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 Maryland.
In this state, organizations are generally required to register prior to soliciting for donations. However, the registration requirement has a religious exemption.
Religious organizations must apply for this exemption; the religious organization exemption is not automatic.
This state has a very broad definition of solicitation and does not specify a minimum threshold of solicitation which triggers the registration requirement. However, organizations which (1) do not use a professional solicitor and (2) receive less than $25,000 in total annual contributions may apply for a registration exemption. The statute does not specify whether the $25,000 maximum is for total contributions or Maryland-source contributions only.
In this state, organizations that are required to register have the option of registering through the Unified Registration Statement, which is a standardized charitable registration accepted in many states.
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.
This state requires organizations to include specific statements whenever the organization is requesting donations (also called “charitable solicitation”).
Religious organizations generally are not required to include this statement, but posting the language is often a best practice to build trust with donors and state regulators. Below is sample language to use with charitable solicitations in this state:
This solicitation is made on behalf of *ORG*, which is located at *ADDRESS* and can be contacted at *TELEPHONE*. A copy of *ORG*’s current financial statements are available on request. A copy of *ORG*’s charitable organization filings are available from the Maryland Secretary of State upon request, for the cost of shipping and printing.
Foreign Corporation Registration Statute: Md. Corporations & Associations § 7- 203 (2019)
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 secretary of state or another state agency.
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.
In this state, organizations that have received recognition of federal income tax exemption are also exempt from the state income tax. However, to receive this exemption, organizations must apply. The exemption is not automatic. Note that, although an organization may be exempt, if it has unrelated business taxable income (UBTI) that is subject to federal taxation, that UBTI will be subject to Maryland’s income tax. [See Md. Code Ann., Tax-Gen. § 10-304(2)]
It is also important to consider whether applying for sales and use tax and property tax exemption would be appropriate for your organization. Information about state tax exemption is available on the Maryland Secretary of State’s nonprofit webpage, as well as on the designated website for the Department of Assessments and Taxation and the Maryland Comptroller of the Currency. An accountant or attorney can provide answers to specific questions regarding your organization’s eligibility for exemption.
If you have questions about this state profile or are seeking an attorney in Maryland, please contact Jonah Samples at firstname.lastname@example.org.
Foreign Business Registration (called “Foreign Corporation Qualification”): https://dat.maryland.gov/SDAT%20Forms/forcp.pdf
a Pro-Bono Attorney at Nelson Mullins Riley & Scarborough LLP
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