The following guidelines provide background information on the most common types of filings and the related exemptions in Massachusetts.
The Commonwealth has a narrow religious exemption for groups that are exempt from filing the IRS Form 990, such as churches. For these groups, the exemption is automatic. Depending on their activities in this state, other religious organizations, not exempt from the IRS Form 990 requirement, may need to complete a charitable registration, despite their religious identity. Practitioner’s Note: The state statutory exemption is for religious organizations generally (Mass. Gen. Laws Ch. 68, Sec. 20) but the related regulations narrow the exemption to IRS Form 990 non-filers only (940 C.M.R. 2.02(1)(a)).
This state does not specifically define a threshold level of contributions that trigger the registration requirement. However, state law does provide that organizations which are (1) volunteer-run, and (2) receive less than $5,000 in contributions annually are exempt from registration.
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. In Massachusetts, the URS can only be used for an initial registration, and only if the organization has not yet passed its initial fiscal year end date of operating in Massachusetts.
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. This state does not currently have this requirement.
This state does not require organizations 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 secretary of state or another state agency. See Mass. Gen. Laws ch. 156D § 15.03. 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 under IRC Sec. 501(c)(3) are automatically exempt from state income tax. 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 taxation.4 Consult with an accountant or attorney to confirm.
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. Registering as an exempt organization will allow charitable organizations to obtain a certificate exempting them from Massachusetts sales and use taxes on the purchase of items used for the organization’s charitable purposes. Mass. Gen. Laws ch. 64H, § 6(e). Information about property tax exemption is available from the Massachusetts Department of Revenue’s Division of Local Services. An accountant or attorney can provide specific guidance on these exemptions.
Certificates of Solicitation
A charitable organization must obtain a Certificate of Solicitation from the Attorney General’s Office before soliciting contributions in Massachusetts. Exceptions exist for some religious organizations and very small-scale solicitations without any professional fundraisers. The governing laws are found in Mass. Gen. Laws ch. 68, §§ 16 (governing solicitation on public ways) 23 (governing solicitation disclosures). An easy-to-read summary of the process can be found here: https://www.mass.gov/service-details/overview-of-solicitation .
Massachusetts also requires “fund-raising counsel,” “commercial co-venturers,” and “professional solicitors” to register with the Commonwealth if they are acting on behalf of a charitable organization that is required to register. Mass. Gen. Laws Ch. 68, § 24. Fees range from $200 to $1,000. Mass. Gen. Laws Ch. 68, § 24. Contracts between the charitable organization and such persons must be written and disclosed to the Commonwealth. Mass. Gen. Laws Ch. 68, § 22.
Massachusetts requires all public charities, except organizations which hold property for religious purposes or certain federally chartered organizations, to file Form PC. More information can be found at: https://www.mass.gov/service-details/annual-charities-filings.
Mass. Gen. Laws ch. 63, § 39 (subsection (b))
Foreign Business Registration (called “Certificate of Registration): https://www.sec.state.ma.us/cor/corpdf/c156ds1503950c11348.pdf
Frequently Asked Questions about Charitable Organizations: https://www.mass.gov/service-details/frequently-asked-questions-about-charitable- organizations
Frequently Asked Questions about Exemptions for Nonprofits: https://www.mass.gov/doc/exemptions-for-organizations-faqs/download
William K. Wray Jr., BBO# 689037
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