STATE TAX EXEMPTION APPLICATION CHECKLIST

FOR 501(c)(3) ORGANIZATIONS

OVERVIEW

Types of State Tax Exemptions

Nonprofit organizations may be eligible for exemption from various state taxes, including:

General Process

1. Obtain federal 501(c)(3) determination letter
2. Research state-specific requirements
3. Apply for state income tax exemption
4. Apply for sales/use tax exemption
5. Apply for property tax exemption (if applicable)
6. Register for charitable solicitation
7. Maintain ongoing compliance

[// GUIDANCE: State requirements vary significantly. Some states automatically recognize federal exemption; others require separate applications. Always verify current requirements with your state.]

PART I - FEDERAL EXEMPTION STATUS

Prerequisites

Before applying for state exemptions, ensure you have:

☐ IRS Determination Letter - Letter recognizing 501(c)(3) status
- Date received: ________________________
- Effective date of exemption: ________________________

☐ EIN: ___ - _______________

☐ Articles of Incorporation - Filed and certified by state

☐ Bylaws - Adopted and current

PART II - STATE INCOME TAX EXEMPTION

Research Your State Requirements

☐ State: ________________________

☐ Administering Agency: ________________________
(e.g., Department of Revenue, Franchise Tax Board, Department of Taxation)

☐ Website: ________________________

☐ Phone: ________________________

State Income Tax Exemption Categories

Category A - Automatic Recognition
Some states automatically recognize federal 501(c)(3) status without requiring a separate application.

States with automatic recognition may include: [Research current list]

☐ My state provides automatic recognition: ☐ Yes ☐ No

Category B - Separate Application Required
Most states require a separate application for state income tax exemption.

☐ My state requires a separate application: ☐ Yes ☐ No
☐ Application form: ________________________
☐ Filing fee: $________________________

Common Required Documents

☐ Completed state exemption application form
☐ Copy of IRS determination letter
☐ Certified copy of Articles of Incorporation
☐ Copy of Bylaws
☐ Copy of IRS Form 1023 or 1023-EZ (some states)
☐ Financial statements or budget
☐ List of officers and directors
☐ Detailed description of activities
☐ Filing fee payment

State Income Tax Exemption Application Tracking

PART III - SALES AND USE TAX EXEMPTION

Research Your State Requirements

☐ State: ________________________

☐ Administering Agency: ________________________

☐ Website: ________________________

Sales Tax Exemption Types

Exemption on Purchases by the Organization

☐ Does my state exempt nonprofit purchases from sales tax?
☐ Yes - all purchases
☐ Yes - limited to certain items
☐ No exemption available

If yes:
☐ Application form: ________________________
☐ Filing fee: $________________________

Exemption on Sales by the Organization

☐ Does my state exempt nonprofit sales from sales tax?
☐ Yes - all sales
☐ Yes - limited (e.g., occasional sales, fundraising)
☐ No exemption available

Common Required Documents for Sales Tax Exemption

☐ Completed sales tax exemption application
☐ Copy of IRS determination letter
☐ Copy of state income tax exemption (if applicable)
☐ Copy of Articles of Incorporation
☐ Description of exempt activities
☐ Description of items to be purchased tax-exempt
☐ Filing fee (if applicable)

Sales Tax Exemption Certificate

Upon approval, you will typically receive:
☐ Sales tax exemption certificate
☐ Exemption number: ________________________
☐ Expiration date (if applicable): ________________________

[// GUIDANCE: Provide the exemption certificate to vendors when making tax-exempt purchases. Keep records of all exempt purchases.]

Vendor Notification

After receiving exemption:
☐ Notify regular vendors of tax-exempt status
☐ Provide copies of exemption certificate
☐ Update purchasing procedures

PART IV - PROPERTY TAX EXEMPTION

Research Your State/Local Requirements

☐ State: ________________________

☐ County/Municipality: ________________________

☐ Administering Agency: ________________________
(typically County Assessor or Tax Commissioner)

☐ Website: ________________________

Property Tax Exemption Availability

☐ Does my state/locality exempt nonprofit property from property tax?
☐ Yes - real property (land and buildings)
☐ Yes - personal property (equipment, furniture)
☐ Yes - both real and personal property
☐ No exemption available
☐ Partial exemption available

Eligibility Requirements

Common requirements for property tax exemption:

☐ Property must be owned by the exempt organization
☐ Property must be used exclusively for exempt purposes
☐ Property cannot generate unrelated business income
☐ Organization must not lease property to taxable entities
☐ [State-specific requirements]

Application Process

☐ Application deadline: ________________________
(many states have annual filing deadlines)

☐ Application form: ________________________

☐ Filing fee: $________________________

Common Required Documents for Property Tax Exemption

☐ Property tax exemption application
☐ Copy of IRS determination letter
☐ Proof of property ownership (deed or title)
☐ Description of how property is used for exempt purposes
☐ Floor plan or property diagram (showing exempt use areas)
☐ Lease agreements (if any portion is leased)
☐ Financial statements
☐ List of officers and directors

Property Tax Exemption Tracking

[// GUIDANCE: Property tax exemption typically requires annual renewal or reapplication. Mark renewal deadlines on calendar.]

PART V - FRANCHISE TAX EXEMPTION

Research Your State Requirements

☐ Does my state impose a franchise tax on corporations?
☐ Yes
☐ No (proceed to next section)

☐ Does my state exempt 501(c)(3) organizations from franchise tax?
☐ Yes - automatic upon federal recognition
☐ Yes - separate application required
☐ No exemption available

Application for Franchise Tax Exemption

☐ Administering Agency: ________________________

☐ Application form: ________________________

☐ Filing fee: $________________________

☐ Application submitted: ________________________

☐ Exemption received: ________________________

PART VI - EMPLOYMENT TAX CONSIDERATIONS

State Unemployment Insurance Tax (SUTA)

☐ Does my state require nonprofits to pay unemployment insurance?
☐ Yes - standard contributions like other employers
☐ Yes - but may elect reimbursement method
☐ Exempt from SUTA

Reimbursement Election

Many states allow 501(c)(3) organizations to elect to reimburse the state for actual unemployment benefits paid rather than paying standard contributions.

☐ Reimbursement election available: ☐ Yes ☐ No
☐ Deadline to elect: ________________________
☐ Election made: ☐ Yes ☐ No

[// GUIDANCE: The reimbursement method may be advantageous for organizations with stable employment and low turnover.]

Worker's Compensation

☐ Worker's compensation insurance required: ☐ Yes ☐ No
☐ Policy obtained: ☐ Yes ☐ No

PART VII - CHARITABLE SOLICITATION REGISTRATION

[// GUIDANCE: Most states require registration before soliciting charitable contributions. This is separate from tax exemption.]

Research Your State Requirements

☐ State: ________________________

☐ Administering Agency: ________________________
(typically Attorney General or Secretary of State)

☐ Website: ________________________

☐ Registration required?
☐ Yes
☐ No
☐ Exempt (small organizations or certain types)

Registration Information

☐ Application form: ________________________

☐ Filing fee: $________________________

☐ Renewal frequency: ☐ Annual ☐ Biennial ☐ Other

☐ Renewal deadline: ________________________

Required Documents for Charitable Registration

☐ Charitable registration application
☐ Copy of IRS determination letter
☐ Copy of Articles of Incorporation
☐ Copy of Bylaws
☐ Most recent Form 990 (or 990-EZ)
☐ Audited financial statements (if required by revenue threshold)
☐ List of officers and directors
☐ Description of charitable programs
☐ Disclosure of professional fundraiser contracts (if any)
☐ Filing fee

Multi-State Fundraising

If soliciting contributions in multiple states:

☐ Identify states where registration is required
☐ Consider using Unified Registration Statement (URS)
☐ Track all registration deadlines

States where registration required:
| State | Due Date | Status |
|-------|----------|--------|
| | | ☐ |
| | | ☐ |
| | | ☐ |

PART VIII - STATE-BY-STATE SUMMARY WORKSHEET

Complete this worksheet for each state where exemption is sought:

State: ________________________

Contact Information

Application Status

Renewal Deadlines

PART IX - ONGOING COMPLIANCE

Annual Requirements

☐ State Annual Report/Statement of Information
- Due date: ________________________
- Filing agency: ________________________
- Fee: $________________________

☐ Charitable Registration Renewal
- Due date: ________________________
- Fee: $________________________

☐ Property Tax Exemption Renewal (if applicable)
- Due date: ________________________

☐ State Tax Returns (even if exempt, some states require filing)
- Due date: ________________________
- Form: ________________________

Record Keeping

Maintain copies of:
☐ All exemption applications
☐ All exemption certificates/letters
☐ Annual renewal filings
☐ Correspondence with state agencies

Calendar Reminders

Set reminders for:
☐ State annual report filing deadline
☐ Charitable registration renewal deadline
☐ Property tax exemption renewal deadline
☐ Sales tax exemption renewal (if applicable)
☐ Any other state-specific deadlines

PART X - COMMON ISSUES AND TIPS

Common Reasons for Denial

☐ Missing IRS determination letter
☐ Organizing documents lack required language
☐ Activities not consistent with exempt purpose
☐ Private benefit or inurement concerns
☐ Incomplete application
☐ Failure to meet state-specific requirements

Tips for Success

☐ Apply promptly after receiving federal determination
☐ Provide complete and accurate information
☐ Include all required attachments
☐ Respond promptly to any requests for additional information
☐ Keep copies of all filings
☐ Track all deadlines
☐ Seek professional assistance if needed

If Denied

☐ Review denial letter for specific reasons
☐ Determine if appeal is available
☐ Consider reapplying with corrected information
☐ Consult with legal counsel

RESOURCES

State Nonprofit Associations
- National Council of Nonprofits: www.councilofnonprofits.org
- State association for your state: [Research]

Multistate Resources
- Unified Registration Statement: www.multistatefiling.org
- State charity registration requirements: [Research by state]

IRS Resources
- State Links for Exemption: www.irs.gov/charities-non-profits/state-links

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