTY
 DEAL MAY NOT CLOSE
 LENDER COULD FIND DEFAULT

33. What Constitutes Good Standing??
Variations in State Terminology . . .
 In Good Standing
 DE
 Active
 PA
 Active/Delinquent
 GA
 Revoked
 MD
 Not in good standing
 AR

34. Entity Compliance Audit
 Identify whether all entities
are in good standing and any
fees owed
 Identify next annual report
due dates
 Identify entities that require
reinstatement or requalification
to restore good standing

35. Entity Compliance Audit
 Identify entities that require
dissolution/withdrawal
 Identify where affiliated entities are
not represented by same registered
agent
Keeping your entities compliant and in
good standing will ensure the company
can meet critical deadlines and avoid
problems at closings!

36. Helpful Resources
 National Association of Secretaries of State
http://nass.org/index.php?option=com_user&view=login&Itemid=427
 National Corporate Research
 State-by-State Guidelines (article and required filings and due
dates chart)
 Forms Library & Filing Guidelines
http://www.nationalcorp.com/ncr/service/show/43
 Corporate Transactions & Compliance Blog
http://info.nationalcorp.com/blog
 State Links
http://www.nationalcorp.com/ncr/service/show/44

37. This presentation is provided for informational purposes only and
should not be relied upon as legal or tax advice. Matters related to
entity compliance policies and procedures should be developed with
the approval of in-house or outside counsel.

38. Find listings for our current season
of webinars and register at:
NonprofitWebinars.com
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