Now you have received your "501(c)(3)" letter from the IRS....

Compliance List for "501(c)(3)" Corporations in Connecticut

with hyperlinks to the necessary documents and filing instructions
(LAST UPDATED 1/28/2010; PLEASE NOTIFY ME if you find BAD LINKS)

DISCLAIMER:  THIS INFORMATION IS NOT PROVIDED AS  LEGAL ADVICE AND CREATES NO ATTORNEY-CLIENT RELATIONSHIP.
PLEASE CONSULT YOUR OWN LEGAL AND FINANCIAL ADVISORS.

1. Loose Ends

Form REG-1: If you have not already done so, file with the Connecticut Department of Revenue Services, attaching your determination letter, to ensure exemption from CT business income tax.

Public Charities Unit: Either file Form PCUREG-1 to register, or CPC-54 if you are exempt. Many exemptions apply; organizations that (a) receive less than $50,000 gross per year from "solicitations", and (b) do not use a paid solicitor, are exempt and file CPC-54. Two officers must sign these forms.  Read the instructions for more on exemptions.  BY THE WAY -- if you do interactive online donations, or if you actively solicit in other states, you may have to register there too. Get forms (site under construction); read about the "online" issue and the "Charleston Principles" .....

Other Exemptions.

• Sales Tax.   You don't have to do anything to be exempt from paying sales tax (if you use a corporate check or credit card). Simply get Form CERT-119 from the Department of Revenue Services, available online, fill it out, and attach a copy of your determination letter.
  
  
• Property Tax.  Property tax exemption is more complicated; you don't get it automatically and it usually starts on the NEXT grand list after your acquire the property. The "grand list" is when property gets valued by the town -- October 1st.  You can read the complicated statutes; most organizations will have to file Form M-3 every 4 years with the assessor.  (This form is provided here as a "fill-in.")  Property tax may apply to things like office equipment as well as real estate and automobiles!
  
  
• There are more taxes and more exemptions.  Check with the Department of Revenue Services about any other exemptions, such as exemptions from collecting sales tax.  These rules change constantly.
  

2. Ongoing IRS and other Tax Filings
   

Annual Filings:  IRS Form 990 (or 990EZ)and Schedule A (click here and here for instructions - be sure to check for current version on www.irs.gov if this page has not been updated): If you have gross income from all sources of $25,000 or more, file annually by the 15th day of the 5th month following the end of your fiscal year (May 15th if your year ends December 31st).  If you have less, you will have to file a "notice" justifying that you do not need to file a 990 (new as of 1/2008 - the form of notice has not yet been drafted by the IRS.  IF YOU FAIL TO FILE FOR 3 YEARS IN A ROW, YOU WILL LOSE TAX EXEMPT STATUS AND WILL HAVE TO RE-APPLY! (also new as of 1/2007). If you have less than $100,000 of gross income and year-end assets of less than $250,000, you may file Form 990-EZ (click for instructions).  By the way -- you will find these published on the Internet, so remember that the public is also reading what you tell the IRS.  Consult an accountant or attorney to complete  these forms:  they are complicated.  Click to fill in and print  Form 8868 for an automatic 3-month IRS extension. 

PENALTIES of $ 20.00 per day for failure to file 990
(there is a maximum).
LOSS OF EXEMPT STATUS - MUST REAPPLY - if fail to file 990 OR NOTICE for 3 years

Watch your "Public Support" compliance: You no longer have to file Form 8734 after the end of your fifth fiscal year.  However, the IRS will review your status based on the information presented in Form 990 or 990EZ relating to the sources of your support.  For help understanding how to include the contributions, read my article "Remember Your Fractions."

Changes: You are required to send the IRS any changes to your Certificate of Incorporation and Bylaws. This can be done by letter, or by an attachment to Form 990. If you change your address, file Form 8822 with the IRS.

Lobbying. If you have not already done so, and want to elect the numerical test for measuring whether your lobbying activity is "substantial," file IRS Form 5768. If you want to revoke your election, use the same form. The election is retroactive:  you can file at the end of the year to cover the entire year.  File Form 990 to report lobbying expenses annually.  ALSO VERY IMPORTANT:  Connecticut ethics laws are stricter than the IRS.  You may have to file with the State Ethics Commission even if what you are doing would not be considered "lobbying" by the IRS at all.

3. Ongoing State Filings

1. Secretary of State.

Annual Report. This will be sent to you by the Secretary of State, but if you do not receive it, you should contact them. There is a small annual fee, and if you miss any reports you will have to file back reports with fees for each missed year.  Very cool:  you can now file ONLINE and pay the fee with a credit card!!   You are not dissolved if you fail to file, but you are not "in good standing" which can be annoying if you apply for a mortgage, or need to sue someone.

Change of Address. This is important to file. You don't have to, but can, report additional directors too.

Change in "statutory agent for service." If the agent you had initially is no longer involved with you, be sure to change this.  File any change in your agent's address as well.

Changes to governing documents: Don't change your Certificate of Incorporation without filing a Certificate of Amendment (fill-in online). Don't change your Bylaws without checking your Certificate. Don't change either without checking the statute, section 33-1000 and following of the Conn. General Statutes.

2. Public Charities Unit. Since 10/2005, registration expires annually, and you will have to use the registration form above annually to re-register. This will include a copy of your Form 990. If you are not required to register, you should still check the requirements if you hire a "fund-raising counsel" (non-employee paid to advice regarding solicitation/fund-raising) or a "paid solicitor" (non-employee who makes direct solicitations on your behalf). In general, contracts must be filed with the Secretary of State and you should only engage "registered" counselors or solicitors.  Remember that if you fund-raise in other states (including in some cases using on-line solicitations especially interactive sites accepting credit cards) you may have to register and report in those states.

4. PUBLIC DISCLOSURE.  You are required to make certain documents available to the public when requested, so make sure you can find the documents when asked.  These include your governing documents; your exemption application (Form 1023) and all attachments (if you filed after 1987 or had a copy of your 1023 in hand at the time); and three years of Form 990, if you filed one.  You'll have to provide these for viewing the same day as a request in person (30 days for mailed-in requests) or face $20/day penalties.  You also have to make copies of anything not posted on the Internet in PDF format, and can only charge $1 for the first page and $0.15 for subsequent pages.
   

5. Other reminders.
   

Keeping Accounts.  All the filings and forms above will be impossible if you do not keep good, organized accounts.  It is worth it to consult with an accountant about how to keep your "books" from the very start.  If you get grants, and have to report on the use of funds, this is essential -- you may have all kinds of liabilities if you don't maintain good records.  This is a MUST.

"Business." If you have employees, or engage in ANY sales, talk to your accountant -- there will be many additional forms required.  And don't forget about INSURANCE!!!

Fund-raising Issues. Check Publication 1771, IRS information on federal requirements relating to charitable gifts, including the requirement that you provide a "disclosure of benefit" to individuals who make gifts of $75 or more and receive a "benefit" in return.  There are all kinds of special rules for different fund-raising activities.  NOTE:  the Pension Protection Act of 2006, signed in August, 2006, adds additional requirements and limits some deductions.  Skip to the end of my article...

Other States. If you conduct activities in other states (which in some cases may include "interactive" on-line fund-raising, or appearing at a fundraising event) you may need to file or register in those states.

Watch your Step - Look out for Conflicts of Interest.  The IRS can impose financial penalties if an "insider" or related party receives "excess benefit" from a transaction with a tax-exempt organization.  In case of doubt consult your attorney or accountant.  COMPENSATION TO "INSIDERS" that is not adequately documented at the time of the payment -- for example by reporting on a 990, W-2, etc. -- may be an "excess benefit" even if reasonable.

Watch for Terrorists -- if the government thinks you are aiding them, you may have your assets seized.  The IRS has  suggested "best practices" and a list of persons to avoid (or at least investigate).  (Can you say McCarthy??)

For further information, contact
Lisa Nachmias Davis
Davis O'Sullivan & Priest LLC
129 Church Street, Suite 805
New Haven, CT 06510
203-776-4400
Fax 203-774-1060
davis@sharinglaw.net
www.sharinglaw.net