Forming a Not-for-profit Corporation in New York State

Where to go for Forms and Information

Updated April 2022

TECHNICAL PAPER SERIES

NEW YORK STATE TUG HILL COMMISSION

DULLES STATE OFFICE BUILDING · 317 WASHINGTON STREET · WATERTOWN, NY 13601 · (315) 785-2380 · WWW.TUGHILL.ORG

The Tug Hill Commission Technical and Is-

sue Paper Series are designed to help local

officials and citizens in the Tug Hill region

and other rural parts of New York State. The

Technical Paper Series provides guidance on

procedures based on questions frequently re-

ceived by the Commission. The Issue Paper

Series provides background on key issues

facing the region without taking advocacy po-

sitions. Other papers in each series are avail-

able from the Tug Hill Commission. Please call

us or visit our website for more information.

TABLE OF CONTENTS

INTRODUCTION ...................................................................................................................................................... 1

DOES YOUR ORGANIZATION NEED TO INCORPORATE? ........................................................................... 1

DOES YOUR ORGANIZATION NEED TO OBTAIN TAX-EXEMPT STATUS? ............................................. 1

FEDERAL ID# ............................................................................................................................................................. 2

INCORPORATION ................................................................................................................................................... 2

INCORPORATING/CHARTERING THROUGH THE NYS EDUCATION DEPARTMENT ......................... 3

EXEMPTION FROM NEW YORK STATE SALES TAX ..................................................................................... 4

501(C)(3) TAX-EXEMPT STATUS .......................................................................................................................... 4

OTHER 501(C) TAX-EXEMPT ORGANIZATION ............................................................................................... 5

FINAL WORDS OF ADVICE .................................................................................................................................. 5

The Tug Hill Commission Technical and Issue Paper Series are designed to help local officials

and citizens in the Tug Hill region and other rural parts of New York State. The Technical

Paper Series provides guidance on procedures based on questions frequently received by the

Commission. The Issue Paper Series provides background on key issues facing the region

without taking advocacy positions. Other papers in each series are available from the Tug Hill

Commission at the address and phone number on the cover.

Introduction

This document provides an overview of the process and forms required for groups considering

incorporation in New York State, although some of the information is also applicable to groups

acting as “unincorporated associations.” Its intent is to point you in the right direction, so you

know where to go for required forms and more definitive guidance. Although incorporating as a

not-for-profit organization or filing for tax-exempt status does not require legal counsel or

assistance from an accounting professional, such assistance is advisable as the paperwork can be

extensive and complex. We suggest that your organization contact the identified agencies for

clarification on any questions you might have, as it may prevent errors that would delay the

process. As with any enterprise concerning funds and their transference, always remember to

keep accurate and concise records of all correspondence and transactions. The information in this

booklet reflects changes to the Not-for-Profit Corporation Law that were enacted when the

Legislature passed the Nonprofit Revitalization Act of 2013.

Does your organization need to incorporate?

If the group plans on doing extensive fundraising, operating an ongoing program, being in

existence for a long time, or seeking tax-exempt status through the IRS, then incorporation will

likely be necessary.

If your organization plans to conduct short-term, small-scale fundraising, then incorporation may

be an unnecessarily long and expensive process. It may be to the group’s advantage to simply

operate as an “unincorporated association.” Generally, if your organization will be receiving less

than $50,000 a year for no more than three years and your assets are under $250,000, you may

want to consider operation as an “unincorporated association.”

Many entities and private foundations require that applicants for funding have tax-exempt status,

which would first require incorporation. However, such entities often do fund requests from local

governments (which are automatically considered tax-exempt). Take the example of a group of

citizens raising funds for a town or village playground project that needs a sizeable grant to make

the project a reality. As an unincorporated association, the group may not be an eligible applicant

for a certain grant program. However, since the project is on town/village property, the

municipality could apply for the grant and the citizens group could donate the funds it has raised

to the municipality, designating those funds for the intended project. In this case, it is not

necessary for the citizens group to incorporate and obtain tax-exempt status for the project to

move forward.

Does your organization need to obtain tax-exempt status?

In most fundraising cases, tax-exempt status refers to 501(c)(3) organizations to which contri-

butions are tax deductible under the Internal Revenue Service code. There are several other

501(c) type tax-exempt organizations which are discussed further at the end of this document.

For our purposes, this section will focus on 501(c)(3) organizations.

If the organization will normally be raising more than $5,000 per year, then filing IRS Form

1023 to apply for 501(c)(3) status is required (see below). The “gross receipts test” used by the

IRS states that an organization may have gross receipts of $7,500 or less in its first year, $12,000

or less in its first two years, or $15,000 or less in the current year and preceding two years before

it is required to file Form 1023. Under certain conditions you may be able to file a Form 1023-

EZ; check the Form 1023 interactive website noted in the reference section of this document for

further details.

Federal ID#

Application for a Federal Employer Identification Number is an online process that once started,

must be completed upon entering the system on the web site. Detailed instructions are provided

at the Federal Employer ID number link listed on the reference page of this document (page 6).

An “unincorporated association” should obtain a federal employer identification number (EIN) if

it plans on keeping funds in a non-interest-bearing bank account (highly recommended due to

further tax issues with interest income from any other type of account).

Incorporation

Most organizations in New York State incorporate through the New York State Department of

State under Section 402 of the state’s Not-for-Profit Corporation Law. Questions regarding any

part of the incorporation process may be directed to:

Division of Corporations

NYS Department of State

One Commerce Plaza

99 Washington Street

Albany, NY 12231

Phone: (518) 473-2492

DOS also has information available on its website. Please refer to the site listed on the reference

page of this document for further detailed instructions or click here.

To incorporate, an organization must file a Certificate of Incorporation with DOS at the above

address. The statutory filing fee is $75, payable by certified check, attorney’s check, or postal

money order. Expedited processing (24-hour turn-around) can be requested for an additional $25

fee.

Another helpful guide to the incorporation process is the document entitled “Procedures for

Forming and Changing Not-For-Profit Corporations in New York,” available from the Charities

Bureau at the State Attorney General’s Office.

Certificate of Incorporation

The Certificate of Incorporation (sometimes referred to as the articles of incorporation or

constitution) provides the framework under which the organization will operate and serves as its

fundamental law. It defines and limits the organization’s purpose and scope of activities. The

document should be inclusive enough to meet the needs of the organization but should not be too

complex or rigid. Instructions for amending the organization’s name or its Certificate and filing

such changes with DOS are available on its web site.

The required contents of a Certificate of Incorporation are defined under Section 402 of NYS

Not-For-Profit Corporation Law. If the organization plans to file for 501(c)(3) exempt status

from the IRS, then the Certificate of Incorporation should be consistent with IRS requirements.

The IRS Publication 557, entitled “Tax Exempt Status for Your Organization,” includes sample

Articles of Incorporation that may be used as a guide.

NOTE: The Certificate of Incorporation is not the same as the organization’s bylaws. The

bylaws are an internal document that details the organization’s operating procedures. Bylaws

should be comprehensive enough to allow the organization to operate efficiently without

contradicting its constitution or Certificate of Incorporation. Bylaws do not need to be filed with

the Certificate of Incorporation and may be amended internally.

Charities Registration

Incorporated not-for-profits and any organization utilizing the services of a professional

fundraiser or fundraising firm must file a Charities Registration Statement, Form CHAR410,

with the Charities Bureau of the New York State Attorney General’s Office. The fee is $25. The

form may be filed while incorporation is still pending. Once registered, the organization must

annually file the state Form 497 along with a copy of its IRS Form 990 annual report 990 (if

applicable). Forms are available online or by contacting the Attorney General’s office directly

at:

State of New York Office of the Attorney General

Charities Bureau

120 Broadway

New York, NY 10271

Phone: (212) 416-8401

www.charitiesnys.com/charindex_new.html

Incorporating/Chartering Through the NYS Education Department

Historical societies, museums, and related cultural agencies should petition the Board of Regents

for a Provisional Charter or Certificate of Incorporation through:

NYS Education Department

Chartering Program

New York State Museum

New York State Education Department

Room 3097, Cultural Education Center

Albany NY 12230

Phone: (518) 473-3131

www.nysm.nysed.gov/chartering/museum

The above website provides information on chartering and includes sample constitutions and

bylaws. Even organizations incorporating through the Department of State may find the sample

bylaws in this document to be helpful. Incorporating through the Education Department ($100

filing fee) constitutes official recognition that the organization’s purposes are of educational or

cultural value. If its educational purposes are incidental to its primary mission, the organization

may choose to incorporate through the Department of State (see above).

Exemption from New York State Sales Tax

Unincorporated associations may still file for exemption from paying New York State sales tax

(though they must at least be able to submit some form of governing document such as bylaws).

Incorporated organizations with tax-exempt status through the IRS must still file with the

Exempt Organization Office at the address below. Tax-exempt status from the IRS does not by

itself exempt an organization from sales tax. Questions and forms may be obtained from:

NYS Tax Department

Exempt Organizations Unit

W. A. Harriman Campus

Albany, NY 12227-0125

Phone: 1-800-698-2909

Request form ST-119.2, “Application for An Exempt Organization Certificate” and the

instructions, Form ST-119.2-I.

NOTE: Sales tax exemption exempts an organization from paying state sales tax on purchases it

makes. It does NOT exempt a non-profit organization from collecting and paying sales tax on

retail sales it makes (sweatshirts, mugs, artwork, etc.).

501(c)(3) Tax-exempt Status through the IRS

All IRS Forms are available by calling their “exempt organizations” number at 1-800-829-5500.

They are also available through the IRS website at (www.irs.gov).

Tax-exempt status under section 501(c)(3) of the Internal Revenue Code is obtained by filing

IRS Form 1023. Also request the accompanying instruction booklet, Publication 557--“Tax

Exempt Status for Your Organization,” that provides more information on the rules and

procedures for obtaining tax-exempt status.

The filing fee is $150 for organizations anticipating annual revenues averaging no more than

$10,000 during their first four years. For organizations anticipating gross annual receipts

averaging more than $10,000 the filing fee is $500. Refer to Form 8718, which should

accompany your Form 1023.

The IRS review process is long. It is advisable to send a copy of your application to your

congressional or senate representative requesting his/her assistance in expediting your

application. This may help to complete the review process in 3 to 6 months rather than 9 months

to a year. Tax-exempt organizations must annually file the Form 990 report of revenue and

expenses with the IRS.

Other 501(c) Tax-Exempt Organizations

All not-for-profits are not created equal.

501(c)(3) organizations, on which we have focused most of our discussion, include religious,

educational, charitable, scientific, literary, testing for public safety, to foster national or

international amateur sports competition, or prevention of cruelty to children or animals

organizations. Contributions to these organizations are generally tax deductible. As already

discussed, applicants must submit IRS Form 1023.

In addition to 501(c)(3), there are over twenty other types of specific 501(c) entities that are

considered tax-exempt under the Internal Revenue Code. While all are exempt from paying

taxes on revenue and interest, contributions to these other types are not always considered to be

tax deductible under IRS guidelines. Although some require no application form, most require

the submission of IRS Form 1024 to obtain tax-exempt status. All must file an annual return

using Form 990 or 990EZ.

A sampling of these types includes 501(c)(4) civic leagues and employee associations; 501(c)(5)

labor and agricultural organizations; 501(c)(6) business leagues, chambers of commerce, and real

estate boards; and 501(c)(7) social and recreation clubs. Contributions to these organizations are

generally NOT allowed as tax deductible.

Certain contributions to other types of non-501(c)(3) organizations may be considered tax

deductible when made for section 501(c)(3) purposes. This may occur in the case of 501(c)(8)

fraternal beneficiary societies or 501(c)(10) fraternal associations. Contributions to cemetery

associations, classified as 501(c)(13), generally are considered tax deductible.

Final Words of Advice

As stated earlier, this document is not a comprehensive, detailed guide to forming a not-for-profit

corporation. It is intended only to point you in the right direction. Upon reading the information

provided by the publications and web sites listed, you will understand why professional legal

and/or accounting services are advisable. While the process may appear complicated, it can go

smoothly if you plan carefully and pay attention to detail. Remember that the laws regarding

incorporation and financial filings are there to protect the public and to protect the credibility of

legitimate not-for-profit organizations.

With volunteer organizations, records often get transferred from one individual to another as

officers change over the years. Important organization documents are sometimes lost in the

process. File these documents in a safe place, as funding applications and grant contracts may

require proof of your not-for-profit status or state charities registration.

Reference guide for non profits

Comprehensive site for IRS Form 1023 requirements - https://www.irs.gov/uac/About-Form-

1023

Gross Receipts Test - Section 501(c)(3) Exemption Application - https://www.irs.gov/charities-

non-profits/charitable-organizations/gross-receipts-test-section-501c3-exemption-application

IRS Form 1023 interactive – site provides step by step instruction and documents needed to

complete Form 1023 and Form 1023-EZ - https://www.irs.gov/pub/irs-prior/f1023i--2017.pdf

Federal Employee ID number link - https://www.irs.gov/Businesses/Small-Businesses-&-Self-

Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online

Filing site for Incorporation - https://dos.ny.gov/system/files/documents/2018/12/1511-

inst.pdf#:~:text=The%20completed%20Certificate%20of%20Incorporation,Avenue%2C%20Alb

any%2C%20NY%2012231.

“Procedures for Forming and Changing Not-For-Profit Corporations in New York” by the

Charities Bureau at the State Attorney General’s Office -

https://www.charitiesnys.com/pdfs/Procedures-for-Forming-and-Changing-NFP.pdf

IRS Tax Exempt Publication 557 - https://www.irs.gov/pub/irs-pdf/p557.pdf

Application for an Exempt Organization Certificate (Form ST-119.2-I) and Instructions for Form

ST-119.2 - https://www.tax.ny.gov/pdf/current_forms/st/st119_2_fill_in.pdf

New York State Charities Bureau site - http://www.charitiesnys.com/home.jsp

Tax exempt status application for unincorporated associations site -

https://www.tax.ny.gov/bus/st/exempt.htm

NYS publication 843 – Guide to state sales tax for New York State exempt Organizations -

https://www.tax.ny.gov/pdf/publications/sales/pub843.pdf?_ga=1.31600826.583560207.1453131

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