Haynes and Boone's Newsroom
Charitable fundraising activities in multiple states—and even in multiple cities, municipalities, and counties within Texas—can potentially create a compliance risk. Although not regulated by the IRS, many state and/or local authorities have adopted charitable solicitation registration and reporting requirements. In addition, the revised Form 990 requires a disclosure regarding compliance with state rules.
Organizations with widespread fundraising activities should consider solicitation requirements that may apply in the jurisdictions in which they engage in such activities. In many cases, fundraising is defined as a “solicitation” only when it is conducted on a public basis. For example, solicitation among an organization’s members is a common exception to registration rules.
Unfortunately, regulation of fundraising activities varies widely from state to state, and even cities and counties within one state can have very different rules. Most of the regulatory schemes require organizations to register, describe any fundraising activities, file financial reports, and pay administrative fees. By way of example, the City of Houston requires annual registration for person-to-person or phone solicitation, as well as annual filing of financial information. Exemptions from the Houston requirements include solicitation of members, solicitation by mail, and solicitation on a charity’s premises or on the premises of a third party that has consented to the activities.
The good news? Thirty-seven of the jurisdictions with registration requirements (36 states and the District of Colombia) accept a Uniform Registration Statement (“URS”) in lieu of a state-specific registration form. Some of the jurisdictions that accept the URS also require supplemental state forms to be filed, and most still require financial reports (which can sometimes be satisfied by filing a copy of the organization’s Form 990) and fees. See http://www.multistatefiling.org/ for more information on the URS.
If you have any questions regarding charitable solicitation, please feel free to contact one of the attorneys listed below. You may also view the alert in the PDF linked below.
To ensure compliance with requirements imposed by U.S. Treasury Regulations, Haynes and Boone, LLP informs you that any U.S. tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
*Board Certified – Estate Planning and Probate Law and Tax Law by the Texas Board of Legal Specialization.