Non-profit Organization

Nonprofit Corporations: Not all non-profit organizations are filed with the Secretary of State. Many, but not all, non-profit organizations choose to incorporate. A nonprofit corporation is created by filing a certificate of formation with the secretary of state in accordance with the Texas Business Organizations Code (“BOC”). “Nonprofit corporation” means a corporation no part of the income of which is distributable to members, directors, or officers [BOC, Section 22.001(5)]. A nonprofit corporation may be created for any lawful purpose, or purposes permitted by the BOC. Not all nonprofit corporations are entitled to exemption from state or federal taxes.

Unincorporated Nonprofit Associations: Section 252.001 of the BOC defines an unincorporated nonprofit association as an unincorporated organization consisting of three or more members joined by mutual consent for a common, nonprofit purpose. All unincorporated nonprofit associations, whether or not the entities are tax exempt, are subject to the provisions of the Uniform Unincorporated Nonprofit Association Act, Chapter 252 of the BOC. The Act addresses a limited number of major issues relating to nonprofit associations; namely, the authority of the nonprofit association to acquire, hold and transfer property in its own name; the authority to sue and be sued as a separate legal entity; and the contract and tort liability of an association’s officers and its members. If you need further information regarding these provisions or how they might affect your association, you should contact your own legal counsel.

An unincorporated nonprofit association may, but is not required to, file with the secretary of state a statement appointing an agent authorized to receive service of process on behalf of the nonprofit association. The filing of the statement does not represent the creation of the nonprofit association; it simply provides a method for a nonprofit association to receive notice of any lawsuit brought against it.

• SOS Forms for Nonprofit Corporations and Unincorporated Nonprofit Associations
• FAQs for Nonprofits
• Doing Business with the SOS on and after January 1, 2010: A Guide for Texas Nonprofit Corporations (PDF)
• Forming a Nonprofit Tax-Exempt Corporation in Texas (PDF, 2.5mb) (2015 Texas C-BAR publication)
• Search for Charities on the IRS Web Site

Tax Issues for Nonprofits

Neither a nonprofit corporation nor an unincorporated nonprofit association is automatically exempt from federal or state taxes.

To become exempt, a nonprofit organization must meet certain requirements and apply with both the Internal Revenue Service and the Texas Comptroller of Public Accounts

• Federal Taxes – IRS Charities & Nonprofits page
  • To attain a federal tax exemption as a charitable organization, your certificate of formation must contain a required purpose clause and a dissolution of assets provision.
  • IRS Stay Exempt: tax information for 501(c)(3) organizations
  • IRS Publication 557 (PDF, 1.06mb), Tax Exempt Status for your Organization.
  • Life Cycle of a Public Charity: sample organizational documents and IRS filings
  • Questions about federal tax-exempt status? Contact the IRS Exempt Organizations Section at 877-829-5500.
  • IRS Form 1023 (PDF) application for recognition of exemption and instructions (PDF).
  • Information about Form 990-N reporting requirements for small tax-exempt organizations whose gross receipts are normally $50,000 or less.
• State Taxes – Comptroller of Public Accounts Exemption page
  • Comptroller Publication 96-1045, Guidelines to Texas Tax Exemptions.
  • Exemption Forms.
  • Questions about state tax-exempt status? Review the comptroller’s FAQs or contact the comptroller’s Exempt Organizations Section by phone at (800) 531-5441 or (512) 463-4600 or by email.

Texas Nonprofit Resources

• Texas Association of Nonprofit Organizations: A gathering place for all nonprofits within the state of Texas.
• Texas Business Advisor: The Texas Business Advisor provides links to various sites that may be of assistance to non-profit associations.
• Charitable Trust Section of the Office of the Attorney General
• Texas C-BAR: Community Building with Attorney Resources provides free legal assistance to Texas non-profit organizations.
• OneStar Foundation – OneStar promotes service and volunteerism, forges effective public and private partnerships, and works to increase the performance of non-profit organizations.

SOURCE: Texas Secretary of State