New Filing Requirements for New York Nonprofit IRC Section 501(c)(3)s and IRC Section 501(c)(4)s
By Marla Esan, Director, Tax & Business Services
With the May 17 tax filing deadline right around the corner, public charities might find themselves with additional filing requirements from the New York State Department of State this year. Based on a revision to Section 9 of Executive Law 172-b (1), (2) & (9), public charities that file NYS CHAR 500 with the New York State Charities Bureau will also have to file those documents with the New York Department of State.
There are three types of financial reports required under this revision:
- Annual Financial Reports,
- Funding Disclosure Reports, and
- Financial Disclosure Reports.
The Department of State may require a charity to file one or more of these reports.
In order to file a report, charities must create an online account at https://my.ny.gov/. All financial reports, returns and attachments are to be uploaded through this Department of State portal.
Also due with each report is a filing fee of $25, which can only be paid by check at this time.
Annual Financial Reports (Executive Law Section 172-b)
Section 501(c)(3) tax exempt organizations meeting the following criteria will be subject to filing:
- Registered with the New York State Charities Bureau and solicits for charitable contributions in the State of New York under Article 7-A,
- Files an annual Form NYS CHAR 500, and
- Gross revenue or support exceeds $250,000.
The Annual Financial Report filing to the Department of State should include all required forms and attachments sent to the New York State Charities Bureau, including Form 990 and all related schedules. The new law applies to any charity that files the NYS CHAR 500, even if that charity is not incorporated in New York. The report is due the 15th day of the fifth month after the close of the organization’s fiscal year, with no ability to extend at this time, even if there is a six-month extended due date for federal and NYS tax filings.
There is a pending NYS Assembly Bill (A1141) which would eliminate this dual filing requirement and require the state to keep donor information confidential. The bill is currently under consideration in Assembly committee. Your Marcum tax advisor will provide updates if the bill becomes law.
Funding Disclosure Reports (Executive Law Section 172-e)
Section 501(c)(3) organizations that make an in-kind donation of $10,000 or more to 501(c)(4) organizations will require the filing of the Funding Disclosure Report when the recipient 501(c)(4) organization, within a 12-month period, reaches a specified threshold of expenditures for lobbying New York State or county or local governments and the lobbying expenditures exceed a specified percentage of the 501(c)(4)’s total revenues.
The Funding Disclosure Report includes the identity of the recipient 501(c)(4), the people who exert managerial control over the 501(c)(3), the date and amount of contributions to the 501(c)(4), and any restrictions that the 501(c)(3) has placed on the contributions. In addition, the 501(c)(3) organization must file an IRS 990 Schedule B with the Department of State even if it does not file one with the NYS Charities Bureau.
Based on a review of the facts presented by the charitable organization in its Funding Disclosure Report, if the Department of State determines that there is an inconsistency with the charitable purpose of the entity, the Department will publish the report on the DOS website. There is an appeal process heard by a Judicial Hearing Officer if such disclosure is proven to cause harm.
The report must be filed with the Department of State within 30 days of the close of the reporting period. The reporting period consists of six months within the calendar year. For example, a charitable organization would be required to file a Funding Disclosure Report before January 31 if the entity made an in-kind donation exceeding $10,000 between July 1 and December 31 of the previous year. If the in-kind donation is made for the reporting period January 1 – June 30 of the current year, the report would be due by July 31.
Financial Disclosure Reports (Executive Law172-f)
An IRC Section 501(c)(4) organization must file a Financial Disclosure Report with the Department of State if it spends more than $10,000 in a calendar year on one or more written communications conveyed to 500 or more people, that refers to and advocates for or against any of the following:
- An identified elected official;
- An executive, administrative or legislative body relating to any proposed or pending legislation;
- An action by any elected official, executive or administrative body or legislative body.
Those 501(c)(4)s must report the names of everyone exerting operational control over the organization, a description of the covered communication(s), the amount of money paid for the communication(s), who received the payment, and the identity of people or entities contributing funding to support the covered communication(s).
The Financial Disclosure Report must be filed with the Department of State within 30 days of the close of the reporting period.
For more detailed information on these new requirements, please contact your Marcum Nonprofit & Social Sector tax advisor.