This state does not have a corporate franchise tax.
The following guidelines provide background information on the most common types of filings and the related exemptions in Kentucky.
In this state, religious organizations are automatically exempt from charitable registration requirements. The religious exemption is not limited to IRS Form 990 Non-Filers, such as churches. Under Ky. Rev. Stat § 367.650(8), a “religious organization” that is eligible for exemption from charitable registration requirements is “any organization, the activity of which is protected by Section1(2) of the Constitution of Kentucky and the First Amendment of the Constitution of the United States.”
In this state, organizations that are required to register have the option of registering through the Unified Registration Statement (“URS”), which is a standardized charitable registration accepted in many states.* Using the URS, rather than a state-specific registration form, has pros and cons. The URS typically must be submitted by mail. If the state has an online filing system, it may be more efficient to use that system, rather than complete and mail the URS manually. Additionally, states that require charitable organizations to submit annual reports often use information from the state-specific initial registration to auto-populate annual reports, saving an organization time in the future.
Some states require organizations to appoint a “registered agent” in the state as part of the organization’s charitable registration. In Kentucky, nonprofit entities (both domestic and foreign) must continuously maintain a registered agent whose address is located in Kentucky. When registering with the Kentucky Secretary of State for the first time, the registered agent must sign to indicate his, her, or its consent to serve as the entity’s registered agent. Ky. Rev.Stat. §§ 14.4- 010;273.182;273.3641.
This state does not require organizations that are exempt from charitable registration requirements to post specific language when conducting charitable solicitations.
Depending on the type and volume of activities an organization has in this state, the organization may also need to register as an out-of-state business (sometimes called a “foreign business”) with the Kentucky Secretary of State. These foreign business registration requirements are separate from the charitable registration. Not every out-of-state organization needs to register. An attorney can assist the organization in determining whether its connections with this state are significant enough to trigger the foreign business registration requirement.
Examples of activities that might trigger this requirement include having employees physically located in the state, conducting programs in the state, and having an office in the state. For more information on foreign business registration requirements, see Ky. Rev. Stat. § 14A.9-010.
In this state, organizations that have received recognition of federal income tax exemption are also exempt from the state income tax under Ky. Rev. Stat. § 141.040(1)(a)(2) and (b)(2). Additionally, religious, education, charitable, and similar organizations not organized or conducted for pecuniary profit are also exempt from state income tax under Ky. Rev. Stat. §141.040(1)(a)(3) and (b)(3). However, to receive this exemption, organizations must apply to the Kentucky Department of Revenue. The exemption is not automatic. The applicable form is available at https://revenue.ky.gov/Forms/10A100.pdf.
It is also important to consider whether applying for sales and use tax and property tax exemption would be appropriate for your organization. Depending on your organization’s activities, you may be subject to Kentucky sales tax as a retailer. Purchases by 501(c)(3) organizations that are used solely in Kentucky for an educational, charitable, or religious function may be exempt, however. Ky. Rev. Stat. § 139.495. More information about state property tax exemption is available on the Kentucky Department of Revenue website. An accountant or attorney can answer specific questions about your organization’s eligibility.
Foreign Business Registration (called “Certificate of Authority”): https://www.sos.ky.gov/bus/business-filings/Forms/Pages/default.aspx
Overview of Kentucky Taxes for Nonprofits: https://www.lexology.com/library/detail.aspx?g=4aebb58f-122b-49ce-a39e- 788e83ba0c59
Information on Property Tax Exemptions: https://revenue.ky.gov/Property/Pages/Property-Tax-Exemptions.aspx
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.