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Nonprofit Organizations FAQs

• Formation of Texas Entities
• Amendments and Corrections
• Name Filings
• Mergers and Conversions
• Terminations and Reinstatements
• Foreign or Out-of-State Entities
• Nonprofit Organizations
• Management and Ownership
• Registered Agents
• Home or Property Owners' Assns.
• Business Organizations Code
• Filing & Other General Questions
• SOSDirect
• Trademarks
• Service of Process Information

The answers to our Frequently Asked Questions are provided for informational purposes and are non intended to provide legal advice or to substitute for the communication of an attorney. If you accept specific legal questions, consult your chaser.

You lot may also wish to review our other FAQs for answers to oftentimes asked questions related to filing issues such as alteration or correcting a filing, causeless proper name and name registration and reservation filings, proper name changes, and withdrawal and termination.

• FAQs for Nonprofit Corporations
• FAQs for Unincorporated Nonprofit Associations
• FAQs for Nonprofit Corporation Periodic Reports

FAQs for Nonprofit Corporations

1. What is a nonprofit corporation?
2. Is a nonprofit corporation a tax-exempt entity? If not, how do I become tax-exempt?
3. How practice I form a "501(c)(3)" corporation?
4. I'm filing a certificate of formation for a nonprofit corporation, and I have to decide whether the corporation will have members.  What is a fellow member?
5. Tin one person exist the sole director and officeholder of a nonprofit corporation?
6. Can a nonprofit corporation pay a salary to its officers, directors and/or employees?
7. Tin can a nonprofit corporation give political contributions?
8. Who has authority to investigate the activities of a nonprofit corporation?
9. Are the books and records of a nonprofit corporation available for inspection?
10. Can I obtain a copy of a nonprofit corporation'due south IRS Form 990 from the secretarial assistant of state?
11. Does a foreign nonprofit corporation have to register to transact concern in Texas if its only contact with the country is solicitation of funds or donations?
12. How can I obtain a re-create of the bylaws, tax exempt filings or other documents for a nonprofit organisation?

1. What is a nonprofit corporation?

   A "nonprofit corporation" is a corporation no part of the income of which is distributable to members, directors, or officers. A nonprofit corporation is created by filing a certificate of germination with the secretary of state. See Form 202 (Discussion 152kb, PDF 142kb). A nonprofit corporation may be created for any lawful purpose, which purpose must be stated in its document of formation.

2. Is a nonprofit corporation a tax-exempt entity?  If not, how do I become revenue enhancement-exempt?

   A Texas nonprofit organisation—whether a corporation or an unincorporated association—is not automatically exempt from federal or state taxes. To become exempt, the organization must see certain requirements and apply with both the IRS and the Texas Comptroller of Public Accounts.

   To learn more about the rules and procedures for obtaining federal tax-exempt status, read IRS Publication 557, "Tax-Exempt Status for Your Organization."  Questions about federal taxation-exempt status can be directed to:

   IRS
   Exempt Organizations Section
   (877) 829-5500

   To larn more about the rules and procedures for obtaining land tax-exempt status, read the FAQs published by the Texas Comptroller of Public Accounts.  Exemption from Texas state taxes is determined by the Texas Comptroller of Public Accounts. Questions about state revenue enhancement-exempt status can be directed to:

   Texas Comptroller of Public Accounts
   Exempt Organizations Department
   (800) 252-5555 or (512) 463-4600
   e-mail

3. How practice I form a "501(c)(3)" corporation?

   The designation "501(c)(iii)" refers to a specific federal tax provision only. If you demand information regarding a federal revenue enhancement provision or a taxation provision impacts your certificate of formation, you should contact your own tax counsel, attorney, or the IRS. The secretarial assistant of country'due south Form 202 meets minimum land law requirements just does not include any additional statements that the IRS might require for tax-exempt status.

4. I'g filing a certificate of germination for a nonprofit corporation, and I have to decide whether the corporation volition accept members.  What is a fellow member?

   Many nonprofits use the term "member" synonymously with "supporter" or "donor."  Separate from this fundraising use, notwithstanding, the Texas Business organisation Organizations Lawmaking provides for a nonprofit corporation with a formal membership structure.  Pursuant to section 1.002(53) of the Texas Business Organizations Lawmaking, a "fellow member" of a nonprofit corporation is "a person who has membership rights in the nonprofit corporation under its governing documents."  Members of a nonprofit corporation are similar to shareholders of a for-profit corporation in that both members and shareholders may have significant rights with respect to internal corporate governance.  Dissimilar shareholders, nonetheless, members of a nonprofit corporation are typically not owners and are non issued stock.  When forming a nonprofit corporation, you must determine whether the corporation volition have members, and if so, who volition govern the corporation—the members, a board of directors, or both.

   A nonprofit corporation is presumed to have members.  If y'all are forming a nonprofit corporation without members, the certificate of formation must include a argument to that outcome.

5. Can i person be the sole managing director and officer of a nonprofit corporation?

   No. The Texas Business Organizations Code requires a nonprofit corporation to have at least three directors, ane president, and one secretary. The same person cannot exist both the president and secretary. Officers and directors must exist natural persons, but may be known by other titles.

6. Tin a nonprofit corporation pay a salary to its officers, directors and/or employees?

   Yes. Any corporation may pay reasonable compensation for services rendered to the corporation. Note that the Secretary of State does not determine what is considered reasonable compensation.  A newspaper presented in 1993 at the IRS Standing Teaching Program for Exempt Organization Specialists discusses reasonable compensation.  This paper is available on the IRS web site (PDF, 116kb).

7. Can a nonprofit corporation requite political contributions?

   There are restrictions on political contributions past nonprofit corporations.  For information, on this topic, you lot may wish to contact your individual attorney, the Texas Ideals Commission, (512) 463-5800, the Federal Election Commission, and the IRS.  You may also wish to review Title 15 of the Texas Ballot Lawmaking.

8. Who has authorisation to investigate the activities of a nonprofit corporation?

   The Texas Attorney Full general has statutory authority to (one) investigate charities that operate equally nonprofit corporations, and (2) inspect the books and records of all corporations, including nonprofit corporations. The secretarial assistant of land has no such authority.  Additionally, the IRS can revoke a nonprofit corporation'southward tax exemption for violations of federal tax laws.

9. Are the books and records of a nonprofit corporation bachelor for inspection?

   Section 22.351 of the Texas Business Organizations Lawmaking gives a fellow member of a nonprofit corporation, on written demand, the right to examine and copy the corporation's books and records.  The member, or the member's agent, auditor, or attorney, may examine and copy these records at any reasonable fourth dimension and for a proper purpose. Section 22.352 also requires a nonprofit corporation to maintain financial records in accordance with mostly accepted accounting principles; the board of directors is required to set or approve an almanac financial report for the preceding year.

   Additionally, section 22.353 requires certain nonprofit corporations to make all records, books, and annual reports of financial activity available to the general public for inspection and copying. Withal, department 22.353 does non utilize to (1) corporations that solicit funds but from their members; (ii) corporations that do not intend to solicit and exercise not actually receive contributions in excess of $ten,000 during a financial yr from sources other than their members; (iii) proprietary schools; (4) religious institutions; (five) trade associations or professional person associations whose main income is from dues and member sales and services; (6) insurers; or (seven) alumni associations of public or private institutions of college education.

   Under certain circumstances, a nonprofit corporation'due south books and records are as well available to the public under the Texas Public Information Act (chapter 552 of the Government Lawmaking). Section 552.003(ane)(A) of the Public Information Deed defines "governmental torso" to include the "part, section, or portion of an system, corporation, commission, committee, establishment, or agency that spends or that is supported in whole or in part past public funds." For more than data on the Public Information Deed, please contact the Attorney General; the secretarial assistant of land cannot provide communication regarding the awarding of the Public Information Act to a item nonprofit corporation.

10. Can I obtain a copy of a nonprofit corporation'southward IRS Course 990 from the secretarial assistant of state?

    No. Although organizations filing Course 990-PF must submit a re-create to certain state attorneys general, nonprofit corporations are generally non required to file Form 990 with the Texas attorney general or the secretary of land. The IRS provides information nigh how to obtain copies of Forms 990, exemption applications, and related tax filings on its Form 990 Resources and Tools page. For more information most registrations and filings with the Texas attorney general, delight visit the Charitable Trusts section of the attorney general's website.

11. Does a foreign nonprofit corporation have to register to transact business concern in Texas if its simply contact with the country is solicitation of funds or donations?

    A nonprofit corporation that actively solicits funds in Texas may be "transacting business" in Texas and should file an Application for Registration (See Form 302 (Word 190kb, PDF 99kb); however, if the corporation's contacts with Texas are but through interstate commerce (for example, by post or past telephone) or independent contractors, then the corporation is probably not "transacting business organisation" in Texas.

    Nevertheless, regardless of the mode of solicitation, an out-of-state nonprofit corporation may be required to register with the secretary of state in order to participate in a state employee charitable campaign under subchapter I, chapter 659 of the Regime Code.

12. How can I obtain a re-create of the bylaws, tax exempt filings or other documents for a nonprofit arrangement?

    If the entity is organized as a Texas nonprofit corporation, you may obtain a copy of the certificate of formation or other filing documents maintained past the secretary of state past contacting our records team at corpcert@sos.texas.gov or 512-463-5555. The documents may too be viewed and copies ordered through SOSDirect.

    The secretarial assistant of state does non maintain the bylaws or tax exempt filings of whatever nonprofit organization. Some organizations that have obtained tax-exempt condition from the Internal Revenue Service are required to make sure documents available to the public. Bylaws may be available if included as office of the arrangement's application for exemption. For more information, please visit the IRS website. The secretary of state'south role cannot aid you in obtaining these documents.

FAQs for Unincorporated Nonprofit Associations

1. What is an unincorporated nonprofit association?
2. Does an unincorporated nonprofit association have to file annihilation with the secretarial assistant of state?
3. Is an unincorporated nonprofit association a tax-exempt entity? If not, how do I become tax-exempt?

1. What is an unincorporated nonprofit association?

   An unincorporated nonprofit association is an unincorporated arrangement consisting of 3 or more members joined by common consent for a common nonprofit purpose. Unlike nonprofit corporations, unincorporated nonprofit associations practise not file certificates of formation with the secretary of state. For more information, run across Form 208 (Give-and-take 32kb, PDF 21kb).

2. Does an unincorporated nonprofit association have to file anything with the secretary of country?

   No. An unincorporated nonprofit association may, but is not required to, file an date of an agent for service of procedure.  See Grade 706 (Word 88kb, PDF 58kb). In addition, the association may, but is not required to, file a statement of authorization as to real property with the county clerk.

3. Is an unincorporated nonprofit association a tax-exempt entity?  If not, how do I go tax-exempt?

   A Texas nonprofit organization—whether a corporation or an unincorporated association—is not automatically exempt from federal or state taxes. To become exempt, the organization must meet certain requirements and apply with both the IRS and the Texas Comptroller of Public Accounts.

   To learn more about the rules and procedures for obtaining federal tax-exempt status, read IRS Publication 557, "Tax-Exempt Status for Your Organization." Questions near federal tax-exempt condition can exist directed to:

   IRS
   Exempt Organizations Section
   (877) 829-5500

   To learn more than about the rules and procedures for obtaining state tax-exempt condition, read the FAQs published by the Texas Comptroller of Public Accounts. Exemption from Texas state taxes is determined past the Texas Comptroller of Public Accounts. Questions about state tax-exempt condition tin exist directed to:

   Texas Comptroller of Public Accounts
   Exempt Organizations Section
   (800) 252-5555 or (512) 463-4600
   email

FAQs for Nonprofit Corporation Periodic Reports

1. I received a notice from the secretary of country about filing a "periodic report." What is this written report? Is this required annually?
2. Why am I receiving notices virtually filing a periodic report?  I am no longer affiliated with this corporation.
3. The report I received contains inaccurate pre-printed information.  How tin I modify it?
4. Can I file a periodic report even if the secretary of state has not requested one?
5. What happens if I don't file the periodic written report?
6. If a nonprofit corporation has been involuntarily terminated or had its registration revoked for failure to file its periodic written report, tin can it be reinstated?
7. Is a nonprofit entity formed under a special statute—such as an electric cooperative formed under the Texas Utilities Lawmaking—required to file a periodic report?

1. I received a notice from the secretary of land nearly filing a "periodic report." What is this report? Is this required annually?

   A nonprofit corporation is required by law to file an informational report not more than one time every four years upon request by the secretary of state.  The report provides information regarding the corporation'due south registered amanuensis and registered part, and the names and addresses of its current officers and directors, and is required regardless of the corporation's tax status.  BOC § 22.357.

   Once requested, the study must be completed and filed with the secretary of land to avoid involuntary termination of a domestic corporation or revocation of the registration of a foreign corporation.  BOC § 22.364.

2. Why am I receiving notices almost filing a periodic report?  I am no longer affiliated with this corporation.

   The secretarial assistant of country sends official notices to the corporation through the current registered agent and registered function accost.  If a periodic report notice was addressed to yous, it is because your proper noun and address appear every bit the corporation's registered agent and registered part and the corporation has not designated or appointed a new registered agent.

3. The report I received contains inaccurate pre-printed information.  How tin can I change it?

   Although you cannot change the entity's name, file number, or jurisdiction of germination, you tin change or update the post-obit pre-printed data on the report past simply crossing it out and filling in the correct data:

   • The registered amanuensis name;
   • The registered role address; and
   • The names, addresses, and titles of persons named equally officers and directors of the corporation.

   To modify its legal name, the corporation must file a document of amendment with the secretarial assistant of state or an subpoena to its registration. Run across Form 424 (Word 135kb, PDF 129kb) or Grade 406 (Word 100kb, PDF 306kb), as applicable.

4. Can I file a periodic report even if the secretary of state has not requested one?

   Yep. Although a nonprofit corporation is not required to notify the secretarial assistant of country of changes to officeholder or director data at the time of the modify, a nonprofit corporation may file a periodic report even if the secretary of land has not asked for 1.  However, filing a voluntary report does not impact your duty to timely file a report when one is requested by the secretarial assistant of country.

5. What happens if I don't file the periodic study?

   A nonprofit corporation that fails to file the periodic report within 30 days from the appointment that the report is sent by the secretary of state forfeits its right to transact business in Texas. BOC § 22.360.  A nonprofit corporation that has forfeited its right to transact business cannot maintain any action, adjust, or proceeding in any Texas court; still, the corporation may nonetheless defend any action or suit. The forfeiture does not impair the validity of any contract. The corporation may relieve itself of the forfeiture by but filing the periodic report within 120 days of the date of mailing of the notice of forfeiture. If the corporation fails to file the written report inside this 120-twenty-four hours catamenia, the secretary of state will involuntarily terminate the existence of the Texas nonprofit corporation or revoke the foreign nonprofit corporation's registration to transact business in Texas, as applicable.  BOC § 22.364.

6. If a nonprofit corporation has been involuntarily terminated or had its registration revoked for failure to file its periodic study, can information technology be reinstated?

   Yes. And so long every bit the entity would otherwise proceed to be, the entity tin can reinstate at whatever time by filing the required written report together with the maximum filing fee of $25.  See Form 802 (Word 146kb, PDF 119kb). Delight notation, withal, that the secretary of state must determine whether the corporation'southward name is still available earlier the required periodic report tin can be filed and the entity reinstated. Consequently, additional filings and fees may need to be submitted together with the periodic study when the name of the corporation is not distinguishable in the records from the name of whatever existing domestic or foreign filing entity, or any proper noun reservation or registration on file with the secretary of country.

7. Is a nonprofit entity formed under a special statute—such as an electrical cooperative formed under the Texas Utilities Lawmaking—required to file a periodic written report?

   Yes.  The Texas Business Organizations Lawmaking (the "Code") provides that a nonprofit corporation created nether a special statute is subject to Title one and Affiliate 22 of the Code, to the extent not inconsistent with the special statute.

Source: https://www.sos.state.tx.us/corp/nonprofitfaqs.shtml

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