The following text is the warning the ACC gives to people on page 1 in the middle column of its Instructions for the Articles of Incorporation for a nonprofit corporation:

“The Internal Revenue Service requires that certain language be in the Articles of Incorporation before it will grant tax exempt status.  The form provided by the Arizona Corporation Commission complies only with the minimal requirements of Arizona law and does not include any IRS language.  If you intend to apply for tax exempt status after the corporation is formed, you should determine what language is required by the IRS and prepare your own Articles of Incorporation.  It is advisable to seek the advice of your tax or legal professional and/or the IRS before you form your corporation.  The Commission staff cannot give you legal or tax advice, and cannot tell you want language to include in your Articles.“

Translation:  The Arizona Corporation Commission is telling people who want to form an Arizona charitable organization to hire an experienced nonprofit organization attorney.  Of course I am prejudiced, but I recommend you hire me (a legal professional who has formed 3,700+ Arizona corporations and LLCs and who has a masters degree in federal income tax law from New York University School of Law) to start an Arizona nonprofit organization that intends to become a tax-exempt charity.  See my article called “Arizona Nonprofit Corporation Formation Services” for a list of the 29 tasks I perform and 16 documents I prepare when I create an Arizona charitable organization for the extremely low price of $1,297.

The post Arizona Corporation Commission Warns Charities Not to Use Its Form Articles of Organization appeared first on Nonprofit Corporations & Charitable Organizations.

The ACC provides form Articles of Incorporation only for a corporation that does not intend to become a tax-exempt charitable organization.  To form an Arizona nonprofit corporation that will not be a charitable organization the incorporator must prepare and file the following forms with the Arizona Corporation Commission:

• Articles of Incorporation.  See the Instructions.

• Statutory Agent Acceptance form.  See the Instructions.

• Certificate of Disclosure.  See the Instructions.

Arizona Corporation Commission’s Warning for Nonprofit Organizations that Intent to be Tax-exempt Organizations

If your to be formed nonprofit organization intends to be a charitable organization exempt from federal income tax DO NOT USE THE ARIZONA CORPORATION COMMISSION’S FORM ARTICLES OF INCORPORATION!!!  The following text is the warning the ACC gives to people in its Instructions for the Articles of Incorporation:

“The Internal Revenue Service requires that certain language be in the Articles of Incorporation before it will grant tax exempt status.  The form provided by the Arizona Corporation Commission complies only with the minimal requirements of Arizona law and does not include any IRS language.  If you intend to apply for tax exempt status after the corporation is formed, you should determine what language is required by the IRS and prepare your own Articles of Incorporation.  It is advisable to seek the advice of your tax or legal professional and/or the IRS before you form your corporation.  The Commission staff cannot give you legal or tax advice, and cannot tell you want language to include in your Articles.“

Translation:  The Arizona Corporation Commission is telling people who want to form an Arizona charitable organization to hire an experienced nonprofit organization attorney.  Of course I am prejudiced, but I recommend you hire me (a legal professional who has formed 3,600+ Arizona corporations and LLCs and who has a masters degree in federal income tax law from New York University School of Law) to start an Arizona nonprofit organization that intends to become a tax-exempt charity.  See my article called “Arizona Nonprofit Corporation Formation Services” for a list of the 29 tasks I perform and 16 documents I prepare when I create an Arizona charitable organization for the extremely low price of $1,297.

The post Arizona Corporation Commission Has New Nonprofit Organization Forms appeared first on Nonprofit Corporations & Charitable Organizations.

In addition to the following illustration, you can also download a graphical depiction of the life cycle, which includes functioning links back to our site.

The post Life Cycle of a Public Charity appeared first on Nonprofit Corporations & Charitable Organizations.

Number 9. In what month does the annual accounting period end? Applications should indicate the end of their fiscal year. It is a good idea to check for consistency. Does the fiscal year ending date stated on the application agree with the fiscal year ending date stated in the by-laws, on the financial statements, and on any prior returns filed?

Number 8. Did you provide the required information on the principal officers and board of directors? Applications should list the following information concerning the governing officials:

names,
mailing addresses,
titles and positions,
annual compensation.

Number 7. Did you provide enough information on the activities to show us how your exempt purpose will be achieved? Please don’t restate your purpose, but explain the specific activities you will carry on to achieve that purpose. You should consider a “who, what, when, where and why” approach. You should explain past, present, and planned activities. If you haven’t started an activity yet, develop your plans well enough that we can have a clear understanding of how it will operate. You are not required to describe activities that are merely speculative at this time.

Number 6. Did you complete all required schedules? You should check the line items on the financial statements. Some lines require supporting schedules.

Number 5. Did you complete all required pages? To make a determination, the information contained on the pages and schedules of Form 1023 and Form 1024 is necessary. On Form 1023, there are various schedules and pages that must be filled out for churches, schools, hospitals, scholarships, supporting organizations, and certain other organizations.

Number 4. Did a director, trustee, principal officer, or other authorized individual in a similar capacity sign the Form 1023 or Form 1024? Generally, a principal officer is the president, vice president, secretary, or treasurer. The person signing the application must indicate his or her title or other authority to sign. A taxpayer’s representative may not sign the application. Neither a stamped signature nor a faxed signature is permitted.

Number 3. If you have adopted by-laws, did you submit a copy? You need to provide a copy of your by-laws, code of regulations, or any other document that sets out the organization’s rules of operation, but only if adopted.

Number 2. Did you attach a complete copy of your organizing document and all amendments? If the applicant is a corporation, this would be a copy of the articles of incorporation that shows it has been filed with and approved by the state. If the applicant is not incorporated, it should have a similar organizing document. This could be a constitution, articles of association, or by-laws. Whatever the document is called, it must at the minimum state: the legal name, the purposes, and the date of adoption. The document should be signed by at least two members of the organization. A trust document must be signed by the trustees and show the date of formation. For section 501(c)(3) applicants, the organizing document must comply with the  organizational test for exemption.

The Number 1 reason for delays in processing exempt organization applications is . . . INCORRECT OR NO USER FEE!

See the  user fee page for more information.

Now that you know the ten most common pitfalls in the EO application process, please avoid them. If your application is completed correctly initially, and sent with all required documents and schedules, there is a good chance your organization could be recognized as exempt with no further contact. If there is contact, the agent can address the technical issues that need to be resolved without taking up your time trying to just get a complete application.

The post Top Ten Reasons for Delays in Processing Exempt Organization Applications appeared first on Nonprofit Corporations & Charitable Organizations.

There are several steps to take to ensure that your Charitable Organization Registration form will be approved.

1. Name of Charitable Organization: The Secretary of State may deny a registration application if the name is too similar to another registered entity or if it might mislead the public. While choosing your name, search the Arizona Secretary of State’s Charitable Organizations database and the Arizona Corporation Commission’s Corporation List to ensure that your name is unique.
2. Address: The charitable organization must have an address in Arizona. All information filed will be public record for five years from the date of filing, so the address will be available to the public.
3. Purpose: Thoroughly describe the charitable purpose of the organization. An application can be denied for any material misstatement or omission.
4. List of Officers and Directors.
5. Disclosure of Convictions: Any felony conviction substantially related to solicitation must be disclosed. The Arizona Secretary of State may deny the application if any employee, member, officer, or director has been convicted of a felony substantially related to solicitation.
6. Notarized Signatures of at least TWO Officers or Directors.
7. Identification: A copy of identification must be included with all applications or they will not be processed. The following forms of identification are acceptable:

• An AZ driver license issued after 1996 or an AZ non operating identification license.
• A driver license issued by a state that verifies lawful presence in the U.S.
• A birth certificate or delayed birth certificate issued in any state, territory or possession of the U.S.
• A U.S. certificate of birth abroad.
• A U.S. Passport
• A foreign passport with a U.S. Visa
• An I-94 form with a photograph
• A U.S. citizenship and immigration services employment authorization document or refugee travel document.
• A U.S. certificate of naturalization.
• A U.S. certificate of citizenship.
• A tribal certificate of Indian blood.
• A tribal or bureau of Indian affairs affidavit of birth.

States, counties, municipalities, their agencies, and political parties, candidates for office and campaign committees required to file financial information with election agencies are exempt from filing for registration.

The completed form can be mailed to the following address:

The form can also be returned in person at either of the following addresses:

The post How to Register as a Charitable Organization with the Arizona Secretary of State appeared first on Nonprofit Corporations & Charitable Organizations.

The post Top Ten Legal Risks for Nonprofit Boards appeared first on Nonprofit Corporations & Charitable Organizations.

The five legal issues discussed in  the article are:

1. Lobbying and Political Campaigning:

2.  Tax Compliance and IRS Activism

3.  Employees, Interns and Volunteers

4.  Privacy and Data Security

5.  Licensing and Intellectual Property Licensing and Intellectual Property

The post 5 Legal Issues Nonprofit Boards Must Be Aware Of appeared first on Nonprofit Corporations & Charitable Organizations.

People may think that one size of Bylaws fits all, but that is not true.  Bylaws are an specially troublesome legal document because the Bylaws are the rules and policies that govern the operation of the members (if any), the officers and the directors.  The Bylaws are the foundational rules of the road for governing the nonprofit corporation.

California nonprofit attorney Gene Takagi’s article called “Basics About Bylaws” contains a good summary of the types of provisions typically included in nonprofit corporations Bylaws.  I especially like his lists of:

• common problems he finds when reviewing Bylaws for California nonprofit corporations, and
• why using the Bylaws of one nonprofit corporation for the Bylaws of a different nonprofit corporation is a bad idea.

Gene’s article is specific to California law, but it illustrates why Bylaws must be written to comply with the statutory requirements of the state in which the nonprofit corporation is formed and the specific purpose and structure of the particular corporation.

The post Checklist for Nonprofit Corporation Bylaws appeared first on Nonprofit Corporations & Charitable Organizations.

The post Nonprofit Startups and the Value of a Nonprofit Attorney appeared first on Nonprofit Corporations & Charitable Organizations.

The post IRS Revokes Tax Exempt Status of Thousands of Arizona Charities appeared first on Nonprofit Corporations & Charitable Organizations.