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E. EMPLOYER IDENTIFICATION NUMBER
INCORPORATION
Effective Date: January 1, 1999
Some not-for-profit groups and organizations are able to provide worthwhile services and accomplish their stated goals while operating as unincorporated nonprofit associations. Usually, such associations do not generate revenue in excess of expenses and thus are not concerned with a tax liability. They are not dependent upon the generation of deductible contributions and do not plan to make application for public or private grant funds. However, experience has shown that most not-for-profit organizations need to be properly incorporated in accordance with the laws of North Carolina and to obtain tax-exempt status under Section 501 (c) of the Internal Revenue Code.
The incorporation process involves a significant amount of time and effort in addition to the completion of certain paperwork. The process requires the organization and its incorporators to deal with important organizational matters, to clearly define the nature and purpose of the organization, and to formulate articles of incorporation and bylaws.
There are a number of benefits which result from incorporation such as separate and perpetual legal existence, limited liability, the right to receive public and private grant monies, etc. However, the formal documents consisting of the articles of incorporation, bylaws, board resolutions, and board minutes provide the structure and procedures which facilitate the organization's decision-making and operational process.
The success of a not-for-profit corporation is greatly influenced by the composition of its governing board as well as how active and committed individual members are to the organization. The board has ultimate legal authority and responsibility for the organization's overall activities and how it utilizes and accounts for available resources. Most boards leave the organization's day-to-day operations to management staff who have been recruited and hired by the board. The board devotes its time and effort into developing policies and procedures which hopefully will ensure achievement of the organization's overall goals and objectives.
The articles of incorporation which represent the basic governing document of the corporation, are intended to specify:
1. Name of the corporation and its location and address.
2. Purpose for which the corporation is organized.
3. Period of duration (which may be perpetual).
4. Number and names of the initial directors.
5. Name and address of each incorporator.
6. Other data consistent with the incorporation statute.
Corporate bylaws represent the rules and regulations which govern the internal management of the corporation and specify the officers which normally consist of at least a chairperson/president, a secretary, and a treasurer selected from the board membership. In most cases, the bylaws stipulate that officers and board members will serve on a rotating term so that new members will be coming on the board on a continuing basis.
Here in North Carolina the Office of the Secretary of State is responsible for incorporating profit as well as not-for-profit organizations. Attached is some information from that office which should be of assistance to you. Also, in view of the fact that incorporation represents a legal process, it is suggested that you secure the services of an attorney who is knowledgeable in this area.
Part of the process of incorporating is choosing and reserving a name for your nonprofit corporation. Our office will approve or reject proposed corporate names according to State corporation law, which requires that the name chosen must be distinguishable upon the records of the Secretary of State from the names of other nonprofit or business corporations operating in North Carolina. Proper name selection is important in your process of incorporating because other parties may sue for unfair competition or trade name infringement if the name chosen is so similar to another corporation's name as to deceive or confuse the public.
The steps involved in choosing a corporate name are the following::
1. Selecting a name;
2. Determining whether it is feasible to use the name; and
3. Putting the name in use; and
4. Deciding on a trademark or service mark.
If you are seeking to obtain protection for a particular corporate name or to resolve a dispute over such a name, you should seek the advice of an attorney rather than contact this office.
Selecting a Name
In choosing the corporation's name there are certain requirements of which you should be aware.
N.C. Gen. Stat. §55A-4-01.
1. A corporate name shall not contain language statingor implying that the corporation is organized for any purpose other than a purpose that is lawful and that is permitted by its articles of incorporation.
2. The corporate name must be distinguishable, under the Corporations Division's rules, from the name of any domestic corporation or the name of any foreign corporation authorized to transact business or conduct affairs in this state.
The choice of a name depends on many factors, but there is one important rule to follow. Do not choose a name because you have seen it elsewhere and believe it will work well for your own corporation, unless you obtain written permission of the part already using the name. Also, examine N.C.Gen. Stat. §55A-4-01 for more details.
Feasibility of a Name
After you have chosen a corporate name, you may do the following in order to determine if the name chosen is available for use.
1. You can check the telephone books in your area for similar names.
2. You can check the Register of Deeds permitoffice in your county and surrounding counties for similar names listed as assumed names or partnership names.
3. You can write or call the Office of the Secretary of State to determine if a proposed name would be available as a corporate name.
4. You can check business directories, city directories, chamber of commerce lists, etc. in your locality for similar names.
5. For a fee, you can have an attorney or a trademark search firm conduct a trademark search through the U.S. Patent and Trademark Office for similar federal trademark or service mark registrations.
6. You can write the Office of the Secretary of State to determine if the words which make up your proposed name have been registered as a trademark or service mark under North Carolina law.
7. You can conduct searches similar to those outlined above in other states in which you plan to operate by contacting the officials in those states which are in charge of similar types of registration. The appropriate offices and the details of registration may vary according to the laws of each state.
With regard to proposed corporate names, the Office of the Secretary of State makes the decision whether a name will be rejected or accepted only on the basis of whether it is distinguishable from another corporation's name. It is your responsibility to decide how many of the searches outlined above are appropriate or necessary for your proposed corporate name.
Putting the Name in Use
Once you have gone through the necessary steps to determining the availability of your corporate name, you are ready to put it in use. By properly filing its articles of incorporation or certificate of authority,a nonprofit domestic or foreign corporation registers its name with our office. This filing means only that the chosen name is acceptable under the corporation laws. It does not guarantee that the use of that name will not be challenged by someone who has been using a similar name and who charges that the use of your chosen name constitutes unfair competition.
Trademark and Service Mark Registration
N.C. Gen. Stat. §§80-1-80-14.
A trademark is a name, symbol, design, device or word used by a person to identify goods or products made or sold by him so that they will be distinguished from similar merchandise made or sold by others. A service mark is comparable to a trademark but is a mark used in connection with the sale or advertising of services, rather than goods or products. Trademarks and service marks may be registered under North Carolina law by filing with the Trademarks Division in the Office of the Secretary of State any time after the mark has been used in commerce in North Carolina. Forms are available from the Office of the Secretary of State.
NOTE: Registration of trademarks and service marks under the federal law may be made by filing with the U.S. Patent and Trademark Office at any time after a mark has been used in a commercial transaction in interstate commerce. The assistance of a competent attorney is advised in case you want to procure a federal registration, due to the complexity of the registration procedure. Some public information is available directly from the U.S. Patent and Trademark Office. Both state and federal registration are voluntary, rather than mandatory, requirements for use of the mark, although in some circumstances such registrations may be necessary for proper protection.
Articles of incorporation are the legal documents which must be filed in order to form a corporation. The information required to be included is detailed below. It is suggested that any other information be contained in your bylaws. (N.C. Gen. Stat. §55A-2-02).
The articles of incorporation must include the following:
1. Corporate Name. The exact corporate name, including abbreviations, punctuation, etc., must be used consistently in all documents filed. For example, the corporate name stated in the caption of the documents filed must be identical to the name stated in article one.
2. Designation as a Charitable or Religious Corporation.
A corporation which is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code is called a "charitable or religious corporation" in the North Carolina Nonprofit Corporation Act. This term also includes a corporation which is organized exclusively for one or more purposes specified in Section 501(c)(3) and which must distribute its assets upon its dissolution to another "charitable or religious corporation" or to the United States or another State. If your corporation fits this description, the articles must include a statement to the effect that it is a "charitable or religious corporation."
3. Registered Office and Agent. A non-profit corporation is required to have a registered office and a registered agent (N.C. Gen. Stat. §55A-5-01). The duty of the registered agent is to forward to the corporation at its last know address any notice, process or demand that is served on the corporation. A registered agent must be:
(1) an individual who resides in North Carolina and whose business office is identical with the registered office;
(2) a domestic corporation whose business office is identical with the registered office; or
3) a foreign corporation authorized to transact business in this State whose business office is identical with the registered office.
The articles of incorporation must set forth the street address (and the mailing address, if different from the street address) of the registered office, as well as the county in which the registered office is located, and the name of the initial registered agent. The registered office may, but need not be, the same as any of the corporation's places of business.
4. Incorporator. The person who signs and files the articles of incorporation is known as the incorporator. There must be at least one incorporator. The name and address of each incorporator must be indicated.
5. Members. Under North Carolina law, a nonprofit corporation may or may not have members. If the corporation is to have members, this must be specified in the articles of incorporation. If the corporation is to have no members, there must be included a statement to that effect.
6. Provisions for Distribution of Assets'
The North Carolina Nonprofit Corporation Act requires that the articles of incorporation include provisions regarding the distribution of the corporation's assets upon its dissolution and termination of existence. Persons drafting the articles are allowed a great deal of flexibility in designing these provisions, but the provisions must not be inconsistent with law. You should consult N.C. Gen. Stat. §55A-14-03 ("Plan of dissolution") for more specifics on distribution of a nonprofit corporation'
Optional Provisions. The articles of incorporation are allowed, but not required, to set forth any provision that can be included in the bylaws of a nonprofit corporation. The articles may also contain:
1. a statement of the purpose or purposes for which the corporation is organized;
2. the names and addresses of the initial directors;
3. provisions relating to management and regulation of the corporation's affairs;
4. provisions which define, limit, or regulate the powers of the corporation, its directors, and its members); (or any class of members);
5. provisions defining the qualifications, rights, and responsibilities of its member; and
6. provisions limiting or eliminating the personal liability of any director for monetary damages for breach of any duty as director.
Powers - N.C. Gen. Stat. §55A-3-02 sets forth certain powers that all nonprofit corporations have, unless the articles of incorporation state otherwise. Because these powers are statutory, they do not need to be listed in the articles of incorporation. Among these statutory powers are the following: to sue, and be sued; to complain and defend in the corporate name; to have and affix a corporate seal; to purchase, lease, acquire, hold, use. own, or otherwise deal in and with any real and personal property; to make contracts and incur liabilities; to elect or appoint officers; to make and alter by- laws; to lend money for corporate purposes; and to have and exercise all powers necessary or convenient to effect any or all of the purposes for which the corporation is organized.
Period of Existence. Unless the articles of incorporation or the Nonprofit Corporation Act provide otherwise, every nonprofit corporation is presumed to have perpetual duration. Consequently, it is not necessary to set forth a period of duration in the articles.
Notarization Not Required. Notarization is no longer required for documents filed with the Office of the Secretary of State. It is permissible for such documents to be notarized or verified, but the notarization or verification must not be defective in any way or the document will be rejected.
Filing the Document. One executed original and one exact or conformed copy of the articles of incorporation signed by the incorporator(s) must be submitted to the Office of the Secretary of State by mail or in person, along with a check, money order, or cash for the filing fee required by law. A photocopy of the articles of incorporation is acceptable as a copy. The filing fee is $50.
The Office of the Secretary of State will examine the articles of incorporation, and if the articles satisfy the requirements of the Nonprofit Corporation Act, they will be filed by time-stamping and dating. The signed original will be retained by the Office of the Secretary of State. The copy will be certified and returned to the person who submitted it for filing.
Articles of incorporation are no longer required to be filed with the office of the Register of Deeds, as was the case under prior nonprofit corporation law.
All nonprofit corporations must have an organizational structure and rules or bylaws by which they are managed. The organizational structure is comprised of directors and officers. which handle the internal management of the corporation, and perhaps also of members, which may have the right to elect the directors of the corporation. The internal management of the corporation is regulated by the corporate bylaws and the articles of incorporation.
Members
A nonprofit corporation may or may not have members. The fact that a corporation has or does not have members must be stated in the articles of incorporation.
Members are those persons who have membership rights in the organization in accordance with the provisions of its articles of incorporation or bylaws. Members may or may not have a right to vote on corporate matters. They may hold meetings and may elect the board of directors and officers, if permitted by the charter or by the bylaws.
Membership in a nonprofit corporation entails certain rights and responsibilities. These should be stated in either the articles of incorporation or the bylaws. Other rights may be granted by statute.
Directors
Directors are those persons who are responsible for the management of the corporation. A nonprofit corporation is required to have at least one director, or it may have more. The articles of incorporation or the bylaws may contain provisions for electing the directors. If a corporation has members, the directors may be elected by the members, if the articles of incorporation or bylaws permit. If a corporation does not have members, the directors are elected or appointed in the manner and for the terms as provided in the articles of incorporation or bylaws.
Officers
The day-to-day management of ;the corporation is provided by the officers of the corporation. The officers are elected or appointed as prescribed in the bylaws and their performance is overseen by the directors. If there is no such provision for their election or appointment, the officers are usually elected or appointed annually by the board of directors. The officers usually consist of a president, one or more vice-presidents, a secretary, a treasurer, and any other officer deemed necessary.
Bylaws
In both membership and non-member corporations, a set of rules known as the bylaws governs the internal administration and regulation of the affairs of the corporation. The bylaws may contain any provisions not inconsistent with the law or the articles of incorporation. The initial bylaws must be adopted by the incorporators or board of directors. (N.C. Gen. Stat. §55A-2-06).
501(c)(3) Attachment -- General Information
The attached provisions may be incorporated by reference into articles of incorporation of a nonprofit corporation, by entering "See attached provisions." in Item #9 on the Secretary of State's standard form for articles of incorporation for nonprofit corporations. This should be done only if the corporation is intended to be tax-exempt under Section 501(c)(3) of the Internal Revenue Code, and if its activities and property are intended to be restricted to one or more of the purposes listed in the "Purposes of Corporation" provision.
Currently Section 501 (c) of the Internal Revenue Code includes twenty-seven categories of organizations which are exempt from federal taxation, and Subsection (c)(3) is only one of those twenty-seven. The Department of the Secretary of State makes the attached provisions available as a courtesy to the public. This should not be interpreted as advice from the Department that the information in this form is appropriate for inclusion in documents designed for a specific corporate transaction since the Department cannot be aware of all the facts and circumstances relevant to a particular transaction. Therefore, your documents should be reviewed carefully by a competent attorney before you file them.
The attached provisions may also be used as amendments to an existing nonprofit corporation's articles of incorporation, by entering "See attached provisions." in Item 2 of the Secretary of State's standard form for Articles of Amendment for nonprofit corporations.
Important: A corporation seeking tax-exempt status may have to complete and submit an Application for Recognition of Exemption Under Section 501 (c)(3) of the Internal Revenue Code (Form 1023) in order to obtain that status. The procedures involved in applying for tax-exempt status are described in IRS Publication 557, "Tax-Exempt Status for Your Organization," available from the Internal Revenue Service. Merely including the attached provisions as part of your articles of incorporation will not necessarily procure tax-exempt status for the corporation; often it is necessary to obtain a "determination letter" from the IRS to achieve this goal.
May 1997
Purposes of Corporation
This corporation is organized for the following purpose(s):
including, for such purposes, the making of distributions to organizations that qualify as exempt organizations under Sections 501(c)(3) and 170(c)(2) of the Internal Revenue Code of 1986 (herein the "Code") (or the corresponding provisions of any future United States Internal Revenue Code).
Prohibited Activities
No part of the net earnings of the corporation shall inure to the benefit of, or be distributable to, its members, directors, officers, or other private persons, except that the corporation shall be authorized and empowered to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of purposes set forth in these articles of incorporation. No substantial part of the activities of the corporation shall be the carrying on of propaganda or otherwise attempting to influence legislation, and the corporation shall not participate in or intervene in (including the publishing or distribution of statements) any political campaign on behalf of or in opposition to any candidate for public office. Notwithstanding any other provisions of these articles, the corporation shall not carry on any other activities not permitted to be carried on (a) by a corporation exempt from Federal income tax under section 501(c)(3) of the Code or (b) by a corporation, contributions to which are deductible under section 170(c)(2) of the Code .
Distributions Upon Dissolution
Upon the dissolution of the corporation, the Board of Directors shall, after paying or making provision for the payment of all of the liabilities of the corporation, dispose of all of the assets of the corporation exclusively for the purposes of the corporation in such manner, or to such organization or organizations organized and operated exclusively for religious, charitable, educational, scientific or literary purposes as shall at the time qualify as an exempt organization or organizations under section 50 1 (c)(3) of the Code as the Board of Directors shall determine, or to federal, state, or local governments to be used exclusively for public purposes. Any such assets not so disposed of shall be disposed of by the Superior Court of the county in which the principal office of the corporation is then located, exclusively for such purposes or to such organizations, such as court shall determine, which are organized and operated exclusively for such purposes, or to such governments for such purposes .
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APPLICATION FOR CERTIFICATE OF AUTHORITY FOR NONPROFIT CORPORATION | |
Item 1 |
Enter the complete name of the corporation exactly as it appears in the records of the appropriate official in the state or country of organization. If that name cannot be used in North Carolina, enter the name that it wishes to use in North Carolina. |
Item 2 |
Enter the state or country of incorporation. |
Item 3 |
Enter the date of incorporation and the period of duration. |
Item 4 |
Enter the complete street address of the corporation's principal office. |
Item 5 |
Enter the complete mailing address of the corporation's principal office if different from the street address shown in Item 4. |
Item 6 |
Enter the complete street address of the corporation's registered office and the county in which it is located. |
Item 7 |
Enter the complete mailing address of the corporation's registered office if different from the street address shown in Item 6. |
Item 8 |
Enter the name of the registered agent. The registered agent must be a North Carolina resident, an existing domestic business or nonprofit corporation, or a foreign business or nonprofit corporation authorized to transact business or conduct affairs in North Carolina. |
Item 9 |
Enter the names, titles, and usual business addresses of the current officers of the corporation. |
Item 10-12 See form. |
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Item 13 |
The document will be effective on the date and at the time of filing, unless a delayed date or an effective time (on the day of filing) is specified. If a delayed effective date is specified without a time, the document will be effective at 11:59:59 p.m. Raleigh, North Carolina time on the day specified. If a delayed effective date is specified with a time, the document will be effective on the day and at the time specified. A delayed effective date may be specified up to and including the 90th day after the day of filing. |
Date and Execution
Enter the date the document was executed.
In the blanks provided enter:
The Articles of Incorporation which must be filed with the Secretary of State reflect the names and addresses of the initial board of directors. However, the incorporators or initial board of directors must formulate and adopt bylaws which govern the internal administration and regulation of the affairs of the corporation as well as provide the organizational structure.
The organizational structure consists of directors and officers which handle the internal management of the corporation. The bylaws indicate the number of directors, the manner in which the board of directors is selected, the terms of office for the directors, and the offices to be filled by duly elected or appointed board members.
Directors are responsible for the overall management of the corporation including the board's responsibility to supervise and approve decisions affecting goals, policies, plans, and programs. In addition, the board has basic responsibility for funding all programs and support services, Therefore, budget approval is a key board responsibility even though budgets are generally prepared by staff and submitted to the board of directors for ultimate review and approval. It should be noted that the same review and approval process should be followed with regards to periodic budget revisions or reallocations during the year.
The not-for-profit organization's bylaws are the authority for electing or appointing officers from among the membership of the board as well as defining the roles and responsibilities of the officers. The day-to-day management of the organization is normally provided by the officers and their performance is overseen by the board of directors. Therefore, the officers must formulate and recommend to the full board of directors policies and procedures which address organizational and operational aspects such as:
1. Internal control structure (control environment, control policies and procedures, and accounting system);
2. Conflict of interest policy statements (organization and employees);
3. Liability protection (board members, officers and employees);
4. Auditor selection process;
5. Investments and cash management practices;
6. Procurement and contract practices;
7. Personnel policies and procedures;
8. Financial accounting and reporting;
9. Employee benefit package;
10. Travel reimbursement practices.
The 1993 General Assembly enacted legislation (Chapter 321, Section 16, 1993 Session Laws) requiring each private, not-for-profit entity, as a prerequisite to the receipt of funding from the State, to formally adopt a policy which addresses conflicts of interest that might arise involving the entity's management, employees, and/or board members. The policy statement is expected to address situations in which any of the above referenced individuals may directly or indirectly benefit from the entity's disbursement of funds received from the State. In, addition, the policy should specify actions to be taken by the entity or individuals, or both, to avoid either actual conflicts of interest or the appearance of an impropriety. Before state agencies or departments can disburse funds to a private, not-for-profit entity, a notarized copy of the policy statement must be on file with the disbursing agency.
The exact wording of the policy statement may vary depending on the desires of the entity's board of directors and legal counsel. However, it is recommended that the policy statement, at a minimum, include the following provisions.
1. The entity is aware that in the process of fund allocation by its management, employees, members of the board of directors or other governing body, instances may arise which have the appearance of a conflict of interest or appearance of impropriety.
2. To avoid conflicts of interests or the appearance of impropriety, any individual who may benefit, directly or indirectly, from the entity's disbursement of funds shall abstain from participating in any decisions or deliberations by the entity regarding the disbursement of funds.
In addition to the above referenced conflict of interest statements for the entity, each employee should be required to sign a conflict of interest statement. This policy statement should stipulate that the employee agrees to neither maintain nor engage in any outside business or financial interest which conflicts with the interests and activities of his/her employer or which interferes with the employee's ability to fully perform his/her job responsibilities in an independent, objective manner.
Organizations which engage in not-for-profit activities are not automatically exempt from federal and state taxes because of the nature and purpose of the entity or the services provided. With the exception of several types of organizations (churches, subordinate organizations, etc.) which are exempt under Section 508(c) of the Internal Revenue Code (IRC), all other organizations must make formal application for exempt status.
FORM 1023 - APPLICATION FOR RECOGNITION OF EXEMPTION is used by organizations seeking exemption under Section 501 (c)(3) because the organizations provide one or more of a wide range of public service benefits such as religious, educational, charitable, scientific, prevention of cruelty to children and animals, etc.
Section 501(c)(3) organizations are exempt from federal and state taxes and federal unemployment taxes (FUTA), are eligible for preferred postal rates, can offer 403(b) annuity plans to employees, and, most importantly, contributions to such organizations are charitable deductions for individuals and corporations.
FORM 1024 - APPLICATION FOR RECOGNITION OF EXEMPTION is used by organizations seeking exemption under other sections of 501 (c) such as civic leagues (c)(4), labor unions (c)(5), business leagues (c)(6), etc.
IRS Publication 557 - TAX EXEMPT STATUS FOR YOUR ORGANIZATION provides excellent guidance to organizations seeking recognition of exemption from federal income tax. The filing of either FORM 1023 or FORM 1024 represents a complicated process and should not be attempted by an organization without the assistance, and advice of a qualified person. Also, a number of documents, such as articles of incorporation, by-laws, financial reports and data, etc., must be included with the FORM when submitted to the Internal Revenue Service for consideration.
Section 501(c)(3) organizations should make application (FORM 1023) for tax exemption within 15 months from the end of the month in which they were organized. When the application is filed within the specified time, any exemption will be recognized retroactively to the organizing date.
It is possible to obtain a ruling or determination letter in advance of operations if the proposed operations are described in sufficient detail so that a reasonable conclusion may be reached that the organization clearly meets the requirements of a particular section of the law. Such a description must be specific and describe the activities that the
organization expects to engage in, the expected source of funds, and the nature of anticipated expenditures.
It is important to show whether the source of funds will be public or private, as well as the nature of such income. For example, specific information should be given about plans to obtain contributions, grants, or income from fund-raising activities and/or investments. Anticipated expenditures should differentiate between those for furtherance of the exempt purpose and those required for administrative purposes. Criteria to be used to select recipients of exempt purpose expenditures and/or activities should be included.
If the submitted information is not in sufficient detail to allow the Internal Revenue Service to determine the exempt status of an organization, then it will be necessary to wait for a detailed statement of actual operations before the ruling or determination letter is granted.
Nonprofit organizations exempt under Section 501 (c) of the Internal Revenue Code are still subject to certain annual filing with the Internal Revenue Service and the State Department of Revenue. Unless gross receipts are less than $25,000 for the year, an organization is required to report its income-producing activities and reflect how the activities and expenditures are related to its exempt purpose.
All exempt organizations, except private foundations, farmers' cooperatives, homeowners' associations, and political organizations, should file FORM-990 no later than the 15th day of the fifth month following the close of the year. The abbreviated FORM 990-EZ, rather than. the FORM-990, can be used by entities with gross receipts under $100,000 and total assets less than $250,000 at year-end.
In addition to either the FORM-990 or the 990-EZ, exempt organizations also must file FORM 990-T if more than $1,000 in unrelated business income was received during the year. Unrelated business income (UBI) is generated when an exempt organization engages in a trade or business that is not related to the exempt purpose of the organization. UBI is a complex subject and is beyond the scope of this manual
However, organizations should obtain a copy of IRS Publication 598-TAX ON UNRELATED BUSINESS INCOME OR EXEMPT ORGANIZATION which is an excellent source of information.
Upon receipt of the tax-exempt status from the Internal Revenue Service, the nonprofit organization should submit a copy of the exemption to the North Carolina Department of Revenue and request State exemption. FORM CD-427: RETURN OF ORGANIZATION EXEMPT FROM INCOME TAX is used to annually report the exempt organization's activities to the State.
Not-for-profit organizations are required to obtain an employer identification number (EIN) from the Internal Revenue Service. This number is used on payroll reports and other documents filed with federal and state authorities. The EIN is also reflected on employee FORM W-2 statements and FORM 1099s sent to nonemployees at year-end.
The attached FORM SS-4 "Application for Employer Identification Number" is used to acquire the EIN. As the instructions indicate, the application should be submitted to IRS at least 4 to 5 weeks in advance of an organization's actual need for an identifying number. There is a provision whereby an organization can obtain a number by telephone in order to be able to file a return or make a tax payment. However, even in this case, the organization is required to follow-up with a properly completed FORM SS-4.
In addition, any organizations which are required to withhold State of North Carolina income taxes on the employees are required to obtain a state identification number. The attached FORM NC-1 should be used to obtain the EIN from the State Department of Revenue.
An employer identification number (EIN) serves a not-for-profit organization in the same manner as an individual's social security number.
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For questions or clarification on any of the policy contained in these manuals, please contact your local county office. |
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