Each year in Washington, nonprofits formed in Washington or registered to do business in Washington must file an annual report with the Secretary of State. The annual report is usually due around the nonprofit’s formation or registration date. The filing requires basic information such as the physical and mailing address of the entity, the governors (i.e. the individuals or entities with authority to represent the nonprofit), and registered agent information.
However, starting on January 1, 2022, the nonprofit annual report will require additional information. RCW 24.03A.070, cross referencing to RCW 23.95.255(2), will now require the below information for an annual report. The new requirements are bolded:
(a) The name of the entity and its jurisdiction of formation;
(b) The name and street and mailing addresses of the entity’s registered agent in this state;
(c) The street and mailing addresses of the entity’s principal office;
(d) In the case of a registered foreign entity, the street and mailing address of the entity’s principal office in the state or country under the laws of which it is incorporated;
(e) The names of the entity’s governors;
(f) A brief description of the nature of the entity’s business;
(g) The entity’s unified business identifier number;
(h) In the case of a nonprofit corporation, the corporation’s federal employer identification number; and
(i) In the case of a nonprofit corporation, any information required under RCW 24.03A.075.
New Reporting Requirements
The first new requirement, the federal employer identification number (“EIN”), is not too complicated or burdensome. The EIN is often obtained from the IRS shortly after the formation with the Secretary of State.
The second new requirement described in RCW 24.03A.075(2) is more complex to understand. RCW 24.03A.075(2) requires the nonprofit to report “Major Changes”, which are listed below:
(a) Amendment of the charitable corporation’s articles to include one or more purposes of the corporation substantially different from any purpose stated in the charitable corporation’s articles in effect before the amendment; or
(b) Operation of a significant program or activity that is substantially different from both:
(i) Programs or activities the charitable corporation has previously operated; and
(ii) Programs or activities described in the most recent application for recognition of exemption from federal income tax that the charitable corporation has filed with the internal revenue service and in response to which the internal revenue service has issued a determination letter of tax-exempt status to the charitable corporation.
Because the nonprofit annual report requirements are so new there is no case law to indicate what is a “substantially different” change to the article’s purposes or operation of a program or activity. Obvious changes, such as a soup kitchen starting a program to take in stray animals is substantially different, but it is yet to be seen what changes the Attorney General will require nonprofits to report to the Secretary of State. While there are still unknowns about the scope of Major Changes it is something nonprofits should be aware of and if the nonprofit is concerned it should seek counsel.
Exceptions to Reporting Major Changes
RCW 24.03A.075 has 3 exceptions for reporting Major Changes on the nonprofit annual report. The exceptions are (1) religious organizations; (2) changes made within the first 3 years of formation if the organization’s programs remain consistent with the purposes in set forth in the articles; and (3) an exception for (2)(b) for programs or activities derived from income, revenue, or sources described in RCW 24.03A.075(3)(c). If you believe your nonprofit may be exempt from reporting it is wise to consult with an attorney before your annual report is due to determine if you meet one of the 3 exemptions.
Annual Report Fees
In addition to the new reporting requirements, the Secretary of State will now add an additional fee to the annual report filing fees. The new fee will go towards the Charitable Asset Protection Account and will be used for the Attorney General and Secretary of State’s enforcement and education programs.
The new fees will be $10 for nonprofits with gross revenue under $500,000 and $50 for nonprofits with gross revenue above $500,000.
If you need help the the annual report for your nonprofit, please feel free to contact The Apex Law Group PLLC. We’d be happy to help!
The above article is for general information purposes only and should not be relied upon as specific legal advice. This article, or contacting Apex, does not in any way form an attorney-client relationship. If you have any questions or would like to learn more, please contact Tara Vitale at email@example.com or visit our website.