Acquiring tax-exempt status in Arizona for a nonprofit organization is a multi-step process that includes state and federal regulations. Here’s an overview of the procedure:
Incorporate Your Nonprofit
Set up your nonprofit as a legal organization in Arizona. Submit the Articles of Incorporation to the Arizona Corporation Commission (ACC). As part of this procedure, decide on a name, describe your goal, and form a board of directors.
You will require an EIN, or federal tax identification number, from the IRS. You may apply for an EIN online at the IRS website.
Develop Bylaws
Your organization’s bylaws must include internal rules and procedures of your nonprofit. They should cover governance, board structure, and decision-making procedures.
Apply for Federal Tax-Exempt Status
File Form 1023 (long form) or Form 1023-EZ (simplified form) with the IRS. This is the form for federal tax exemption. This is under section 501(c)(3) of the Internal Revenue Code. These forms need specific information regarding your organization’s activities, cash flow, and administration. Pay the filing fee, if any.
Register for Charitable Solicitation
Adhere to the reporting and disclosure guidelines about your solicitations and register with the Arizona Attorney General’s Office.
Failure to file yearly reports may result in penalties and the dissolution of your organization.
Comply with State Tax Regulations
Sales tax and use tax may require registration and compliance. This is based on the operations and sources of funding of your organization.
Maintain Tax-Exempt Status As A Nonprofit
After the IRS grants you tax-exempt status, you have to follow up on ongoing compliance obligations. Submit the yearly Form 990, which contains financial data about your company. If you fail to submit Form 990 for three years in a row, your tax-exempt status may be automatically revoked.
Tax laws and regulations may change over time. It’s best to stay informed to maintain your nonprofit’s tax-exempt status in Arizona. Seek the guidance of legal and financial professionals who specialize in nonprofit law and taxation. They can help you navigate the complex requirements and maintain compliance. Tax-exempt status can be a time-consuming and detailed process. It’s crucial to follow all federal and state regulations.