DIY - Guide for Obtaining State Income/Franchise Tax Exemption

Income tax is a tax on an organization's income. Franchise tax is a fee for the privilege of doing business in a particular state. States generally require one or the other, but not both. Most states allow 501(c)(3) organizations to obtain an exemption from paying these taxes.

RENOSI completes* these filings for its clients. However, we understand that some people like to do things themselves, so we have created this DIY guide. If you would like our assistance with this or anything else, we are here to help.

*Additional filing fees charged by your state are not included in the cost of your plan and must be invoiced separately.

RENOSI is the leader in helping national organizations set up and manage affiliate chapters. Setting up local, regional and state affiliate chapters is an excellent way to grow your national organization. Managing hundreds and even thousands of chapters, however, is time-consuming and difficult.

Since its inception, RENOSI has provided a simple and stress-free solution to help obtain and maintain tax-exempt status for over 6,000 nonprofits. With the interactive myRENOSI dashboard, our partners can organize their state and federal registrations, allowing our team of experts to help ensure your tax-exempt status is not revoked.

FEATURED BLOG

Group Exemption Management Requires Form 990 – Everyone Must File!

Jack Englund

Sep 14, 2023

Have you ever had a group project where someone just didn’t pull their own weight? It made it harder for everyone else. Maybe you recently took a canoe down the Colorado River with your friend Paul, and when you hit the rapids, Paul just took his paddle out of the water. Or worse, Paul started panicking and flipped the whole canoe over. Managing your group exemption is the ultimate group project. Making sure everyone files form 990 is a major part.

New Rules Are Coming…

When managing your group tax exemption with the IRS, ensuring your subordinate members file their 990-series return every year is like ensuring everyone does their part of the group project. The IRS requires group exemption holders to supervise/control its subordinate chapters. On June 12, 2020, the IRS issued new proposed rules that defined and strengthened this requirement.

Just Keep Paddling!

The newly defined rules require group exemption holders to educate their subordinates on the annual filing requirements of Form 990. This also means that the group exemption holder must obtain, review, and retain a copy of each subordinate 990, each year. The IRS wants to know that Paul, and everyone else, kept their paddles in the water.

What if We Don’t?

This one is simple: In the newly proposed rules, the IRS indicates that if 50% or more of its subordinate organizations do not file their 990, which ultimately leads to the auto-revocation of said subordinate groups, the canoe will likely flip. As a result, the organization will be at risk of losing its group exemption.

Form 990 is Crucial.

Filing your 990, and ensuring that all your subordinate members file their 990 every year, is crucial to the survival of your group exemption. The new rules for group exemption management are coming. When they arrive, the IRS will be looking to enforce their policies and you do not want your organization to be the one that gets caught without a paddle!

Greek Boss is on the road!

Jack here! I’m hitting the road to introduce RENOSI and Greek Boss . So far, I’ve been to 10 states. More travel is coming! I can’t wait to share Greek Boss with more student leaders and Greek Life Advisors!

In late September, the Texas tour takes off! I’ll be visiting Alabama, Louisiana, and traversing the great state of Texas.

Let me know if you’d like me to stop by your school. I can even do a workshop for your students!