USA compliance for community organizations

Key findings (concise, actionable)1) Federal tax-exempt recognition (IRS)- Use Form 1023 (full) or Form 1023-EZ (streamlined) to apply for recognition under IRC §501(c)(3). Form 1023-EZ applicants must confirm eligibility via the Instructions and submit via Pay.gov. (IRS)- After recognition, file annual information returns (Form 990, 990-EZ, or 990-N) as appropriate; failure to file for three consecutive years leads to automatic revocation of tax-exempt status. (Harbor Compliance / JMCO)- Obtain an Employer Identification Number (EIN) (IRS SS-4). (IRS)2) State charitable solicitation and fundraising registration- Many states regulate solicitation of funds; statutes typically require registration with a state agency before soliciting residents.

The majority of states (≈40) require charitable registration prior to solicitation; registration rules, required disclosures, renewal frequency, and exemptions vary widely by state. Consult state charity officials (NASCO) and each state’s Attorney General or charity division. (IRS charitable solicitation page; National Council of Nonprofits)- Crowdfunding, giving days, and multi-state online solicitations can trigger registration requirements in multiple states; plan for multi-state filings where donors are targeted in other states. (Council of Nonprofits)3) Beneficial Ownership Information (BOI) / FinCEN (Corporate Transparency Act)- As of the March 26, 2025 interim final rule, FinCEN revised its definition of "reporting company" and exempted entities formed in the United States (formerly “domestic reporting companies”) from BOI reporting.

Foreign entities that register to do business in the U.S. may still have BOI deadlines (reporting companies registered before March 26, 2025: file by April 25, 2025; those registered on/after March 26, 2025: 30 days after registration effective).

Always check FinCEN FAQs and newsroom for updates. (FinCEN)4) Employer and payroll obligations- Community organizations with employees must comply with federal employment tax and reporting rules (issue W-2s, withhold/pay payroll taxes) and with state requirements (unemployment insurance, workers’ compensation) — these obligations are similar to for-profit employers. (JMCO / Harbor Compliance)

Key findings (concise, actionable)1) Federal tax-exempt recognition (IRS)- Use Form 1023 (full) or Form 1023-EZ (streamlined) to apply for recognition under IRC §501(c)(3). Form 1023-EZ applicants must confirm eligibility via the Instructions and submit via Pay.gov. (IRS)- After recognition, file annual information returns (Form 990, 990-EZ, or 990-N) as appropriate; failure to file for three consecutive years leads to automatic revocation of tax-exempt status. (Harbor Compliance / JMCO)- Obtain an Employer Identification Number (EIN) (IRS SS-4). (IRS)2) State charitable solicitation and fundraising registration- Many states regulate solicitation of funds; statutes typically require registration with a state agency before soliciting residents.

The majority of states (≈40) require charitable registration prior to solicitation; registration rules, required disclosures, renewal frequency, and exemptions vary widely by state. Consult state charity officials (NASCO) and each state’s Attorney General or charity division. (IRS charitable solicitation page; National Council of Nonprofits)- Crowdfunding, giving days, and multi-state online solicitations can trigger registration requirements in multiple states; plan for multi-state filings where donors are targeted in other states. (Council of Nonprofits)3) Beneficial Ownership Information (BOI) / FinCEN (Corporate Transparency Act)- As of the March 26, 2025 interim final rule, FinCEN revised its definition of "reporting company" and exempted entities formed in the United States (formerly “domestic reporting companies”) from BOI reporting.

Foreign entities that register to do business in the U.S. may still have BOI deadlines (reporting companies registered before March 26, 2025: file by April 25, 2025; those registered on/after March 26, 2025: 30 days after registration effective).

Always check FinCEN FAQs and newsroom for updates. (FinCEN)4) Employer and payroll obligations- Community organizations with employees must comply with federal employment tax and reporting rules (issue W-2s, withhold/pay payroll taxes) and with state requirements (unemployment insurance, workers’ compensation) — these obligations are similar to for-profit employers. (JMCO / Harbor Compliance)

State business/charter compliance for nonprofits and LLCs- Maintain good standing with the state of incorporation/formation

file annual reports/registration renewals, maintain a registered agent, follow state-level corporate formalities. For LLCs used as community organizations, follow Secretary of State requirements for annual reports and any state-level taxes/fees. (Harbor Compliance)

Governance, recordkeeping, and donor rules- Adopt governance best practices

conflict-of-interest policy, documented board meetings and minutes, internal controls, gift acceptance policy, donor acknowledgment and receipts, and proper handling of restricted funds and grants. Keep thorough records (financials, Form 990, donor records). (Harbor Compliance; JMCO)7) Additional compliance areas to check (state-dependent)- State sales tax exemption rules for nonprofits (exemption applications and renewals vary by state).- Licensing and permits for events/games-of-chance/raffles in many states.- Data privacy laws in certain states (e.g., California CCPA/CPRA, Virginia, Colorado) that may apply depending on data collected and donors’ residency.- Insurance (general liability, D&O for board members) and local permits for events.Practical compliance checklist (starter for US business owners / LLC founders running community orgs)- Choose appropriate legal entity (nonprofit corporation vs. LLC social enterprise) and file with state; obtain EIN (Form SS-4).- If seeking tax-exempt status, determine whether Form 1023-EZ eligibility exists; otherwise prepare Form 1023.- Register for state charitable solicitation where you will solicit donors; research each state’s requirements and renewal deadlines via NASCO/state AG/Secretary of State.- Establish governance policies (conflict-of-interest, financial controls, gift acceptance), maintain minutes, and segregate duties for financial processes.- If hiring employees, register with federal and state tax agencies, withhold payroll taxes, issue W-2s, and comply with state unemployment and workers’ comp rules.- File required federal annual returns (Form 990 series) timely; maintain state filing obligations (annual reports, tax exemptions).- Monitor FinCEN BOI pages for updates relevant to foreign entities and any restored or changed reporting obligations.- Keep documentation for audits/grant compliance; secure donor acknowledgments for tax deductions.Recommended authoritative resources and direct links (used in research)- IRS — Charitable solicitation/state requirements: https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-solicitation-state-requirements- IRS — About Form 1023-EZ: https://www.irs.gov/forms-pubs/about-form-1023-ez- FinCEN — BOI (Beneficial Ownership Information) & interim final rule updates: https://www.fincen.gov/boi- National Council of Nonprofits — Charitable solicitation registration guidance: https://www.councilofnonprofits.org/running-nonprofit/fundraising-and-resource-development/charitable-solicitation-registration- Harbor Compliance — Nonprofit Compliance Guide (state checklists, filings, Form 990 guidance): https://www.harborcompliance.com/nonprofit-compliance-guide- JMCO (James Moore) — Nonprofit compliance summary (Form 990, employment filings, governance): https://www.jmco.com/articles/nonprofit/compliance-requirements-for-501c3/