The following guidelines provide background information on the most common types of filings and the related exemptions in Virginia.
Charitable organizations generally must register with the Office of Charitable and Regulatory Programs within the Virginia Department of Agriculture and Consumer Services before soliciting any money. Virginia defines the terms “solicit” and “solicitation” very broadly. Charitable organizations also must resubmit a Registration Statement annually and are subject to recordkeeping requirements.
Virginia excludes churches, with specified caveats, and political parties from the definition of a “charitable organization.” Those entities are not required to seek an exemption from the registration requirement. Depending on their activities in the state, other religious organizations may need to complete a charitable registration, despite their religious identity or affiliation.
Virginia also exempts certain charitable organizations from the registration requirement, but the eligible organizations must apply for the exemption. Exempt entities remain subject to other statutory duties, such as maintaining fiscal records. More information regarding registration and exemption is available at the Virginia Department of Agriculture and Consumer Services website.
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. 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, which could save the 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. However, foreign corporations and limited liability companies, including nonprofits, which transact business in the state are required to register with the Secretary of State and to maintain registered agents. Va. Code Ann. § 13.1-757; Va. Code Ann. § 13.1-925; Va. Code Ann. § 13.1-1051.
This state requires non-exempt charitable 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:
You may obtain a copy of *ORG*’s financial statement by contacting the Virginia State Office of Consumer Affairs in the Department of Agriculture and Consumer Services.
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 and to file annual reports. These foreign business registration requirements are separate from the charitable organization registration.
Foreign businesses must register trade names with local circuit courts in which they transact business. Several Virginia counties, cities, and towns also require nonprofit and charitable organizations that do business within their borders to obtain a business license. Some Virginia counties, cities, and towns require charitable organizations that wish to solicit donations to provide the county, city, or town with evidence of registration with the Virginia Department of Agriculture and Consumer Services.
Not every out-of-state nonprofit organization needs to register or to obtain a license. An attorney can assist the organization in determining whether its connections with this state are significant enough to trigger the foreign business registration and licensing requirements. Examples of activities that might trigger these requirements include having employees physically located in the state, conducting programs in the state, and having an office in the state.
In Virginia, organizations that have received recognition of federal income tax exemption under IRC Sec. 501(c)(3) are automatically exempt from state income tax, except on unrelated business income. 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 and local business taxes. [See Va. Code Ann. § 58.1-401(5).] Consult with an accountant or attorney if you have questions about your organization’s tax liability.
Nonprofit organizations are not automatically exempt from local real estate and property taxes and license fees. Although the Virginia Code exempts many organizations from local taxes (Va. Code Ann. § 58.1-3600 et seq.) and license fees (Va. Code Ann. § 58.1-3703(c)(18)), organizations must affirmatively seek an exemption from local tax authorities.
Certain nonprofit organizations are exempt from paying sales and use taxes. Va. Code Ann. § 58.1-609.11. More information about the exemption application is available at the Virginia Department of Taxation website. An accountant or attorney can provide specific answers to your organization’s eligibility for the exemption.
This state does not have a corporate franchise tax on entities other than banks.
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