The initial corporate meeting is the essential first step in forming a nonprofit organization. It is at this meeting that the initial board of directors is installed and officer titles determined. The minutes (notes) of this meeting should include a resolution that shows unanimous affirmation by the initial board to establish the organization and pursue both incorporation and federal tax exemption. The purpose of the organization should be articulated in writing, as well.
B. Federal Employer Identification Number (FEIN)
Obtaining an FEIN is an important early step. An FEIN, or Federal Employer Identification Number, is a numeric identifier for businesses. Much like a Social Security number, it is a 9-digit number assigned by the Internal Revenue Service that becomes permanently associated with your organization. It is required of all organizations, both for-profit and nonprofit, and its acquisition should be among the first things accomplished by new startups.
FORM NAME: Application for Employer Identification Number
FORM NUMBER: SS-4
FILING FEE: $0
FOUNDATION GROUP SERVICE: Yes (a component of SureStart™)
C. Incorporation in Maine
Incorporating a nonprofit involves the filing of a formation document, usually referred to as Articles of Incorporation, unless otherwise indicated below. In Maine, this document is filed with Maine Secretary of State’s office.
FORM NAME: Articles of Incorporation
FILING FEE: $40
FOR ADDITIONAL INFORMATION: http://www.maine.gov/sos/, https://www.maine.gov/
FOUNDATION GROUP SERVICE: Yes (a component of SureStart™)
NOTE: While the State of Maine provides a template (boilerplate) document for incorporation, be aware that the Maine template does not meet Internal Revenue Service requirements for obtaining 501(c)(3) status. As part of our SureStart nonprofit formation service, all Articles of Incorporation prepared by Foundation Group are drafted to meet strict IRS requirements.
D. Bylaws
Bylaws are the rules used by the officers and directors to govern the organization. Maine does not require a copy of the bylaws to be filed with the state. Regardless of filing requirement, their creation is a part of the formation process and is required by state law. It is critical that the bylaws be drafted by someone with knowledge of both state and federal law governing the operation of a tax-exempt organization.
NOTE: A copy of the bylaws is required by the IRS when seeking tax-exemption as a 501(c)(3) organization, unless applicant is using Form 1023-EZ.
FOUNDATION GROUP SERVICE: Yes (a component of SureStart™)
E. Beneficial Ownership Information Report
Starting Jan. 1, 2024 every newly formed nonprofit corporation must file the Beneficial Ownership Information (BOI) Report with the Financial Crimes Enforcement Network (FinCEN).
This is due in 2024 within 90 days of incorporation. Once the corporation becomes tax exempt with the IRS, another filing will be made to inform FinCEN that the entity is now exempt, which will exempt it from future updates of the BOI filing. In 2025, the report will be due within 30 days of incorporation.
If there are any changes to the information reported in the initial registration prior to the exemption being obtained from the IRS, the corporation is required to file an update within 30 days of said changes.
FORM NAME: Beneficial Ownership Information (BOI) Report
WHERE TO FILE: https://fincen.gov/boi
FOR ADDITIONAL INFORMATION: https://www.501c3.org, https://www.501c3.org/videos
FOUNDATION GROUP SERVICE: No
F. FEDERAL TAX EXEMPTION (501(c)(3) or other 501(c) Status)
Once a nonprofit corporation has been formed, the next step is to seek tax-exemption from the Internal Revenue Service, more commonly referred to as getting 501(c) status. The IRS recognizes statuses from 501(c)(2) through 501(c)(27). The overwhelming majority of tax-exempt organizations are recognized as 501(c)(3) organizations for their charitable purposes.
To obtain recognition as a 501(c)(3), tax-exempt entity, Form 1023 must be filed with the Internal Revenue Service. Form 1023 is a comprehensive look at an organization’s structure and programs. Given the number of additional schedules, attachments, and exhibits that may be required in addition to the application itself, most Form 1023 filings range between 50-100 pages of information.
In July of 2014, the IRS introduced Form 1023-EZ. This abbreviated version of the application for exemption is available only to qualified, small organizations. Form 1023-EZ is controversial in that most states oppose its use and the foremost nonprofit industry and advocacy groups fear it will negatively impact grant funding opportunities for small charities that use it.
FORM NAME: Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code
FORM NUMBER: 1023 (or 1023-EZ)
FILING FEE: $600 ($275 for Form 1023-EZ)
FOR ADDITIONAL INFORMATION: https://www.irs.gov/pub/
FOUNDATION GROUP SERVICE: Yes (a component of SureStart™)
NOTE: For organizations seeking federal tax-exemption under another 501(c) section, Form 1024-A or Form 1024, Application for Recognition of Exemption Under Section 501(a), must be filed.
Should the IRS grant tax-exempt status, the applicant will be issued a letter of determination to that effect.
G. State Income Tax-Exemption (Corporate Income Tax)
Most states recognize the federal letter of determination and do not require any additional state filings in order to be income tax exempt for state purposes. A handful of states, however, have their own recognition requirements.
MAINE REQUIRES FILING: No, exempt after receiving IRS Determination Letter
FOR ADDITIONAL INFORMATION: https://www.maine.gov/revenue/
FOUNDATION GROUP SERVICE: Yes, in specific service packages
NOTE: Corporate tax-exemption does NOT exempt you from Unrelated Business Income tax (UBIT). For additional information, see https://www.501c3.org/tag/unrelated-business-income .
H. Charitable Solicitations (Fundraising) Registration
Most states require a nonprofit organization to register with its department of charitable solicitations, typically administered by the attorney general’s office. Some states administer the effort through the secretary of state, and others are a combination (bifurcated). A key point is that nonprofits may have a registration requirement beyond their state of incorporation if the organization solicits donations in those other states.
In addition to initial registration, most states require charities to renew their registration on an annual basis. Failure to maintain compliance with fundraising registration may result in punitive fines and loss of ability to operate in that state.
FORM NAME: Charitable Organization Application
FORM NUMBER: N/A, online only
FILING FEE: $50
AUDIT REQUIREMENTS: No audit requirements
EXEMPTION FROM FILING ALLOWED: Yes, various purposes and revenues
FORM NAME: N/A
FOR ADDITIONAL INFORMATION: http://www.maine.gov/
FOUNDATION GROUP SERVICE: Yes, both as a component of SureStart™ and a-la-carte
I. Sales Tax Exemption
Many nonprofits can benefit from being exempt from sales tax on purchases of services, goods, and materials. Some of the states that allow for sales tax exemption require that you have already received your 501(c)(3) status from the IRS. Others do not.
MAINE ALLOWS: Yes, but very limited and specific
FORM NAME: Form specific to type of organization
FORM NUMBER: Varies
FILING FEE: No fee
FOR ADDITIONAL INFORMATION: http://www.maine.gov
Sales tax exemption is very specific and limited in your state. Please contact your state for more specific guidance.
FOUNDATION GROUP SERVICE: No
J. County of Other Local Registrations
There are 3,140 counties in the US. While many do not require business licenses or other filings by nonprofits, some do. We highly recommend that all organizations contact their county clerk’s office to inquire as to any necessary filings. Many local, city, and county agencies also require a business license registration. Please check with your local agencies to ensure you have met all requirements to operate.
FOUNDATION GROUP SERVICE: No
Ongoing Nonprofit ComplianceOnce a nonprofit organization has been created and has obtained tax-exemption and other necessary qualifications, these statuses must be maintained. Below is a list of the ongoing compliance filing requirements for a nonprofit, tax-exempt organization in Maine.
A. Corporate Annual Report
Your nonprofit corporation must file a corporate report annually with the state in order to remain in good standing. This report keeps the state updated concerning the organization’s current officers, directors, and other relevant information.
FORM NAME: Annual Report
FORM NUMBER: MNPCA-13
FILING FEE: $35
DUE DATE: June 1
LATE FILING PENALTIES: Varies
FOR ADDITIONAL INFORMATION: http://www.maine.gov/sos/
FOUNDATION GROUP SERVICE: No
B. Federal IRS Form 990
IRS Form 990 is an annual information return that must be filed by all 501(c) organizations. Form 990 is similar to a corporate tax return, but with several key distinctions. It is an annual report of income and expense activity, along with information specific to nonprofits: the prior year’s activities and accomplishments, significant detail about structure and operations and information about larger donors. No taxes are due on net income from tax-exempt activities.
There are 5 different versions of Form 990: Form 990, Form 990EZ, Form 990-N, Form 990PF, and Form 990-T. Which one is required of any particular organization depends upon a number of factors, the most significant of which is the amount of annual, gross revenue received by the organization. In tax year 2008, the IRS significantly increased the amount of information that is required to be reported by organizations. 2009 added even more to those changes. It is highly advisable that nonprofit organizations seek the assistance of a qualified professional to assist with the preparation of Form 990.
NOTE: Some version of Form 990 is required of all 501(c) organizations (except churches), regardless of gross revenue or past filing requirements … even if an organization has not yet received official 501(c) determination. Significant penalties, and even revocation of tax-exempt status, can result from failure to file a timely and accurate return.
FORM NAME: Return of Organization Exempt from Income Tax
FORM NUMBER: Form 990, 990EZ, 990-N, 990PF, 990-T
FILING FEE: $0
DUE DATE: 15th day of the 5th month following the end of the fiscal year (extendable for 6 add’l months)
LATE FILING PENALTIES: $20 per day, up to the lesser of $10,000, or 5% of the organization’s gross revenue. If gross revenue exceeds $1,046,500, the penalty increases to $100 per day, up to $52,000.
FOR ADDITIONAL INFORMATION: https://www.irs.gov/forms-pubs/
FOUNDATION GROUP SERVICE: Yes, both as a component of Assurance™, and a-la-carte
NOTE: There are no financial penalties associated with the late filing of Form 990-N. The IRS will, however, revoke the tax-exempt status for organizations that fail to file any version of the Form 990 for 3 consecutive years. Other than one official notice, the IRS will NOT send annual reminders that your Form 990 is due.
C. State Exempt Organization Information Reporting
Most states recognize the IRS Form 990 as acceptable for state tax exemption reporting. Many states require no reporting at all, depending upon the type of organization.
MAINE REQUIRES FILING: No
COPY OF IRS FORM 990 ACCEPTABLE: N/A
FOR ADDITIONAL INFORMATION: http://www.maine.gov/ag/
FOUNDATION GROUP SERVICE: No
D. Charitable Solicitations Renewal
Once an organization has registered with the state Division of Charities, it may have to renew that registration annually. If required, the threshold to report usually depends upon the type of organization and the amount of gross revenue.
MAINE REQUIRES RENEWAL: Yes
FORM NAME: Charitable Organization Application
FORM NUMBER: N/A
DUE DATE: November 30
FILING FEE: $25
LATE FILING PENALTIES: $50
AUDIT REQUIREMENTS: No audit requirements
FOR ADDITIONAL INFORMATION: http://www.maine.gov/
FOUNDATION GROUP SERVICE: Yes, as a component of Assurance™, and a-la-carte
E. Other Reporting Requirements
The regulatory world we inhabit is in a constant state of change. It is imperative that all businesses stay aware and informed, including (and especially) nonprofit, tax-exempt organizations. Know what your state and the federal government require and stay current. It is a lot easier, and much less expensive, to do things correctly the first time.
Important Notice: Form changes occur periodically to implement new requirements. Forms may be eliminated or revised, or new forms may be created. Before submitting forms for filing, please be sure that you have the most recent version of forms.
Links can change frequently. If you have a problem with a link, copy and paste the link in your navigation bar.
Employers – If the nonprofit organization has or may have employees and/or speakers/guests/independent contractors, there could be additional registration and reporting requirements at the federal and state level. A common mistake for organizations is compensating people as independent contractors when the relationship requires paying them as employees. You can find information at both the federal and state level to clarify such relationships. Below you will find helpful IRS links. For state requirements, check with the department of revenue. This is the most commonly used name for that department; your state may identify it by a different name. At this department, you will find topical information about: state unemployment insurance (SUTA), state income tax (SIT), new hire reporting requirements, and workers compensation.