Nonprofit annual reports

A bill (S.362) filed in the NC Senate would create a new annual filing requirement for nonprofits that are incorporated in North Carolina. Main requirements of the bill include:

1. Every North Carolina nonprofit would be required to file an annual report with the N.C. Secretary of State that includes its name, address, and email address, as well as the names, addresses (which can be the nonprofit’s address), and titles of its principal officers, and a brief description of its activities.
2. All reports would be filed online.
3. All reports would be due on November 15 of every year, beginning in 2021.
4. Nonprofits would be administratively dissolved if they don’t file reports within 60 days of the due date.
5. Nonprofits that don’t file reports would also lose the right to receive semiannual sales tax refunds.
6. There would be no filing fee for nonprofits.

In an improvement over a similar bill that was considered in 2017, nonprofits with charitable solicitation licenses would be exempt from this additional annual report filing, since they already provide the same information to the Secretary of State every year.

The annual reporting will help protect the integrity of the nonprofit sector and could help preserve nonprofit tax exemption. Unlike virtually every other state, nonprofits incorporated in North Carolina don’t file basic annual reports. This means that many defunct nonprofits continue to be incorporated in North Carolina, which could create fraud that would jeopardize the integrity of all nonprofits. The potential for abuse in the current system has led some elected officials to question the merits of nonprofit tax exemption. Currently, more than 120,000 nonprofits are incorporated in North Carolina, but only about 36,000 tax-exempt organizations file some variation of the Form 990 with the IRS.

The Center is continuing to work with the N.C. Secretary of State to ensure that nonprofits - particularly small organizations - are aware of the new annual report requirements and that the reports are easy for nonprofits to file and do not create duplicative reporting requirements.