Nonprofit organizations are subject to numerous federal and state tax filing requirements, including annual tax returns. Most nonprofit organizations are required to file an annual federal tax return (Form 990, 990-EZ, 990-PF, or 990-N); however, state filing requirements are different and vary from state to state. The State of New Jersey (NJ) requires a nonprofit organization to file an annual tax return (initial registration and renewal registration) if it has 501(c)3 tax exempt status, is domiciled in NJ, or solicits NJ residents for a charitable cause.
The amount in annual contributions determines the form and timing of the initial registration (CRI-150-I and CRI-200). Contributions should be reported as gross contributions and include donations from the general public, corporations and other businesses, foundations and trusts, legacies and bequests, fundraising events, and other sources. A nonprofit organization should file an initial registration with the NJ Division of Consumer Affairs prior to soliciting contributions in NJ. However, if a nonprofit organization received less than $10,000 in gross contributions in the prior year and all of its functions are performed by volunteers, is a religious organization or school, or is a qualifying library, it is exempt from the registration requirement. Furthermore, if a nonprofit organization which was previously exempt under the aforementioned “less than $10,000 in gross contributions provision” later exceeds the $10,000 threshold, it must register within 30 days.
Renewal registrations are required to be filed by six months after a nonprofit organization’s fiscal year-end. Similar to initial registrations, the amount in annual contributions determines the type of form to file. A short form (CRI-200) should be filed if annual contributions are $25,000 or less. A long form (CRI-300-R) should be filed if annual contributions are greater than $25,000. A six month extension of time to file (CRI-400) is permitted for the long form and is also permitted for the short form as long as contributions exceed $10,000.
In addition to the type of renewal registration to file, long form filers also have another potential administrative cost. The NJ Division of Consumer Affairs requires an annual audited financial statement to be included with the renewal registration if the nonprofit organization has both more than $25,000 in annual contributions and more than $500,000 in annual revenue. Nonprofit organizations which are on the bubble of these respective thresholds need to be cognizant and determine if proactively seeking additional revenues will be counterproductive.
Initial and renewal filings are required to be submitted on the NJ Division of Consumer Affair’s portal. An officer or a board member should create a login on the portal which will then allow the nonprofit organization to submit its initial and renewal filings. Annual registration fees range from $30 to $250, depending on the form filed and the amount of annual contributions. Initial filings also require the nonprofit organization to submit its bylaws, articles of incorporation or formation documents, and the Internal Revenue Service (IRS) determination letter or Form 1023 application.
In conclusion, complying with NJ’s charity registration requirements can be somewhat complicated depending upon the nature and amount of annual revenue. A nonprofit organization needs to have a basic understanding and/or consult with a CPA to determine if there is an initial registration requirement, an ongoing renewal registration requirement, and/or possible financial statement audit requirement.
Article contributed by Jeffrey A. Wilson, CPA