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The following guidelines provide background information on the most common types of filings and the related exemptions in Minnesota.
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This state has a narrow religious exemption for groups which are exempt from filing the IRS Form 990, such as churches. See Minn. Stat. § 309.515. 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 define the threshold solicitation which triggers exempt status. State law does, however, provide a “de minimis” exemption for organizations which are (1) volunteer-run organizations, (2) receive contributions of less than $25,000, and (3) do not use a professional fundraiser. The statute states that the $25,000 maximum refers to total contributions from all sources.
In this state, organizations which are required to register have the option of registering through the Unified Registration Statement, which is a standardized charitable registration accepted in many states (Minnesota also requires a Minnesota-specific supplement). 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 which requires 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. The person on the registration statement as having custody of books and records will be subject to service if there is no registered agent. See Minn. Stat. § 309.56.
This state requires organizations to include specific statements whenever the organizations are requesting donations (also called “charitable solicitation”). Below is sample language to use with charitable solicitations in this state:
This solicitation is made on behalf of *ORG* located in *CITY*, *STATE*. Contributions to *ORG* *ARE/ARE NOT* tax-deductible. Contributions will be used in support of *ORG*’s religious mission to *PURPOSE*, such as *ACTIVITIES*.
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 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 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. Organizations can do so by submitting a Business Activity Questionnaire for determination https://www.revenue.state.mn.us/sites/default/files/2017-09/c101.pdf. 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 Minn. Stat. § 290.05.
It is also important to consider whether applying for sales and use tax and property tax exemptions would be appropriate for your organization.
Information about property tax exemption is typically available from the local county. (For an example, please see this website from Saint Louis county.) Information about sales and use tax exemption is available from the Minnesota Department of Revenue. An accountant or attorney can provide specific answers to questions about your organization’s eligibility for exemptions.
Foreign Organization Registration: https://www.sos.state.mn.us/media/1559/foreigncorpregistration.pdf
Charitable Registration Information: https://www.ag.state.mn.us/Charity/InfoCharitableorgandTrusts.asp
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