To maintain your 501(c)(3) Nonprofit Public Charity in good standing in Michigan, follow this advice.
8 Ways to Keep Your Nonprofit Legal
In order to keep a 501(c)(3) nonprofit company in Michigan, you must:
Apply for a state tax exemption.
Tax-exempt organisations must file annual federal returns.
Keep a Registered Agent on file.
Submit periodic reports
Request permissions and licences
Register/Renew Your Charitable Organization
Follow the Public Inspection Rules.
1. Apply for a state tax exemption.
A. Exemption from state income taxes
Once you obtain your 501(c) decision letter from the IRS, your organisation will be immediately excluded from paying corporation income tax.
B. Exemption from state sales tax
Nonprofits classified as 501(c)(3) in Michigan are free from paying sales tax on purchases. Each vendor will want a Certificate of Exemption, as well as a copy of your IRS decision letter. Access the Michigan.gov guidelines for further information.
2. Tax-exempt Organizations’ Annual Federal Returns
A. Federal Annual Returns
The IRS requires most tax-exempt charitable organisations to submit an annual return (Check the IRS website for a list of exceptions).
An organization’s yearly gross receipts dictate which form should be utilised to submit the annual federal return.
The IRS defines ‘gross receipt’ as “the total sums the organisation received from all sources throughout its yearly accounting period, before deducting any expenditures or expenses.”
For gross revenues of $50,000 or more, file Form 990-N.
$200,000 in gross income and $500,000 in total assets —- File 990-EZ
If your gross revenues exceed $200,000 or your total assets exceed $500,000, you must file a 990 form.
If you have any concerns, please contact the IRS at
(800) 829-3676 (Form related questions)
(800) 829-1040 (general information)
Q: When is the 990 form due?
A: Form 990 is due on the 15th day of the 5th month after the end of the organization’s fiscal year.
For example, if the fiscal year closes on December 31st, the form 990 is due on May 15th.
NOTE: If an organisation fails to complete Form 990 for three years in a row, it will lose its tax-exempt status.
B. Unrelated Business Profits
If an organisation earns more than $1,000 from a trade or company that is unrelated to the organization’s declared purpose, it must submit Form 990-T to pay taxes on that revenue.
If your organisation anticipates to pay $500 or more in unrelated business income taxes for the year, you must pay a quarterly estimated tax on the unrelated business income using Form 990-W.
3. Keep a Registered Agent.
Any charity that has incorporated must have a registered agent with a Michigan office location. If your registered agent or office address changes, you must submit CSCL/CD-520 with the Michigan Department of Licensing and Regulatory Affairs in order for your Articles of Incorporation to be revised.
Your company may be terminated if you fail to inform the Michigan Department of Licensing and Regulatory Affairs of this change.
4. Submit Periodic Reports
Nonprofits must file an annual report to the Michigan Department of Licensing and Regulatory Affairs by October 1st of each year. You may submit your annual report online using their online filing system.
Failure to submit the required reports may result in the termination of your company.
5. Obtain Permits and Licenses
At the state level, the majority of Michigan charities will not need a general business licence. Many states and counties in Michigan, however, have their own regulations. Check with your local clerk’s office to see whether your organisation will need to get any form of licence or permission.
6. Register/Renew Your Charitable Status
Charitable Michigan organisations that want to collect donations must register with the Michigan Attorney General and renew their registration every year. You may register (using form CTS-01) through email or postal mail. You may also Efile your form if you choose.
The only organisations exempt from this rule are those that solely solicit with volunteers and receive less than $25,000 per year. Review the Charitable Organizations and Solicitations Act for further information on exemptions. If your organisation qualifies, you may submit a Request for Exemption form (CTS-03) to the Attorney General’s Office.
7. Register with the Michigan Treasury Department and the Unemployment Insurance Agency.
If your organisation intends to hire people, you must register with the Michigan Treasury and Unemployment Insurance Agency.
Registration is simple and may be done online or by mail using the Registration for Michigan Taxes form. You may also get in touch with the Michigan Business Tax department.
8. Obey Public Inspection Rules
To comply with federal requirements governing 501(c)(3) organisations, you must make the following papers available to any member of the public who wants them:
Annual returns for your organisation may be filed up to three years after the due date (including the following Forms: 990-PF, 990-EZ, 990-T, and 990)
Any supporting documentation and attachments for the 990 forms listed above. For Schedule B, however, you simply need to indicate the kind of the gift and the amount given.
Official IRS documentation demonstrating that your group is tax-exempt.
Your organization’s exemption application and any supporting documentation filed with it (including Form 1023).
Your company is NOT required to share the following papers or information with the general public:
Any part of Schedule B of Form 990/990-EZ that names donors.
Anything deemed an adverse judgement, including past rejections of tax-exempt status.
Any extra information that the IRS is entitled to withhold, such as trade secrets, patents, and so forth.