For better or worse, any time you run a corporation there will be regulations to contend with. Virginia nonprofit corporations are no different. Here we discuss the recurring filing requirements for nonprofit corporations incorporated in Virginia.

Q: What are the basic compliance requirements for Virginia nonprofit corporations?

A: There are many regulations on businesses in Virginia (and other states for that matter), but the one’s we’re addressing here are those that fit into three primary categories:

  • State business registration and the related reporting requirements
  • State charitable contribution solicitation registration and the related reporting requirements
  • Internal Revenue Service annual filing requirements

Q: What are the requirements at a state level?

A: OK, let’s start with the state business registration and the related annual reporting. That is managed by the Virginia State Corporation Commission (the “VSCC”). Every corporation in Virginia has to register with the VSCC, and every year after the initial registration the corporation has to renew the registration, pay the required fee, and file an annual report.

Q: What is an “annual report”?

A: According to the VSCC website, the annual report is “…used to change and update the Commission’s records regarding the corporation’s principal office address and the names, titles and addresses of its directors and principal officers.” It’s essentially a report with key information about the organization and its officers and directors that must be confirmed as accurate, with any changes that need to be made noted on the form. This is what one looks like.

Q: What if nothing has changed since the last annual report? Do I still have to file a new one?

A: It doesn’t really matter whether or not the information has changed, you still have to file an annual report. Now, if nothing has changed the report can be filed online (as opposed to a paper filing, which is required when there are changes to report), which is nice, but an annual report has to be filed whether or not there are any changes.

Q: When is the annual report due?

A: Unlike tax forms, which have standard due dates based on your tax year, the due date for the VSCC annual report will be different for each organization. It is due “…on or before the last day of the month in which the corporation was incorporated or registered to transact business in Virginia.” Also unlike tax forms, if your due date is a weekend or holiday, the annual report has to be received by the VSCC on or before the last business day of that month. You can’t carry it over until the first business day of the following month.

Q: Do I pay the annual registration fee when I file the annual report?

A: The payment of the annual registration fee has the same due date as the annual report, but you don’t necessarily have to pay the fee when you file (or mail) your report. They can be done separately. As long as they’re both on time you’ll be fine.

Q: What about charitable solicitation registration?

A: Based on the information I’ve seen, this appears to be a requirement that is not as well-known. Essentially the rule is this – before you solicit contributions from anyone in Virginia, you must file something with Virginia Department of Agriculture and Consumer Services Office of Charitable and Regulatory Programs (“VDACS”). Certain organizations may qualify for an exemption from the annual registration requirements, in which case you’d need to file a Form 100, Virginia Exemption Application for Charitable or Civic Organization. If you qualify for an exemption that’s all you’ll need to do. Organizations that don’t qualify for an exemption must file a Form 102 Registration Statement for a Charitable Organization, not only for your initial registration, but for every year thereafter.

Q: How can I qualify for an exemption from VDACS and only have to file a Form 100?

A: There are 16 different types of exemptions available, but whether an organization qualifies for any of them depends on the facts and circumstances. For example, most youth soccer organizations claim exemption as a “civic organization”, as defined in the Virginia Code, or as an organization that is going to solicit in “five or fewer contiguous cities and counties”. It should be noted, though, that while many youth soccer organizations that are registered with VDACS have claimed an exemption, many have determined they aren’t exempt and file a Form 102 each year.

Q: How burdensome is it to file a Form 102?

A: Compared to the Form 100 it’s burdensome, but it isn’t awful. The majority of the information requested is done so in the form of a question, but there are a number of required attachments and some nuances that you’ll need to pay attention to.

Q: OK, now the fun stuff. What about the IRS requirements?

A: Great question. As you may know, nearly all nonprofit organizations are required to file some type of 990-series form, either a 990-N, a 990-EZ, or a regular old form 990. Which form you must file depends on the size (financially speaking) of your organization. Here’s a summary of the filing requirements if you’re not considered a “Private Foundation” by the IRS:
Size of the Organization Type of Filing Required
Gross receipts normally <= $50,000 990-N
Gross receipts < $200,000 and total assets < $500,000 990-EZ
Gross receipts >= $200,000, or total assets >= $500,000 990
If the IRS considers you a Private Foundation you’d be required to file a form 990-PF regardless of your size.
If you file a 990-EZ or a 990 you’ll also have some schedules to file, the most common being Schedule A, Public Charity Status and Public Support and Schedule O, Supplemental Information to Form 990 or 990-EZ, though there are many others that could be required depending on your organization’s specific situation.
If you have what the IRS considers “unrelated business income” of over $1,000 you will also be required to file a form 990-T.

Q: What is “unrelated business income”?

A: This is not always straightforward, so there’s no real simple answer to that question. The rules basically say that income is unrelated if the activity generating the income is:

  • A trade or business
  • Regularly carried on; and
  • Not substantially related to the organization’s exempt purpose
As you might imagine, interpreting the facts about a particular activity can be tricky, but if you’re earning money from an activity that’s not directly related to your organization’s exempt purpose it’s something to at least ask your accountant about. IRS Publication 598 has a wealth of information on the subject.

Q: What happens if we forgot to file one of the 990-series returns?

A: If you were required to file a 990 or 990-EZ and didn’t file on time, you’ll be subject to penalties, though sometimes the IRS will abate those for you. The size of the penalties depends on how much time has passed since the original due date and how large your organization is, financially speaking. If you go three years in a row without filing the required returns your organization’s tax-exempt status will automatically be revoked, which can be a real problem.

Q: Where can I get more information?

If you need help with sorting through these issues for your organization or have questions about the article, just contact us, we’d be happy to help.

1You must know the entity’s VSCC corporation ID to search here, which can be found on the VSCC Business Entity Search, which can be searched by the name of the corporation.