The following guidelines provide background information on the most common types of filings and the related exemptions in Iowa.
In this state, charitable solicitation registration for religious organizations is not required, as of the date of this publication (March 08, 2021). Be sure to review other state registration and tax requirements, and stay apprised of updates by visiting the applicable state agency’s website (see “Helpful Links” below).
Some states require organizations to appoint a “registered agent” in the state as part of the organization’s charitable registration. This state does not currently have this requirement as there is no charitable registration requirement, but foreign (i.e., non-Iowa) entities doing business in Iowa must generally appoint a registered agent in accordance with the above-referenced business registration statutes.
This state does not require organizations to post specific language when conducting charitable solicitations. However, if donors request financial information about a soliciting organization, the organization should provide the financial information within five days of the request.
Depending on the type and volume of activities an organization has in this state, the corporation or organization may need to register as an out-of-state business (sometimes called a “foreign corporation”) with the secretary of state or another state agency. (See Iowa Code § 504.141(18)). An attorney can assist the organization in determining whether its connections with this state are significant enough to trigger the foreign corporation registration requirement. Examples of activities which might trigger this requirement include having employees physically located in the state, conducting programs in the state, and having an office in the state.
In this state, organizations which have received recognition of federal income tax exemption under IRC Sec. 501(c)(3) are automatically exempt from state income tax. Some organizations may choose to send a copy of their IRS determination letter to the state department of revenue to indicate the organization’s position that it qualifies for the exemption. Note that, although an organization may be exempt, if it has unrelated business taxable income (“UBTI”) that is subject to federal taxation, that UBTI may be subject to state income tax. (See Iowa Code § 422.34).
It is also important to consider whether applying for sales and use tax and property tax exemption would be appropriate for your organization. Iowa does not have a blanket sales and use tax exemption for nonprofits or exempt organizations, but some specific exemptions are available. The Iowa Department of Revenue website provides a guide to exemptions which may be helpful. Information regarding Iowa’s Religious, Educational, and Charitable property tax exemption is also available through the Iowa Department of Revenue. An accountant or attorney can provide specific answers to questions about your organization’s eligibility for exemption.
This state does not have a corporate franchise tax.
Elisabeth A. Archer
This resource contains general educational information related to legal concepts, but this information does not constitute legal advice. Anyone seeking legal advice is strongly encouraged to consult with a licensed attorney regarding any of the matters discussed herein. Although licensed attorneys work with Napa Legal, Napa Legal is not a law firm and does not undertake legal representation on behalf of any clients. Further, no licensed attorney working with or on behalf of Napa Legal agrees to undertake legal representation on behalf of any client unless the terms of such representation are set forth in a separate, written representation agreement.