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INDEX OF LAWS INDEX OF LAWS

Names

Incorporating

Unincorporated Associations

Chapters of a State or National Charity

Trusts

Soliciting Contributions (Registration)

Professional Fundraisers

Special Events

Charitable Assets (Registration)

Document Disclosure

Meetings

Record Retention & Disposal

Business Tax

Sales Tax

Property Tax

Employment Tax

Community Foundations

Volunteers

 



 

 

Names

 

Corporations:

Prior to filing the articles of incorporation, charity founders may wish to file a form to reserve the name they have chosen to prevent others from incorporating under the same name or filing it as an assumed name. To reserve a name, file Form 540 with the Corporation Division of the Michigan Department of Licensing and Regulatory Affairs. After it is formed, the organization may also want to file other program names, initials or acronyms that it will use on a regular basis. See Item #6 below.

 

Corporations are not allowed to file "doing business as" names (d/b/a) with the county clerk. Only an individual or a group of individuals are allowed to file a d/b/a.

 

Unincorporated Associations

The individuals acting as members of an unincorporated association may file a "doing business as" (d/b/a) name with the county clerk where they intend to use the name. A d/b/a filed with the county clerk is only valid for use within the county where it is filed. There are, however, disadvantages in operating as an unincorporated association and operating only under a d/b/a. For a discussion of the disadvantages, see the Unincorporated Associations section below.

 

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Incorporating

 

Incorporating -- Articles of Incorporation

 

Those that wish to incorporate must file articles of incorporation with the Corporation Division that is in the Michigan Department of Licensing and Regulatory Affairs, Bureau of Commercial Services.  This is the state agency where you must file, not only the original articles of incorporation, but also annual reports to maintain the corporation, amendments to the original articles, assumed names for the corporation and appropriate forms if the organization changes its registered office or resident agent.

 

Below are links directly to the forms nonprofit corporation need to file, along with a brief explanation of each.  (NOTE:  If you wish to review all of the forms provided on the website to ensure coverage of all requirements, link to the entire list of corporation forms.)

 

FEES: Filing fee amounts are provided on each form.  Please note that, if you want expedited service, filing fees increase.  See Form #272.

 

1.  The form to file the original articles of incorporation is Form 502, ARTICLES OF INCORPORATION – NONPROFIT.

REQUIRED LANGUAGE FOR CHARITIES:  You will most likely be filing with the IRS for 501(c)(3) tax exempt status. The IRS will only grant 501(c)(3) status if your creating documents include required language affirming a charitable purpose for the corporation; dedicating all assets of the corporation to carrying out the charitable mission; and providing that all assets of the corporation will be passed on to another charitable organization if the corporation is dissolved. The IRS website provides the required language and sample articles of incorporation for your use. This information is also available in IRS Publication 557. You may also read more on IRS requirements on the IRS Rules page of this website.

 

2.  If you make a mistake in the articles of incorporation you filed (typos, misspelling, punctuation), you can correct mistakes by filing Form 518, CERTIFICATE OF CORRECTION.

 

3. To make substantive changes in the original filing (changing the corporate name or revising certain articles), the organization can amend the articles that were previously filed by filing Form 515, CERTIFICATE OF AMENDMENT – PROFIT AND NONPROFIT.

 

4.  Sometimes a charity will wish to make major changes in its purpose, structure, and/or operations and may choose to restate its articles of incorporation, rather than file a number of amendments. Or the organization may have filed several amendments over a period of time and would prefer to replace all of the previously filed articles and amendments by filing a completely new set of articles of incorporation that includes all of the changes.  In these situations, the prior articles are superseded/replaced by the restated articles of incorporation.  To restate articles of incorporation, file Form 511, RESTATED ARTICLES OF INCORPORATION – NONPROFIT.

5. To change the name of your corporation, the specific article in the articles of incorporation that includes the legal name must be amended, so it is necessary to file Form 515, CERTIFICATE OF AMENDMENT – PROFIT AND NONPROFIT.

 

6. To file an assumed name (a different name under which the organization wishes to do business, an acronym, or a program name), the organization must file Form 541, CERTIFICATE OF ASSUMED NAME. The instructions for the form notify the filer that the "certificate is effective for a period expiring on December 31 of the fifth full calendar year following the year in which it was filed" unless a Form 543, Certificate of Termination, has been filed prior to that date.

 

7. To change the address of the organization or the name of the resident agent during the year prior to filing the Annual Report discussed below, the organization must file Form, 520 CERTIFICATE OF CHANGE OF REGISTERED OFFICE/RESIDENT AGENT. This is a very important filing to enable the Corporation Division to communicate with the organization.

 

8  ANNUAL CORPORATE FILINGS. See below under "Maintaining the Foundation" for information on what is required of nonprofit corporations. 

 

9. OTHER CORPORATION FORMS are available for specific circumstances, and include forms such as EXPEDITED SERVICE REQUEST, RESIGNATION OF AGENT, CERTIFICATE OF ABANDONMENT OF AMENDMENT, CERTIFICATE OF DISSOLUTION, RESERVATION OF NAME, and others.  To view all corporate forms, go to the Corporation Division website Document Management System.

 

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Unincorporated Associations

 

It is possible to form a charity by forming an unincorporated association.  This is sometimes appropriate for a short-term project. However, here are some disadvantages in forming and being a part of an unincorporated association:

 

  • Members, officers and directors of an unincorporated association can be held liable for any acts of the organization.  There is no liability protection as can be provided by a nonprofit corporation.  In other words, if the association were sued, the assets belonging to the individuals involved could be jeopardized.
  • An unincorporated association cannot enter into contracts or be named on titles to property.  Any business transactions must be signed by an individual who would be personally liable for any contractual obligations.
  • There is no official record that the organization exists.  The name is not on file with any state agency, unless the individuals involved file a "doing business as" with the county clerk (which is limited to use within the county).

 

If the choice is made to form an unincorporated association, then a constitution and/or bylaws should be written and adopted to form the association. See below for elements that should be included in bylaws.

 

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Chapters of a State or National Charity

 

Chapters or subsidiaries that have an affiliation with a parent organization should contact the parent to learn about any other legal obligations.  For example, there may be a charter that includes certain mandates, or there may be contractual obligations, trademarks, copyrights, or specific professional standards. If a chapter intends to form as a separate legal entity, go to the Forming a Charity page of this website.


If the national organization receives funds from the chapter or from individual donors, then the national organization may also need to file a registration with the Charitable Trust Section of the  Michigan Department of Attorney General.

 

Also, a chapter or subsidiary may qualify to be included in a group 501(c)(3) ruling that is discussed on the IRS Rules page of this website.

 

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Trusts

 

There are no state law requirements for how trusts must be written. For a discussion of elements that need to be included in a trust and for other resources, go to the Trusts page of this website.

 

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State law provides a number of benefits to charitable organizations, including:

 

  • Exemption from Michigan Sales and Use Tax
    To take advantage of this exemption, complete the Michigan Sales and Use Tax Certificate of Exemption and present this to retailers, along with a copy of the IRS determination letter verifying the organization's tax exempt status.
  • Exemption from Property Taxes
    Contact your local tax assessor to request exemptions for personal and real property that is occupied and used exclusively for the exempt purposes of the organization.
  • While 501(c)(3) organizations are not exempt from paying into the Michigan Unemployment Insurance Agency to cover employees, charities are eligible to either sign up for a direct reimbursement program, so that there is no cost if none of their employees ever file for unemployment insurance; or charities can join a pool of similar organizations to obtain lower raters. One group plan is offered by The 501 Alliance.
  • Charities, unlike most businesses, can operate games of chance as fundraising activities. Most charities will need to obtain a charitable gaming license prior to operating such an event or fundraiser. The Charitable Gaming Division in the Department of Lottery is a source for information. Also, see below under the topic Charitable Gaming.
  • There are a number of specific laws that may provide exemptions or benefits for charities that may not be included in this list. Be sure to check laws that may apply to the specific programs or activities the charity operates. For example, there are specific use tax exemptions that may apply to vehicle donation programs. While this issue is discussed briefly on this website below under Special Fundraisers & Events, a number of other specific exemptions are not included.

 

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The Nonprofit Corporation Act requires nonprofit corporations to file annual reports (Information Updates), accompanied by a filing fee, with the Corporation Division. The annual report form is sent out to nonprofit corporations each year in August and bears an identifying bar code. The report asks for the name of the resident agent, the registered address of the organization and a list of the names and addresses of the members of the board of directors. The law mandates that if an organization fails to file even one report or pay a filing fee for two consecutive years, the organization will be automatically dissolved. If the corporation is automatically dissolved it will be necessary to complete the delinquent and file them with the required filing fee, plus a $5 penalty for each form before the corporate status will be reinstated.

 

If you do not receive the form in the mail, or if the organization cannot locate the form, call the Corporation Division customer service number at 517-241-6470 to request the form. Be sure the contact information (Resident Agent and Registered Address) are always kept up to date to ensure the annual form is sent to the correct address.

 

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Financial Reports

 

Charities Section

 

Audits

Larger organizations that apply for a Charitable Solicitation License must file either a review by an independent auditor or an audit, according to the following thresholds:

 

  • If total support to the organization (contributions) exceeds $500,000 (not including government grants), then an audit by an independent auditor must be submitted with the Application for License to Solicit Donations
  • If total support to the organization (contributions) exceeds $250,000 but does not exceed $250,000 (not including government grants), then either a review or an audit by an independent auditor must be submitted with the Application for License to Solicit Donations.

For more information, see the last page of, and the instructions for, the Initial Solicitation Application/Registration or the Renewal Solicitation Application on the Charities page of the Attorney General's website.

 

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Soliciting Contributions (Registration)

Charitable Organizations and Solicitations Act Requirements

This law requires charities that either solicit or receive charitable contributions in Michigan to file a registration with the Department of Attorney General’s Charitable Trust Section.  Some organizations are exempt from the requirement.

 

Exemptions include:

  • charities that solicit or receive less than $25,000 in contributions in any 12-month period, so long as it is an all-volunteer organization with no paid staff person engaged in helping to solicit or receive funds
  • churches, religious organizations and organizations that are an integral part of a church
  • private foundations or other organizations that solicit contributions only from members, directors, or members of the families of those persons, AND the organization does not invite or encourage members of the general public to contribute or become members of the organization
  • schools / educational institutions that have been authorized to operate by the Michigan Department of Education or the State Board of Education
  • veterans' organizations that have been chartered by Congress
  • charities that receive funding only from one other licensed charitable organization such as a supporting organization
  • licensed hospitals and hospital based foundations and hospital auxiliaries that support only one or more licensed hospitals
  • organizations that are licensed by the Department of Human Services as day care or other organizations providing service to children and families
  • those solicitations that are to benefit one or more named individuals or families (Such solicitations would not be considered charitable solicitations under federal or state law, but the Act does contain a specific exemption for them.)

 

 

New Organizations and First-Time Filers

All new filers should complete and submit either the Initial Solicitation Registration form, along with all requested attachments, or a Request for Exemption if the organization thinks that one of the specific exemptions in the law may apply. Each of the forms has a Checklist in the instructions pages listing required information and attachments that must be included with the submission.


For more information go to the Charities Page of the Attorney General's website.

 

Annual Renewal of the Charitable Solicitation Registration

The charitable solicitation registration expires each year approximately seven months following the end of the organization's fiscal year.  You will be notified of the expiration date when you receive notice that the Charitable Trust Section has approved the license application.  Make a note of this date.

 

The Renewal Solicitation Registration form must be submitted to the Charitable Trust Section 30 days prior to the expiration of the license, along with all required information and attachments.


The Charitable Trust Section will also accept the national multi-state form, the Unified Registration Statement. This is a form that is accepted by almost all states that require licensing or registration for charitable solicitations, including Michigan. The form can be found on the Multi-State Filer Project website.


For more information go to the Charities Page of the Attorney General's website.  

 

Michigan's Supervision of Trustees for Charitable Purposes Act Requirements

Michigan's Attorney General, through the Charitable Trust Section, administers the requirements of this law, commonly called "the charitable trust act." Under the provisions of the law, every charity that holds charitable assets in Michigan must register as a charitable trust with the Charitable Trust Section, unless some specific exemption in the law applies.  Assets include cash, funds, investments, real property, or personal property held by the charity. Under the law, they are considered “charitable trusts” because they hold assets in trust for a charitable purpose, and the board of directors and officers of the charity are the trustee(s) of those assets.  Because the Act contains no threshold amount for registration, charitable assets of ANY value that are held in trust may be subject to registration. To read about the specific exemptions, go to the Supervision of Trustees for Charitable Purposes Act on the Michigan Legislature website.

 

For a more complete discussion of the oversight of the Michigan Attorney General, you may want to read the article “How and Why the Michigan Attorney General Supervises Charitable Trusts.” 

 

Registering a Charitable Trust or Requesting an Exemption

Charitable trust registration may be completed by one of two methods. If the charity must obtain a charitable solicitation license and files, the Initial Application/Registration form, that form automatically registers the charity as well. Charities that do not apply for a charitable solicitation license must file the Charitable Trust Registration Statement and the Charitable Trust Inventory. Some organizations, such as religious organizations, governmental agencies, educational institutions, amateur theater, band and orchestra organizations and hospitals, are exempt from the charitable trust registration requirement, If the organization may be exempt from the registration requirement, you should file the Request for Exemption, along with all required attachments to request a verification of the exempt status.

For more information on charitable trust registration and other requirements, go to the Charities page of the Attorney General's website.

 

You may also choose to e-file forms with the Charitable Trust Section by going to the website and clicking the E-Filing link on the Charities section of the Attorney General's website. E-Filing is free of charge for all Attorney General forms.

 

To maintain the registration file, the charity must file a financial accounting with the Charitable Trust Section six months following the end of each financial year. The reporting requirement may be fulfilled by submitting a copy of the organization's IRS 990, 990-EZ, 990-PF, a bank trust accounting, or a treasurer's report that includes a statement of income and expenses and a balance sheet. Very small organizations that have less than $25,000 in annual gross receipts AND hold less than $100,000 in assets may request a waiver of the annual reporting by calling the Charitable Trust Section at 517-373-1152 and requesting a waiver form. The waiver may be requested only after the organization has completed registration and filed at least one financial report.

 

 

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Professional Fundraisers

Another requirement of the Charitable Organizations and Solicitations Act is that any person, corporation, organization, or other entity that is compensated in any way for planning, conducting, managing or carrying out solicitation of contributions for a charity must obtain a professional fundraiser license from the Attorney General's Charitable Trust Section. To obtain the license, complete and submit the Application for License of Professional Fund Raiser along with a $10,000 bond. There is no license fee. To read more about the procedures and requirements and for links to all of the forms you will need go to the Charities section of the Attorney General's website. The professional fundraiser license expires June 30 each year.

 

Employers and officers of the charity are not considered professional fundraisers unless part or all of their compensation is based on the amount of funds raised. For example, if an development director were paid bonuses based on the success of fundraising efforts, then that person would need to be licensed as a professional fundraiser.

 

Annual license renewal

The renewal application is the same form as for the initial license. The renewal application must be filed prior to the expiration of the license on June 30 each year.

 

Professional Solicitors

Those individuals who are hired by licensed professional fundraisers to conduct solicitations -- those who make phone calls or go door-to-door -- must be registered with the Charitable Trust Section. There is a one-page Registration of Professional Solicitor form to be completed and submitted for each individual solicitor.

 

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Special Fundraisers & Events

There are many kinds of fundraising activities that charities may choose to conduct. Below many of these activities are listed, with links to other websites and to pages on this website where additional information can be found. Please note that charities conducting these solicitation and fundraising activities must apply for a charitable solicitation license, unless they are specifically exempted from the requirement. See the section above on applying for a charitable solicitation license from the Attorney General's Charitable Trust Section. Also, if professional fundraisers are used to help carry out these activities, they may need to obtain a Professional Fundraiser License from the Attorney General's Charitable Trust Section. See the section above for information on Professional Fundraiser Licenses.


Charitable Auctions
There is no separate law that regulates charitable auctions aside from the charitable solicitation licensing requirement. Because the organization will be selling merchandise, the organization will be required to pay 6% sales tax on the items sold. Sales tax applies only to the fair market value of the item, not for the total auction bid. The charity may need to obtain a license from the State of Michigan to allow them to collect the sales tax from the purchaser/winning bidder. To find out more about Sales Tax, go to the section below on State and Local Taxes or go directly to the State of Michigan, Department of Treasury website. 

Because auctions are not games of chance, they are not regulated by the State's Charitable Gaming Division, which regulates Bingo, raffles and other gaming activities.


Charitable Games (Bingo, Raffles, Texas Hold-em Tournaments , Las Vegas Nights)
These events involve games of chance that are subject to licensing by the Michigan Department of Lottery, Charitable Gaming Division. To learn more about the licensing requirements and a list of training sessions, go to the Charitable Gaming Division website.
The section below on Charitable Gaming also has information and links.

Dinners, Dances
Most dinners sponsored by charities as fundraisers or celebrations are either handled by professional caterers and establishments that already comply with food handling requirements. However, if the charity conducts such activities on their own, check with the local Environmental Health or Community Health agency or go to the Michigan Department of Agriculture webpage to learn about requirements and licenses. Note that potlucks operated by charities that serve homemade foods are exempt from the licensing requirement. If an organization conducts any activities where gifts are distributed, for example, doorprizes, the organization may need to obtain a raffle license. See the section below on Charitable Gaming for more information and links to find out how the rules apply.

If the charity engages in the sale of alcoholic beverages
they may need to obtain a special liquor license for the event. The Special Liquor License Application form provides information to answer many of the questions. The Liquor Commission's FAQs for Special Liquor Licenses also answers questions you may have.

Door-to-Door Solicitations
Before conducting door-to-door solicitations, check with local government agencies for local ordinances that prohibit or regulate such activities.

Golf Outings
Even though participants pay to participate in golf events, the charity may still be subject to the charitable solicitation license requirement, since the charity usually solicits sponsors, prizes and other donations to help carry out the event. Also, a donation may be a part of the fee for participating. While most events are conducted at a golf course that already has the required food handling and liquor licenses, it is important to note that, if the charity is directly involved in these activities, then they may need to obtain their licenses. The Special Liquor License Application form provides information to answer many of the questions. The Liquor Commission's FAQs for Special Liquor Licenses also answers questions you may have.

Internet Solicitations
Charities that solicit donations through their own websites or websites of other organizations or businesses must apply for a charitable solicitation license if they wish to obtain contributions from Michigan donors. If a Michigan organization solicits contributions by way of websites, it will be presumed that the charity intends to solicit Michigan donors and will accept contributions from Michigan donors. If an organization does not wish to apply for the Michigan charitable solicitation license, then any web solicitations should contain a clear message that no contributions will be accepted from Michigan donors and that the organization does not intend to solicit Michigan donors. If the organization is located in Michigan, however, registration as a charitable trust will still be required. See the section below for rules and procedures for charitable trust registration.

Telephone Solicitations

Telephone solicitations are subject to Attorney General oversight. Charities that solicit contributions through telephone solicitations must apply for a charitable solicitation license. Any professional contractor who conducts, manages or plans a telephone solicitation campaign must obtain a
professional fundraiser license; individual solicitors who work for those fundraisers must also register as professional solicitors.

Vehicle & Boat Donations
Charities that solicit donations of cars, boats or other merchandise are subject to the charitable solicitation license requirements of the Attorney General. Some vehicle donations in Michigan qualify for tax credits. For more information fo to the
Michigan Department of Treasury website.


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Charitable Trust Registration

 

Michigan's Supervision of Trustees for Charitable Purposes Act

Michigan's Attorney General, through the Charitable Trust Section, administers the requirements of this law, commonly called "the charitable trust act." Under the provisions of the law, every charity that holds charitable assets in Michigan must register as a charitable trust with the Charitable Trust Section, unless some specific exemption in the law applies. Assets include cash, funds, investments, real property, or personal property held by the charity. Under the law, the charities are considered “charitable trusts” because they hold assets in trust for a charitable purpose, and the board of directors and officers of the charity are the trustee(s) of those assets.  Because the Act contains no threshold amount for registration, charitable assets of ANY value that are held in trust are subject to registration.

 

For a more complete discussion of the oversight of the Michigan Attorney General, you may want to read the article “How and Why the Michigan Attorney General Supervises Charitable Trusts” It is found at http://www.mi.gov/ag/0,1607,7-164-17334_18095-45038--,00.html

 

Charitable trust registration requires the filing of two forms, the Charitable Trust Registration Statement and the Charitable Trust Inventory. To enable the Charitable Trust Section to create an accurate and complete file and to document any possible exemptions that may apply, you should also file the Charitable Trust/Charitable Solicitation Questionnaire, along with all required attachments.  You will find links to all forms and a more complete description of forms and procedures at the Charities section of the Attorney General's website. Here are also direct links to the Charitable Trust Registration Statement and the Charitable Trust Inventory.

 

You may also choose to e-file forms with the Charitable Trust Section by going to the website and clicking the E-Filing link on the Charities section of the Attorney General's website. E-Filing is free of charge for all Attorney General forms.

 

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You may also call the Charitable Gaming Division at 517-335-5780

 

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Document Disclosure

 

While federal IRS rules require charities to disclose certain information to the public, Michigan laws requiring disclosure of information usually apply to public agencies and public funds. Michigan's Freedom of Information Act (FOIA) (Public Act 442 of 1976), located in the Michigan Compiled Laws at MCL Sections 15.231 - 15. 246) deals with what documents must be disclosed by "public bodies." The definition of "public body" focuses on governmental agencies; however, there are some limited circumstances where a charity may be subject to the provisions of FOIA. For example, FOIA most likely applies to private organizations that receive most of their funds from government agencies or from millage assessments.

 

Getting advice from legal counsel who is familiar with nonprofit organizations and FOIA requirements is particularly wise for FOIA questions, since there is some confusion in written opinions and court cases about whether FOIA applies to nonprofit organizations.  There is a 1989 Attorney General Opinion that found that including nonprofits in the FOIA was unconstitutional, since the Act was intended to deal only with governmental entities. (OAG 6563)  However, some court opinions, issued since the 1989 Attorney General Opinion, have found that the FOIA does apply under certain circumstances. ( Jackson v Easter Michigan University Foundation 215 Mich App 240 and Sclafani v Domestic Violence Escape, 255 Mich App 260) Below is some very general guidance as to when FOIA applies, or may apply, to a nonprofit organization. FOIA may apply if:

 

  • the charity is formed under a specific state or local law or ordinance that specifies that it must comply with the FOIA;
  • the charity is created by state or local authority, i.e., a resolution is passed by a county board of commissioners to create a separate organization to shelter animals or provide emergency services;
  • the charity is “primarily funded” by or through a state or local authority (for example, an emergency response team that is funded by millage assessments); courts have ruled that “primarily funded” means 50% or more;
  • the charity has specified in its creating documents that it will be subject to the FOIA

 

Meetings

 

The Open Meetings Act (OMA) (Public Act 267 of 1976) is, in general, much narrower in its application than FOIA.  Very few nonprofits are subject to its requirements to provide public notice to meetings or conduct meetings that are open to the general public.  Although having an “open meeting” policy may be a good management principle for many nonprofits, it is very seldom a legal requirement.  OMA may apply if:

 

  • the charity is formed by a Michigan law or local ordinance that specifies that it must comply with the OMA;
  • the charity is formed by a city to carry out certain public purposes on behalf of the city;
  • the charity has specified in its creating documents that it will be subject to the OMA

 

 

 Record Retention & Disposal

 

There are no specific law that specifically provides for how long all charities must preserve records, although there may be requirements in specific laws that apply to certain programs or activities.  Also, as a good management practice charities should implement policies for how long documents should be kept. A chart in The Michigan Nonprofit Management Manual, 5th Edition, available for sale on MNA's online bookstore provides some guidelines for charities on this issue.

 

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Business Tax

 

Charities are exempt from the payment of Michigan business taxes under section 207 of the Michigan Business Tax Act of 2007.

 

Sales Tax 

 

Purchases

Form 3372 found on the Sales and Use Tax Information page on the Michigan Department of Treasury website. You may complete this form and take it to the retailer to claim an exemption, along with a copy of the IRS determination letter documenting your 501(c)(3) exemption. Additional information about sales tax exemptions can be found on the "Common Sales and Use Tax Exemptions and Requirements" page of the Michigan Department of Treasury's website. The Michigan Department of Treasury offers other resources to assist in understanding, paying, and claiming exemptions of sales tax, including a "New Businesses Webinar Presentation."

 

Selling Merchandise

Charities ARE NOT exempt from paying Sales Tax when they sell merchandise. Depending on the amount of sales during the year, the charity will need to remit sales tax to the State of Michigan periodically (annually, quarterly or monthly, depending on the amount of tax owed to the State). The charity will also need to obtain a license to collect sales tax from the purchasers. The Department of Treasury's Revenue Administrative Bulletin 1995-3 states exempts most nonprofit organizations from paying sales tax on retail sales if the "aggregate sales at retail for the calendar year are less than "5,000." If sales exceed that threshold, then tax is due on all sales for the year.

 

The Michigan Department of Treasury  website has information on what you need to do to apply for a license and how and when you need to remit the tax to the State. The Instruction Book on the website answers many of the questions, but you will need to go to the Department of Treasury link above for all of the forms and information you need. The Michigan Department of Treasury also offers other resources to assist in understanding, paying, and claiming exemptions of sales tax, including a "New Businesses Webinar Presentation."

 

Property Taxes
Real property that is owned by charitable organizations may be exempt from property taxes if the property is occupied only by the charity and the property is used solely for the purpose of carrying out the charitable mission of the organization. The Michigan General Property Tax Act in Sections 211.7 -- 211.7kk describes various types of property that is exempt from taxation. Most charitable organizations will need to refer to Section 211.7n (theaters, libraries, educational institutions, and those fostering the development of literature, music, painting, or sculpture) and Section 211.7o (charitable organizations, including conservation organizations, homes or nursing facilities for the elderly or infirm, and others). Scroll through the entire list of exemptions to find other specific sections on youth camps, houses of worship and parsonages, health clinics and other specific categories of charitable organizations that may hold property.

To claim the tax exemption, contact the local tax assessor.

 

Employment Taxes

For a discussion and links go to the State Employment Taxes section of the Employment Laws page of this website.

 

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Employment Laws

 


 

 

Whistleblower Protection Act prohibits employers from retaliating against an employee who reports, or intends to report, a violation of state law by the employer. Section 2 of the Act (Michigan Compiled Laws (MCL) 15.362; Public Act 469 of 1980) states as follows:

 

"An employer shall not discharge, threaten, or otherwise discriminate against an employee regarding the employee's compensation, terms, conditions, location, or privileges of employment because the employee, or a person acting on behalf of the employee, reports or is about to report, verbally or in writing, a violation or a suspected violation of a law or regulation or rule promulgated pursuant to law of this state, a political subdivision of this state, or the United States to a public body, unless the employee knows that the report is false, or because an employee is requested by a public body to participate in an investigation, hearing, or inquiry held by that public body, or a court action."

 

The law also requires employers to post notices to inform employees of their rights under the law. You may print a poster on the Michigan Occupational Safety and Health (MIOSHA) portion of the Michigan website or you may order posters by email.

 

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Dissolving a Nonprofit Corporation

Michigan's Nonprofit Corporation Act provides for the filing of a Certificate of Dissolution to dissolve the corporation. Michigan's Dissolution of Charitable Purposes Corporations Act requires that organizations operating under a charitable purpose obtain the approval of the Michigan Attorney General prior to dissolution. The Corporation Division will require a copy of a letter from the Attorney General's Charitable Trust Section approving the dissolution, along with the filing of the Certificate of Dissolution. A more complete discussion of dissolution can be found on the Dissolving a Corporation page of this website.

 

The Michigan Attorney General also, under the Supervision of Trustees for Charitable Purposes Act, has authority to oversee the use of charitable assets in Michigan.

 

Another filing that is not an absolute requirement any longer is with the Michigan Department of Treasury.  At one time, corporations were required to obtain a tax clearance from the Department of Treasury prior to filing the Certificate of Dissolution.  Even though it is no longer a requirement, it is wise to get a certification that there are no taxes owed to the State of Michigan.  The form is found at Department of Treasury website.  A copy of the articles of incorporation showing that the organization is a nonprofit and the determination letter from the IRS should accompany the form.

 

 

Unincorporated Associations

Terminating an unincorporated association is determined by the rules of the organization. However, if the organization holds charitable assets, the use and disposition of those assets is under the authority of the Michigan Attorney General. Many aspects of dissolution of charitable corporations can also be helpful in considering the dissolution of an unincorporated entity. A more complete discussion of the dissolution process can be found on the Dissolving a Corporation page of this website.

 

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Mergers

Because the merging charities may hold charitable assets, the Attorney General's Charitable Trust Section should be notified of the merger. The following documents should be filed with the Charitable Trust Section:
 

  • A letter explaining the transaction
  • A copy of the merger agreement
  • A copy of the plan of merger
  • Articles of incorporation of the non-survivor
  • IRS returns and financial statements for the non-survivor for the two most recent years
  • Filings to properly register the survivor unless a charitable trust file already exists. See above for more information regarding Attorney General Oversight 

To complete the merger, Form 550 must be filed with the Corporation Division of the Department of Licensing and Regulatory Affairs.

 

Conversions 
If a charitable corporation is converting to a non-charitable corporation, the following must be filed with the Charitable Trust Section for a letter of approval prior to filing with the Corporation Division:

  • An explanation of why the organization incorporated as a nonprofit and why it will be converted to a for profit
  • Current IRS status
  • IRS returns for the last three years
  • Audits for the past three years, if prepared
  • Articles of incorporation, if not already on file with the Attorney General.


To find more information about the Attorney General's authority over charitable organizations and assets, go to the Charities Section of the Attorney General's website.

 

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Index of Laws

 

Community Foundations

Under Michigan's tax law, community foundations that serve areas of Michigan may be certified to accept donations that are eligible as a tax credit for the donor, directly reducing the donor's tax bill. The Michigan Department of Treasury has an application process to become certified as a community foundation that is eligible for this benefit. However, only one community foundation can be certified for any area of the state. Since all areas of the State of Michigan are currently served by certified community foundations, no applications are being accepted.

The State of Michigan website offers a list of currently certified community foundations and references to the laws and rules that provide for certification.

 

Volunteers

Michigan has a Volunteer Registry program where those who wish can add their name and credentials to be called in a time of emergency. The website on the Michigan Department of Community Health website offers some information regarding legal issues and volunteers. Go to the Volunteer Registry page and link to "Legal and Regulatory FAQs."

Other issues to consider are:

  • liabiilty of the charity for acts committed by volunteers:
    The Nonprofit Corporation Act permits corporations to indemnify volunteer directors.
    The charity should consider purchasing a liability insurance policy.
  • Procedures for managing volunteers to protect against charges of discrimination or unfair practices
  • Procedures for dismissing volunteers.

While these issues are not specifically covered in statutes, setting consistent policies will provide the charity with protection against charges of unfair treatment. For more information and resources on setting policies, go to the MNA online bookstore, www.boardsource.org and www.managementhelp.org.

 

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 For lists of other resources go to the Other Resources page on the website. The list of resources is still being developed.

 

NOTE: The Michigan Nonprofit Association publication, Michigan Nonprofit Management Manual, 5th Edition, available for sale on MNA's website also discusses state legal requirements for Michigan Nonprofits.