How To Maintain Texas Nonprofit Compliance

Follow this instructions to maintain your 501(c)(3) Nonprofit Public Charity in Texas in good standing.

9 Steps to Keeping Your Nonprofit Legal

In order to keep a 501(c)(3) nonprofit company in Texas, 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
You must pay the Texas Franchise Tax.
Request permissions and licences
Register with the Texas Workforce Commission to renew your charitable registration.
Follow the Public Inspection Rules.

1. Apply for a state tax exemption.

A. Exemption from state income taxes

After receiving your 501(c) decision letter from the IRS, you may submit for state income tax exemptions using form AP-204, Application for Exemption – Federal and All Others.

Exempt Organizations Section, Texas Comptroller of Public Accounts, P.O. Box 13528 Austin, Texas 78711

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)
FAQ

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 incorporated nonprofit must have a registered agent with a Texas office location. If your registered agent or office address changes, you must submit Form 401 with the Secretary of State to amend your Certificate of Formation. Your company may be terminated if you fail to inform the Secretary of State of this change.

4. Submit Periodic Reports

The Texas secretary of state may compel your group to produce some form of yearly report. If your organisation does not have to submit an annual report, it may have to file a Franchise Tax Report and/or a Public Information Report.

Failure to submit the required reports may result in the termination of your company.

5. Comply with the Texas Franchise Tax

Unless the Texas Comptroller of Public Accounts grants an exemption, every nonprofit operating in Texas will be obliged to pay a state Franchise Tax. You may read more about franchise tax exemptions and see whether your company qualifies.

NOTE: Even if your organisation has asked for a franchise tax exemption, you must pay the franchise tax until the exemption is granted.

For further information about Texas franchise taxes, please contact the Texas Comptroller’s office at:

1(800)-252-1381

or send an email to [email protected]

6. Obtain Permits and Licenses

The majority of Texas organisations will not need any form of general business licence. If your organisation intends to offer products or services, you must apply for a Texas Sales Tax permit. The application form for this permission may be obtained from the Texas Comptroller’s Office.

7. Renew your charity registration.

Charity Texas charities are usually excluded from the need to register as a charitable organisation. This rule has two main exceptions:

If your organisation intends to generate funds for veterans, you must register with the Texas Secretary of State. Forms 3501 and 3502 must be submitted. The cost of registration will vary depending on the form and purpose of your group, as well as the number of counties in which you want to collect contributions. This registration must be renewed annually.
If your organisation intends to collect contributions over the phone, you must register with the attorney general’s office. You must complete the Charity Registration Form and pay the $50 registration fee. A $50,000 surety bond will also be needed if your company will use a commercial telephone solicitor.
Visit their website to learn more about the Texas Law Enforcement Telephone Solicitation Act (LETSA) and how it may affect your organisation.

8. Apply to the Texas Workforce Commission

If your organisation will have any form of workers, you must register with the Texas Workforce Commission.

Registration is simple and may be done online. You may also find contact information for your local workforce commission.

9. 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.