Learn how to dissolve a nonprofit company in your state.
Do you need to dissolve your Wyoming nonprofit corporation? Here’s a short rundown of the essential processes involved in dissolving and winding up a 501(c)(3) nonprofit company in Wyoming.
Table of Contents
Dissolution Authorization
Closing begins with dissolution, and you will need a determination to dissolve to do so. The resolution should contain a dissolution plan outlining how the nonprofit’s residual assets will be allocated after all creditors have been paid. With the resolution and strategy in hand, Wyoming law allows for voluntary dissolution in the following manner:
If your nonprofit does not have members, a vote of the directors is required; otherwise, action of the directors is required followed by a vote or other permission of the members.
The board alone must adopt the resolution to dissolve and plan of dissolution under the first procedure. The resolution must be adopted by a majority of the directors by default.
The board must first approve the resolution to dissolve and then propose it to the members under the second approach. The members then gather and vote to ratify the resolution, including the dissolution plan. Members may also offer written approval for the resolution.
Make careful to accurately document the resolution to dissolve, the plan of dissolution, the votes of the directors, and, if required, the votes or written consents of the members. This information will be required for filings with the state and the IRS.
First Notice to the Secretary of State
You must submit articles of dissolution with the Secretary of State (“SOS”) for your nonprofit, but you must notify the SOS of your plan to dissolve on or before that date. A copy or description of your dissolution strategy must be included in the notification. You cannot transfer any assets of your organization until 20 days after submitting the notification to the SOS, or unless the SOS signals in writing that it will not take action on the transfer, whichever comes first.
Dissolution Articles
You must submit articles of dissolution to the SOS when your board (and, if appropriate, voting members) has authorized the dissolution and after or on the same day you have filed the requisite notice with the SOS. The articles of dissolution must include the following:
the name of your nonprofit, the date dissolution was authorized if no member approval was required, a statement to that effect, and a statement that dissolution was approved by a sufficient vote of the board of directors if member approval was required, (a) the designation and number of members of, and votes entitled to be cast by, each class entitled to vote separately on dissolution; and (b) the total number of votes cast for and against dissolution.
The SOS website has a blank form for the articles of dissolution that may be downloaded. There is a filing fee of $10.
“Rising Winds”
After your nonprofit has legally approved dissolution, it continues to exist merely for the purpose of completing certain last tasks known as “winding up” the firm. Winding up is primarily concerned with paying off any obligations and then distributing any leftover assets, although additional responsibilities may be included.
In general, you may distribute money and property only after you have paid off all of your nonprofit’s obligations. There are various regulations that must be followed while distributing assets. For example, your nonprofit is required to return any things leased to it on the condition that they be returned upon dissolution. A dissolving 501(c)(3) organization must also disperse its remaining assets for tax-exempt purposes after paying off obligations and repaying borrowed assets. In reality, this generally entails donating assets to another 501(c)(3) charity or organizations. Other distribution criteria may also apply. If you have any concerns, you should speak with a lawyer.
Creditors and Other Claimants Should Be Warned
Giving notice to creditors and other claims is another aspect of winding up your dissolved charity. It is not required to provide notification. However, doing so will assist reduce your obligation and enable you to make final dispositions of residual assets more securely. After dissolution, you may send notification to known claims. You may also notify unknown claimants by posting a notice in a newspaper.
Notice to the Secretary of State
After “all or substantially all” of your nonprofit’s assets have been transferred—that is, after you have completed winding up your nonprofit—you must notify the SOS of who acquired assets other than creditors. The list must include an address for each asset receiver as well as the assets received.
Note on Federal Taxation
You must submit IRS Form 990 or IRS Form 990-EZ for federal tax reasons. Schedule N (Liquidation, Termination, Dissolution, or Significant Disposition of Assets) must be completed, as well as copies of your articles of dissolution, resolution to dissolve, and plan of dissolution. When filling out Form 990 or Form 990-EZ, tick the “Terminated” box in the header section on Page 1 of the return.
Further Information
The SOS website has further information such as forms, postal addresses, phone numbers, and filing costs.
Be careful that dissolution will not put an end to any litigation initiated by or against your organization prior to dissolution. Furthermore, even after dissolution, additional legal actions might be brought by or against your organization for claims or obligation accrued before to dissolution. Depending on the circumstances, fresh proceedings might be launched up to five years following the dissolution.
This article only covers the most fundamental procedures of voluntary dissolution once your organization has begun operations. There are several further, more specialized regulations that address topics such as:
uninvited dissolution
dissolution of unusual nonprofits
what particular components should be included in a dissolution plan that provides sufficient prior notice of member and/or director meetings
the needed number of votes from directors and/or members to authorize dissolution
How to expressly agree dissolution in writing without a meeting; what information must be included in notifications to creditors; and how to react to legal claims after dissolution.
Furthermore, your articles of incorporation or bylaws may incorporate restrictions that apply instead of or in addition to state law. You are highly advised to speak with a lawyer for further information on these and other issues.
Dissolving and winding up your nonprofit company is simply one part of the closure process.