The following guidelines provide background information on the most common types of filings and the related exemptions in Michigan.
This state has a narrow religious exemption for groups that are exempt from filing the IRS Form 990, such as churches. The exemption for IRS Form 990 non-filers is not automatic; eligible organizations must apply for it. 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.
This state does not specifically identify a threshold level of solicitation which triggers the registration requirement. The state does, however, exempt organizations from registration if the organization: (1) receives less than $25,000 in contributions annually, (2) makes a copy of its financial statement available to the public, and (3) does not use a professional fundraiser. The statute indicates that the $25,000 maximum applies to gross contributions and does not specify whether this is limited to Michigan-source contributions or total contributions.
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. This state does have an online filing system for charitable registrations. Accordingly, it may be more efficient to use that system, rather than complete and mail the URS manually.
Note that this jurisdiction requires organizations incorporated in other states to appoint an in‐ state registered agent. This can be done through a commercial service or by appointing a person or entity who is a supporter of yours.
This state does not require organizations to post specific language when conducting charitable solicitations. Organizations are encouraged to post their Michigan charitable registration number.
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 are tax exempt 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 also may be subject to state income tax. See Mich. Comp. Laws § 206.625. Consult with an accountant or attorney to confirm.
It is also important to consider whether applying for sales and use tax and property tax exemption would be appropriate for your organization. More information regarding Michigan state tax exemptions is available on the Department of Treasury sales and use tax webpage and the property tax exemption webpage. An accountant or attorney can provide answers to specific questions regarding your organization’s eligibility for exemption.
This state does not have a corporate franchise tax.
Foreign Business Registration (called “Certificate of Authority”): https://www.michigan.gov/lara/0,4601,7-154-89334_61343_35413_35426-120069--,00.html
Online Charitable Registration: https://www.michigan.gov/ag/0,4534,7-359-82915_82919_103558---,00.html; https://efile.form990.org/frmNPParticipatingStateSCOMI.asp
Common Sales and Use Tax Exemptions and Requirements: https://www.michigan.gov/taxes/0,4676,7-238-43519_43529-155524--,00.html
Information Regarding State Property Tax Exemptions: https://www.michigan.gov/taxes/0,4676,7-238-43535_53197---,00.html
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.