What You’ll Learn
If you’re a nonprofit in Utah, or you’re a nonprofit considering fundraising or other activities in Utah, you must understand the requirements that Utah has established for nonprofits operating in the state.
How can you become familiar with these laws? Where should you start?
Start here. This state profile includes the basic requirements nonprofits must consider. Reading the profile and implementing appropriate compliance measures will help you prepare your organization for success in Utah.
Getting to Know the State Nonprofit Corporation Law
*Important primarily for nonprofits incorporated in Utah
Emma Woodhouse, handsome, clever, and rich, with a comfortable home and happy disposition, seemed to unite some of the best blessings of existence; and had lived nearly twenty-one years in the world with very little to distress or vex her. She was the youngest of the two daughters of a most affectionate, indulgent father; and had, in consequence of her sister’s marriage, been mistress of his house from a very early period. Her mother had died too long ago for her to have more than an indistinct remembrance of her caresses; and her place had been supplied by an excellent woman as governess, who had fallen little short of a mother in affection.
- Emma, Jane Austen
When reading a novel, we get to know a fictional character by the author’s description. The author tells us about the character’s appearance, purpose, actions, mannerisms, and values.
Nonprofit corporations are something like fictional characters.
We learn how a nonprofit will look and act and make decisions not by reading a novel, but by reading the state law (called the nonprofit corporation act) and the rules the nonprofit makes for itself (called the bylaws and articles of incorporation). The law and the organization’s own rules tell us the organization’s name, purpose, way of acting, and method of making decisions.
To get to know your own nonprofit, be sure to review the sections below.
State Nonprofit Corporation Law
For Religious Nonprofits
Nonprofit Religious Corporation Act: Utah’s nonprofit corporation law lacks: (a) specific provisions permitting the formation of nonprofit religious corporations; (b) specific protections for religious exercise at faith-based organizations, and (c) express acknowledgement of an option for nonprofits to incorporate for religious purposes. See Utah Code § 16-7-1
Reliance on Religious Guidance in Governance: Utah law permits a director to rely on guidance from religious figures within his or her faith tradition in the fulfillment of the director’s fiduciary duties. Utah Code § 16-6a-822(3)(c)
Understanding Religious Liberty in this State
*Important for all nonprofits doing business in Utah, whether incorporated in Utah or elsewhere
The religious education and formation of students is the very reason for the existence of most private religious schools, and therefore the selection and supervision of the teachers upon whom the schools rely to do this work lie at the core of their mission. Judicial review of the way in which religious schools discharge those responsibilities would undermine the independence of religious institutions in a way that the First Amendment does not tolerate.
- Our Lady of Guadalupe School v. Morrisey-Berru, 140 S. Ct. 2049 (2020).
Sometimes, the state or local government (like the city or county) makes laws that could conflict with your organization’s free exercise of religion or its sincerely-held religious beliefs.
For example, a law might require employers not to make faith-based distinctions between job candidates. If your organization’s mission is to pass on the teachings of your faith, you will need to make faith-based distinctions in evaluating candidates because their faith commitments will impact their abilities to partner in your mission and witness the faith to your program participants.
So what do you need to do? Be aware of the laws listed below. If any of the laws impact your organization—for example, if you are an employer or a facility open to the public—learn more about how you can protect yourself by reviewing Napa Legal’s religious liberty resources. Talk to an attorney if you have specific concerns.
Religious Liberty Protections
State Religious Freedom Restoration Act: Utah has not enacted a RFRA and has enacted nondiscrimination laws that conflict with the beliefs of many religious organizations. Not sure what a “religious freedom restoration act” is? Click here to learn the fundamentals.
State Constitutional Protection of Free Exercise: The Utah Constitution follows in lockstep with the federal constitution’s protections, meeting but not exceeding the required minimum protections of the First Amendment. Utah Const., art. I, Sec. 4; art. III; art, X, Sec. 8; art. XIII, Sec. 3
Blaine Amendment: The Utah Constitution contains a Blaine Amendment that could prevent the participation of faith-based schools in generally available public benefit programs on the same terms as similarly situated secular schools. This is not as broad as a general Blaine Amendment, which prohibits all aid to faith-based institutions, but is still detrimental to the work of faith-based institutions. Current U.S. Supreme Court precedent has rendered this language ineffective, but it could become effective in the future if Court precedent changes. Utah Const., art. I, § 4; art. X, § 9; Not sure what a Blaine Amendment is? Review the basics here.
Other Relevant State Laws and Regulations
Utah currently has a broad, statewide public accommodation law. That law provides that it does not “deny any religious organization the right to regulate the operation and procedures of its establishments.” Be sure you understand this and any local regulations that may apply to your organization.
Religious Freedom and Public Accommodation Laws: Utah’s nondiscrimination laws generally restrict religious freedom for religious organizations that offer public programming and facilities and provide no meaningful religious accommodations or exemptions. Utah Code Ann. § 13-7-3; Not sure what a public accommodation law is or what it means for your organization’s religious liberty? Learn the basics in this article which discusses the issue in the context of the case Fulton v. City of Philadelphia.
Protections for Religious Exercise in State of Emergency: Utah law has no explicit constitutional or statutory protections for religious exercise during a time of emergency
Key Employment Laws and Regulations
In addition to tracking with the protected classes in the federal anti-discrimination employment law (race, color, religion, sex, and national origin), Title VII of the Civil Rights Act of 1964, Utah prohibits employers from discriminating on the basis of age, pregnancy-related conditions, disability, sexual orientation, and gender identity. An employer is any person who has fifteen or more employees for twenty or more weeks each year. Some religious exemptions apply to this requirement. Local governments may also have employment-related regulations. An attorney can help you understand what requirements apply to your organization.
Religious Freedom for Employees: Utah Code Ann. § 34A-5-112
Conducting Activities or Programs in this State
Understanding the Business Registration Requirement
*Important primarily for nonprofits doing business in Utah but incorporated elsewhere
If you are an out-of-state corporation fundraising or conducting activities in this state, you must consider whether you need to register as a foreign nonprofit corporation. Utah law requires entities that are conducting affairs in the state to register. An attorney can help you decide whether you need to register based on the type and volume of activities you have in this state.
Fundraising and Charitable Registration in This State
How to Know (And What to D0) If You're Fundraising In This State
*Important for both Utah and Foreign Nonprofits
Not sure what “charitable registration” is? Need to review the basics? Read this article for a refresher.
Utah generally requires organizations to register prior to soliciting donations. However, the registration requirement has a narrow religious exemption. To be eligible for the exemption, the solicitation must be made for a “church, missionary, religious, or humanitarian purpose,” and the organization must be one of the following:
- a lawfully organized corporation, institution, society, church, or established physical place of worship, at which nonprofit religious services and activities are regularly conducted and carried on;
- a bona fide religious group that does not maintain specific places of worship, that is not subject to federal income tax, and that is not required to file an IRS Form 990 under any circumstance; or
- a separate group or corporation that is an integral part of an institution that is an income tax exempt organization under 26 U.S.C. Sec. 501(c)(3) and is not primarily supported by funds solicited outside the group's or corporation's own membership or congregation.
The Division of Consumer Protection may require an organization claiming the exemption to file a notice of a claim of an exemption or renewal of such a notice, and the burden is on the organization to show that it is entitled to the exemption.
Utah has a broad definition of what constitutes solicitation and does not specify what minimum activity level triggers registration requirements.
If You're Fundraising In Multiple States, Make Sure You Understand the URS
In Utah, organizations that are required to register can register through the Unified Registration Statement, 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 is useful if your organization is required to register in multiple states. However, the URS typically must be submitted by mail. Utah has an online filing system and using that system may be more efficient than completing and mailing the URS manually.
Additionally, creating the online profile will save the organization time in preparing future annual reports, which are processed using the same system.
Evaluate Whether You'll Need a Registered Agent
Utah requires organizations incorporated in other states to appoint a registered agent. This can be done through a commercial service or by appointing a person or entity who is a supporter of your organization.
Follow the Rules About Communicating with the Public
This state does not require organizations to post specific language when conducting charitable solicitations. Note, however, that Utah Code § 13-22-13 does prohibit, among other things, “any untrue statement of material fact” in connection with a solicitation.
Charitable Registration Exemption Statute
Annual Report Requirement
Audit Requirements: Utah does not require the submission of reviewed or audited financials as a condition of maintaining authorization to fundraise in the state. However, the Division of Consumer Protection has investigative and enforcement powers outlined in Utah Code § 13-22-3.
Get Acquainted with State and Local Taxes and Exemptions
State and Local Taxes
*Important for all nonprofits doing business in Utah, whether incorporated in Utah or elsewhere
In Utah, organizations that have received 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. To apply organizations can use form TC-161. 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 income tax.1 Consult with an accountant or attorney to confirm.
It is also important to consider whether your organization might be eligible for sales and use tax or property tax exemption. In Utah, federal § 501(c)(3) status does not automatically provide an exemption from sales, use and property taxes. More information about the sales and use tax exemptions and applications is available on the Utah State Tax Commission website, on Form TC-160, and in Utah administrative rules. An accountant or attorney can provide answers to specific questions regarding your organization’s eligibility for exemption.
Corporate Income Tax Statute
Corporate Franchise Tax Statute
What You Need to Know About Sales Tax
Sales and Use Tax Exemptions: Utah imposes a sales and use tax on religious organizations’ sales and purchases but generally provides a broad and comprehensive, entity-based tax exemption for 501(c)(3) religious organizations’ sales upon application. Utah Code Ann. § 59-12-104.1; Form TC-160
Property Tax Exemptions: Utah imposes property tax and provides only fragmented property tax exemptions that include only a narrow subset of religious organizations or that apply only to a narrow category of religious and/or charitable property uses. Utah Code Ann. § 59-2-1101
State-Specific Special Requirements
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.
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**Please note that the following state profiles are forthcoming and will be published soon:Hawaii and Washington