Non-profit Return Filing Requirements

Non-profit organizations can be exempt from paying income and sales taxes but that doesn’t mean they are exempt from all taxes or from reporting requirements. The following are some examples of reporting requirements and taxes applicable to non-profit organizations:

• Exemption applications – in order to be exempt from federal income taxes, organizations must file an application with the IRS and be approved as a valid exempt organization. This must be done within the first two years of existence.
• Solicitation approval – in order to solicit contributions and hold charitable assets in the State of Illinois, organizations must apply to the Illinois Attorney General’s Office before making any such solicitations.
• Sales tax exemption – in Illinois, only a limited subset of non-profit organizations are eligible for sales tax exemption. An application must be filed with the Illinois Secretary of State for approval prior to being exempt from paying sales tax on purchases.
• Payroll taxes – any non-profit organization with employees is subject to the same payroll taxes and payroll reporting requirements as any other business. This includes filing Form 1099 for any contract services.
• Annual reporting – each year, exempt non-profit organizations must file an informational return with both the IRS and the Illinois Attorney General if applicable.

This is not an exhaustive list of requirements--please contact us if you need assistance in assessing requirements for an organization you are involved with.More information can be found here (Tax Information for Charities & Other Non-Profits) or here (Illinois Attorney General - Building Better Charities).