Charitable Solicitation - Periodic State Reporting


Most states have statutes that require charitable organizations that solicit contributions from the public to register and file periodic financial reports. Many states accept a copy of the Form 990PDF in place of all or part of their financial report forms.  If you use Form 990, Form 990-EZ, or 990-PF to satisfy state or local filing requirements, note the following:

Determine state filing requirements

You should consult the appropriate officials of all states and other jurisdictions in which the organization does business to determine their specific filing requirements.  "Doing business" in a jurisdiction may include any of the following:  (1) soliciting contributions or grants by mail or otherwise from individuals, businesses, or other charitable organizations; (b) conducting programs; (c) having employees within that jurisdiction; (d) maintaining a checking account; or (e) owning or renting property there.

Monetary tests may differ

Dollar limitations that apply to Form 990, 990-EZ, or 990-PF, when filed with the IRS may not apply when using the return in place of state or local report forms.  An  example of an IRS dollar limitation that does not meet some state requirements is the $50,000 gross receipts minimum that creates an obligation to file Form 990 or 990-EZ with the IRS.

Additional information may be required

State or local filing requirements may require you to attach to Form 990, 990-EZ, or 990-PF, one or more of the following:  (a) additional financial statements, such as a complete analysis of functional expenses or a statement of changes in net assets; (b) notes to financial statements; (c) additional financial schedules; (d) a report on the financial statements by an independent accountant; and (e) answers to additional questions and other information.  Each jurisdiction may require the additional material to be presented on forms they provide.  The additional information does not have to be submitted with the return filed with the IRS.

Even if IRS accepts the return that the organization files as complete, a copy of the same return filed with a state will not fully satisfy that state's filing requirement if required information is not provided, including any of the additional information discussed above, or if the state determines that the form was not completed by following the applicable Form 990, 990-EZ, or 990-PF instructions or supplemental state instructions.  If so, the organization may be asked to provide the missing information or to submit an amended return.

Use of audit guides may be required

To ensure that all organizations report similar transactions uniformly, many states require that contributions, gifts, grants, etc., and functional expenses be reported according to the AICPA industry audit and accounting guide, Not-for-Profit Organizations (New York, NY, AICPA, 2003), supplemented by Standards of Accounting and Financial Reporting for Voluntary Health and Welfare Organizations (Washington, DC, National Health Council, Inc., 1998, 4th edition).

Donated services and facilities

Although the two publications named above sometimes call for reporting donated services and facilities as items of revenue and expenses, many states and the IRS do not permit the inclusion of those amounts in Parts I and II of the Form 990 or Form 990-PF or Part I of Form 990-EZ.  The optional reporting of donated services and facilities is discussed in the instructions for all three returns.

Amended returns

If the organization submits supplemental information or files an amended Form 990, 990-EZ, or 990-PF with the IRS, it must also send a copy of the information or amended return to any state with which it filed a copy of the return originally to meet that state's filing requirement.

Method of accounting

Most states require that all amounts be reported based on the accrual method of accounting.

Time for filing may differ

The deadline for filing Form 990, 990-EZ, or 990-PF with the IRS differs from the time for filing reports with some states.

Public inspection

Form 990, 990-EZ, or 990-PF information made available for public inspection by the IRS may differ from that made available by the states.

Life Cycle of a Public Charity