At a Glance

North Carolina nonprofits must file annual IRS Form 990s by May 15 (for calendar-year organizations) and renew their Charitable Solicitation License with the state by the same deadline. Missing these filings can result in penalties, late fees, or loss of tax-exempt status after three consecutive missed federal filings.

Introduction

Running a nonprofit in North Carolina comes with numerous responsibilities, and staying compliant with annual filing requirements sits at the top of that list. Though paperwork might not be the most exciting part of fulfilling your mission, it’s absolutely essential for maintaining your organization’s legal status and tax benefits.

With expert service and modern technology, navigating through federal Form 990s, charitable solicitation licenses, and tax exemption maintenance doesn’t have to be overwhelming. Each filing serves a specific purpose in ensuring your nonprofit remains transparent and accountable to both the government and your supporters.

This step-by-step guide breaks down all the critical nonprofit annual filing requirements you need to know about—from federal obligations to North Carolina-specific regulations. We’ll walk you through exactly what to file, when to file it, and how to avoid costly penalties or status revocations.

Understand Your Federal Filing Obligations

Every tax-exempt nonprofit must file an annual information return with the IRS to maintain its status. Meeting these federal obligations should be a top priority in your compliance strategy.

Determine which Form 990 to file

The IRS requires different versions of Form 990 based on your nonprofit’s financial activity. Choosing the correct form is essential for proper compliance:

• Form 990-N (e-Postcard): For organizations with gross receipts normally $50,000 or less.
• Form 990-EZ: For organizations with gross receipts less than $200,000 and total assets less than $500,000.
• Form 990: Required for organizations with gross receipts of $200,000 or more or total assets of $500,000 or more.
• Form 990-PF: Required for private foundations regardless of financial status.

Additionally, if your nonprofit earns $1,000 or more from activities unrelated to your mission, you must report this on Form 990-T.

Know your filing deadlines

Your Form 990 deadline falls on the 15th day of the fifth month after your tax year ends. For organizations operating on a calendar year (January 1 – December 31), this means May 15 of the following year.

If you need more time, file Form 8868 to request an automatic six-month extension. This would extend your deadline to November 15 for calendar-year organizations. However, the 990-N deadline cannot be extended, although there’s no penalty for late submission unless it’s your third consecutive missed filing.

Tracking your specific deadline is crucial since it varies based on your fiscal year. For instance, organizations with a fiscal year ending July 31 must file by December 15. We help track these varying deadlines to ensure timely submission across different fiscal year schedules.

Consequences of non-compliance

Failing to meet federal filing requirements carries serious penalties. Organizations that miss their deadline face daily fines of $20 per day the return is late. For organizations with gross receipts exceeding $1,352,000, this penalty increases to $135 per day with a maximum penalty of $67,500.

Furthermore, if your organization files an incomplete return or provides incorrect information, similar penalties apply. The maximum penalty for most organizations is the lesser of $12,000 or 5% of gross receipts for the year.

The most severe consequence comes from failing to file for three consecutive years—automatic revocation of your tax-exempt status.

1. Your organization would need to pay corporate income taxes
2. Donations would no longer be tax-deductible for donors
3. You’d need to reapply for tax-exempt status, a lengthy and costly process

Beyond financial penalties, non-compliance can damage donor trust and jeopardize grant funding opportunities. Many foundations and government agencies only support organizations fully compliant with tax regulations.

Renew Your North Carolina Charitable Solicitation License

Beyond federal requirements, North Carolina nonprofits must maintain compliance with state regulations, primarily through the Charitable Solicitation License (CSL). This license ensures organizations soliciting donations operate with transparency and accountability.

Who needs to register

Most nonprofits that solicit contributions in North Carolina must register with the Secretary of State’s Charitable Solicitation Licensing Division (919-814-5400, sosnc.gov). This requirement applies to:

• North Carolina-based organizations soliciting within the state
• Out-of-state entities fundraising in North Carolina
• Organizations using professional fundraisers or consultants
• Entities participating in charitable sales promotions

The definition of “solicitation” is comprehensive, covering traditional fundraising methods, online campaigns, and even placing collection receptacles in public spaces. Any organization requesting public contributions for charitable purposes must typically register before beginning fundraising activities.

Filing deadlines and fees

Your CSL renewal is due on the 15th day of the fifth month after your fiscal year ends. For example, with a December 31 fiscal year end, your renewal deadline is May 15. The state automatically grants a two-month extension, with the possibility of requesting an additional four-month extension by submitting IRS Form 8868.

The renewal fee structure is based on your previous fiscal year’s contributions:

• $0 if contributions were less than $5,000
• $50 for contributions between $5,000 and $99,999
• $100 for contributions between $100,000 and $199,999
• $200 for contributions of $200,000 or more

Missing your renewal deadline triggers a $25 late fee for each month or partial month the filing is overdue. We manage these renewal deadlines alongside federal obligations to prevent costly penalties and ensure compliance across all jurisdictions.

Required attachments and disclosures

To renew your CSL, you must submit the same application used for initial registration while selecting the renewal option. Essential documentation includes:

• A statement of your charity’s purpose and how contributions will be used
• List of major program activities
• Copy of IRS determination letter (if not previously submitted)
• Names under which your entity solicits contributions
• Documentation of legal authority to use your entity name or DBAs
• List of states where authorized to solicit
• Names and addresses of all directors, officers, and trustees
• Information on individuals responsible for solicitation activities
• Details on custody and distribution of contributions
• Total contributions received in the last fiscal year

Additionally, you must disclose whether any officers have been prohibited from soliciting in any jurisdiction or found engaging in unlawful practices related to charitable assets.

Exemptions and how to apply

Several categories of organizations are exempt from CSL requirements. These include:

• Religious institutions
• Government agencies
• Educational institutions accredited by regional accrediting bodies
• Licensed hospitals and their foundations
• Noncommercial radio or television stations
• Volunteer fire departments and emergency services
• YMCAs and YWCAs
• Nonprofit continuing care facilities

Organizations receiving less than $50,000 in annual contributions that don’t compensate officers, trustees, fundraisers, or solicitors may also qualify for exemption.

To request an exemption, submit a written application with supporting documentation through the Secretary of State website. Certain exemptions require annual renewal, particularly those based on contribution thresholds.

Apply for Sales and Use Tax Refunds

Unlike many states, North Carolina currently requires 501(c)(3) nonprofits to pay sales tax at the time of purchase. Fortunately, qualifying organizations can reclaim these funds through a semiannual refund process, which can significantly impact your operational budget.

Eligibility for sales tax refunds

North Carolina’s tax system operates differently from most states. In fact, it is one of only two states (along with Utah) that uses a refund system instead of point-of-sale exemptions. Under North Carolina General Statute § 105-164.14(b), qualifying nonprofits can request refunds of state, county, and transit sales and use taxes paid on direct purchases that support the organization’s mission.

To qualify for these refunds, your organization must:

• Hold valid 501(c)(3) status with the IRS
• Register with the NC Department of Revenue for a sales tax refund account ID (beginning with “72”)
• Use purchased items directly for carrying out your nonprofit work
• Submit proper documentation within filing deadlines

This refund process covers both direct purchases and reimbursements to authorized individuals who make purchases on behalf of your nonprofit.

Filing Form E-585

Initially, you must register with the Department of Revenue using Form E-585NPA, “Application for Nonprofit Sales and Use Tax Refund Account ID”. This one-time registration is required before submitting any refund claims.

After receiving your nonprofit account ID, submit Form E-585, “Nonprofit and Governmental Entity Claim for Refund State, County, and Transit Sales and Use Taxes”. This form requires you to:

• Provide your nine-digit nonprofit sales tax refund account ID
• Separate sales tax by category (state, food, county, and transit)
• List qualifying purchases with corresponding tax amounts
• Complete Form E-536R if purchases were made in multiple counties

Tax refunds are subject to caps. For any given state fiscal year, the total amount of refunds is capped. The aggregate refund for state sales and use taxes cannot exceed $45,000,000, and the aggregate refund for local sales and use taxes cannot exceed $20,000,000.

Deadlines and documentation

The sales tax refund operates on a semiannual schedule:

• First period (January 1-June 30): File by October 15 of the same year
• Second period (July 1-December 31): File by April 15 of the following year

These deadlines are strictly enforced—you cannot combine multiple periods on a single form. Additionally, claims filed more than three years after the due date are barred by statute.

This system creates added record-keeping burdens. You must maintain detailed records of all sales tax paid during each period. We help organize these filing details and track deadlines to streamline your refund process and ensure proper documentation.

You don’t need to submit receipts and invoices with your Form E-585, but you must retain them for at least three years after filing in case of audit. This extended recordkeeping requirement adds administrative overhead that smaller nonprofits especially should plan for.

This refund process creates temporary cash flow challenges for many organizations, effectively providing an interest-free “loan” to the state until refunds are processed. For smaller nonprofits, the administrative burden of tracking sales tax may sometimes exceed the refund amount, so evaluate whether the potential refund justifies the effort required to claim it.

Maintain State Tax and Property Exemptions

Maintaining your tax exemptions at both federal and state levels requires regular attention to different requirements. In North Carolina, tax exemptions for nonprofits operate under distinct systems that need separate oversight to ensure ongoing compliance.

Corporate income and franchise tax exemption

North Carolina automatically extends state income tax exemption to organizations that qualify for federal tax-exempt status. This streamlined approach means:

• No formal application or fee is required to obtain state franchise and income tax exemption
• Organizations exempt from federal income tax are exempt from North Carolina corporate income tax on revenue not classified as unrelated business income
• Qualified organizations are likewise exempt from franchise taxes under Article 3 of North Carolina Revenue Law

Despite this automatic qualification, it’s beneficial to request a letter of tax exemption from the North Carolina Department of Revenue (877-252-3052, ncdor.gov). Without this documentation, your nonprofit may be considered subject to franchise and corporate income tax. To obtain this letter, submit:

• Articles of Incorporation
• Bylaws
• Federal Determination Letter (if applicable)

The Department doesn’t issue “exempt numbers” but provides letters confirming your exempt status.

Property tax exemption process

Federal tax exemption does not automatically grant property tax exemption. Property tax exemption in North Carolina requires meeting two distinct criteria:

1. The property must be owned by a qualified organization
2. The property must be used for an exempt purpose

All property is presumed taxable unless specifically exempted by statute. To secure exemption, submit an application to your county tax assessor under G.S. 105-282.1.

After initial approval, you’re typically not required to file applications in subsequent years except when:

• New property is acquired
• Improvements are added or removed
• Changes occur in property use or organizational qualifications

Property tax exemptions can be partial—if only a portion of your property satisfies use requirements, that portion can be exempt while the rest remains taxable.

When to reapply or update

North Carolina doesn’t require renewal applications for corporate income tax exemption. Your responsibilities include:

• Notifying the county assessor of any qualifying changes by filing a new property tax exemption application during the listing period immediately following the year changes occurred
• Maintaining detailed records the Department may request to verify your tax status
• Ensuring continued compliance with original qualifying criteria

Many other states have implemented annual renewal requirements or payment in lieu of taxes (PILOTs) for nonprofits, making North Carolina’s system more favorable for maintaining tax exemptions once established.

Ensure Public Disclosure and Transparency

Transparency serves as the foundation of nonprofit credibility. Beyond compliance requirements, public disclosure demonstrates your commitment to ethical operations.

Making Form 990 available to the public

Tax-exempt organizations must legally make their three most recent annual information returns (Form 990, 990-EZ, or 990-PF) available for public inspection. This obligation extends to:

• Providing copies within 30 days for written requests
• Making documents available immediately for in-person requests
• Allowing inspection during regular business hours at your principal office

You may charge reasonable copying fees (up to 20 cents per page) plus actual postage costs. Failure to comply with these requirements can result in penalties of $5,000 for each willful violation.

Posting on GuideStar or your website

Many nonprofits exceed minimum requirements by proactively sharing financial information. GuideStar (now part of Candid) provides an ideal platform for transparency, hosting information for more than 2.7 million U.S. charitable organizations.

To maximize transparency:

• Update your GuideStar profile with mission statements, leadership information, and financial data
• Add your Form 990 promptly after IRS acceptance
• Include management discussion and analysis documents
• Upload your annual report and audited financial statements

This effort yields tangible benefits. Nonprofits with GuideStar’s Gold or Platinum Seals of Transparency receive twice as many profile views. These organizations typically receive donations averaging 11% higher than those with lower transparency ratings.

Disclosure requirements for fundraising materials

Fundraising communications must include specific disclosures. These disclosures help donors make informed decisions while protecting your organization from accusations of misleading practices.

Many state charitable solicitation statutes mandate disclosure language on solicitation materials, including:

• Your organization’s legal name and address
• Tax deductibility status of contributions
• Purpose of solicited donations
• Registration status in applicable states

Providing financial transparency and these disclosures builds donor trust and confidence in your nonprofit’s operations.

Conclusion

Maintaining your North Carolina nonprofit’s compliance requires attention to several critical annual filing requirements. Establishing a structured compliance calendar helps you stay ahead of deadlines and preserve your organization’s good standing. Federal Form 990 filings serve as your primary obligation, with penalties for non-compliance ranging from daily fines to potential revocation of tax-exempt status after three consecutive missed filings.

Your North Carolina Charitable Solicitation License needs regular renewal based on your fiscal year. This essential state requirement ensures transparency when soliciting donations from the public. Meanwhile, the unique sales tax refund system in North Carolina demands careful record-keeping, though the potential financial benefits often justify the administrative effort.

While federal tax exemption automatically extends to state income and franchise taxes, property tax exemptions require separate applications and ongoing compliance with usage requirements. Throughout all these processes, public disclosure remains paramount—not just for legal compliance but also for donor trust.

Successful nonprofit management means balancing your mission work with regulatory requirements. Labyrinth, Inc. can streamline these administrative responsibilities, helping nonprofits track deadlines across multiple jurisdictions and maintain good standing. With experienced specialists managing the preparation and filing of annual reports and charitable registration renewals, nonprofit leaders can focus on mission-critical work while ensuring accurate, timely compliance.

Remember, these annual filing requirements exist to ensure nonprofits operate with transparency and integrity. Though paperwork might seem removed from your core mission, timely compliance ultimately supports your ability to serve your community effectively and sustainably for years to come.

Frequently Asked Questions