Legal Compliance Checklist for North Carolina Nonprofits

Have you Who has to do it How and when to do it

Filed your articles of

incorporation?

• All NC nonprots must le articles of incorpora-

tion with the NC Secretary of State to operate as a

nonprot corporation.

• Any individual (incorporator) can le the articles.

• File with the NC Secretary of State Business Registration

Division, www.sosnc.gov/divisions/business_registration.

• Then adopt bylaws and related governance policies at

your initial board meeting.

• It is a good practice for nonprot boards and key staff

to review articles of incorporation and bylaws regularly

to be certain they are consistent with each other, with

state laws, and with the organization’s actual practices.

Updated your regis-

tered agent’s name,

phone number, and

physical addresses

with the NC Secre-

tary of State?

• Any nonprot incorporated (or authorized as a for-

eign nonprot) in North Carolina that has changed

its principal ofce address, registered ofce ad-

dress, or registered agent.

• Note: If your nonprot is registered as a foreign

corporation in other states, you may need to le

annual reports in those states. Currently, North

Carolina is one of the few states that does not

require nonprot corporations to le annual

reports. The Center continues to advocate for the

state to adopt a simple, no-fee annual report for

nonprot corporations.

• File a Change of Registered Ofce/Agent or Change

of Ofce Address form at any time. To get the form or

check what is on le now, contact the NC Secretary of

State, www.sosnc.gov/divisions/business_registration.

Filed IRS Form 1023

to apply for federal

corporate tax

exemption and

made it available

to the public?

• All nonprots with gross receipts of $5,000 or

more that want to receive tax-deductible grants or

contributions.

• Churches, their integrated auxiliaries, and conven-

tions or associations of churches do not have to

apply. For more, see IRS Publication 1828 (www.irs.

gov/pub/irs-pdf/p1828.pdf).

• Many organizations with annual gross receipts of

$50,000 or less and total assets of $250,000 or less

may le the online Form 1023-EZ.

• Make your form available for review by anyone who

requests it.

• Download Form 1023 at www.irs.gov/pub/irs-pdf/f1023.

pdf and instructions at www.irs.gov/pub/irs-pdf/i1023.pdf.

• Download Form 1023-EZ at www.irs.gov/pub/irs-pdf/

f1023ez.pdf and instructions at www.irs.gov/pub/irs-pdf/

i1023ez.pdf. The form must be led electronically at

www.pay.gov.

• File within 27 months of incorporation for retroactive

recognition of tax exemption.

Filed Form 990,

990-EZ, or 990-N

(e-Postcard) and

made your forms for

the past three years

publicly available?

• Nonprots with $50,000 or less in annual gross re-

ceipts may use the online Form 990-N (e-Postcard).

Very small nonprots with budgets under $5,000 do

need to le, even if they are not required to le Form

1023.

• Nonprots with annual gross receipts of more than

$50,000 or with an average of more than $50,000

over the past three years must le a 990 or 990-EZ.

• Nonprots with annual gross receipts under

$200,000 and total assets under $500,000 may le

Form 990-EZ.

• All supporting or controlling organizations must le

Form 990 or 990-EZ.

• Most nonprots must le Form 990 or 990-EZ

electronically for scal years beginning on or after

July 2, 2019. The IRS may allow small nonprots

with annual gross receipts under $200,000 and total

assets under $500,000 to le paper forms for two

more years.

• File the form each year by the 15

day of the 5

month

after your scal year ends (e.g., Nov. 15 if your year ends

June 30).

• Large nonprots (over $10 million in assets) and private

foundations must le electronically if you le at least

250 tax returns per year. Congress is considering leg-

islation requiring all tax-exempt nonprots to le their

990s electronically, but would have a two-year hardship

delay for small nonprots with annual budgets below

$200,000 and less than $500,000 in assets.

• Get forms at www.irs.gov/charities-non-prots/required-

ling-form-990-series and www.irs.gov/charities-non-prof

its/annual-electronic-ling-requirement-for-small-exempt-

organizations-form-990-n-e-postcard.

• You must make your forms available for review by any-

one who requests them. You must provide immediately

for in-person requests or within 30 days for written

requests. You may charge a reasonable copying fee and

postage, if any. Alternately, post your three most recent

forms on your website or GuideStar.

connued

Legal Compliance Checklist

for North Carolina Nonprofits

Created by the North Carolina Center for Nonprofits and updated annually, the legal compliance checklist outlines laws that affect North Carolina

nonprofits’ governance, finances, advocacy, human resources, and fundraising. This checklist is not intended to give legal advice and should

not be relied on without your attorney’s counsel. Throughout the document, the term “nonprot” generally refers to 501(c)(3) public charities

incorporated in or operating in North Carolina. Private foundations and nonprots classied as tax-exempt under other Internal Revenue Code

sections may be subject to different rules and regulations.

Have you Who has to do it How and when to do it

connued

Filed Form 990,

990-EZ, or 990-N

(e-Postcard) and

made your forms for

the past three years

publicly available?

• Nonprots that fail to le their 990, 990-EZ, or

990-N for three consecutive years will automati-

cally lose their tax-exempt status. The IRS must

provide notice of this possible revocation of tax-

exempt status to organizations that have failed to

le a Form 990, 990-EZ, or 990-N for two consecu-

tive years.

• Churches, their integrated auxiliaries, and conven-

tions or associations of churches don’t have to le.

• For what to le, see www.irs.gov/charities-non-prots/

form-990-series-which-forms-do-exempt-organizations-

le-ling-phase-in.

• Ask the IRS (877-829-5500) or your CPA for details.

• State law requires nonprots that receive $5,000 or

more in federal, state, or local grants or loans to make

their Forms 990, 990-EZ, or 990-N available to the pub-

lic. Comply by posting it on your website or GuideStar

(https://guidestar.candid.org/update-nonprot-prole).

These nonprots must also give anyone who asks a ba-

sic statement about the amount of public funds received

and how they were used.

Made sure that your

board members

understand their

duciary duties?

• All nonprots.

• Every nonprot board member is a duciary of the

organization and has duties of care, loyalty, and

obedience.

• Part 3 of the North Carolina Center fo r Nonprots’

Guidebook for Boards of Directors of North Carolina

Nonprots explains the duties and liabilities of board

members (www.ncnonprots.org/sites/default/les/

resource_attachments/BoardGuidebook_2ed.pdf). Share it

with your board.

• Nonprots with board members who are local govern-

ment elected ofcials (e.g. county commissioners, city

council members, or mayors) should be particularly

careful that these board members avoid potential

conicts of interest if the local government where

they serve awards grants, contracts, or appropria-

tions to the nonprots on whose boards they serve. A

new state law, which took effect on January 1, 2022,

requires these local elected ofcials to recuse them-

selves from voting on the award of grants, contracts, or

appropriations to the nonprots on whose boards they

serve. The law does not prohibit local elected ofcials

from serving on nonprot boards, and it does not apply

to employees of counties or municipalities. It only ap-

plies in cities and towns with at least 15,000 residents

and in counties that have cities or towns with at least

15,000 residents.

Adopted and adhered

to policies on con-

icts of interest, gift

acceptance, Form

990 review, whistle-

blower protection,

and document reten-

tion and destruction?

• Most nonprots.

• On Part VI of Form 990, nonprots may be required

to indicate whether they have these policies in

place.

• On Part VI of Form 990, nonprots are also asked

whether ofcers, directors, trustees, and key em-

ployees are required to disclose annually interests

that could give rise to conicts.

• See the Center’s website for sample policies on conicts

of interest (www.ncnonprots.org/resources/sample-

conict-interests-policy), gift acceptance (www.ncnonprof

its.org/resources/gift-acceptance-policies), whistleblower

protection (www.ncnonprots.org/resources/whistleblow

ing-retaliation), and document retention and destruction

(www.ncnonprots.org/resources/document-retention-and-

destruction-policy).

 Complied with

the limitation on

private benet and

the prohibition on

private inurement

for 501(c)(3)

organizations?

• All 501(c)(3) public charities. • Under the private benet doctrine, tax-exempt nonprof-

its must be organized and operated for public purposes,

and any benets to specic private individuals must

only be incidental. For more, see www.irs.gov/pub/irs-

tege/eotopich01.pdf.

• Under the private inurement doctrine, tax-exempt

nonprots are prohibited from providing unjust enrich-

ment to insiders, including board members and ofcers.

Common examples of private inurement include paying

excessive compensation to an executive director and

paying a board member greater than fair market value

for goods or services provided to the nonprot. For

more, see https://nonprotlawblog.com/private-benet-

rules-part-ii-private-inurement-doctrine.

• The Internal Revenue Code may impose “intermedi-

ate sanctions” on insiders who receive excess benets

from their transactions with the nonprots they serve.

These sanctions can require the organization to undo

the transaction with the insider and lead to excise taxes

on the insider and other board members and ofcers of

the nonprot. For more, see www.irs.gov/charities-non-

prots/charitable-organizations/intermediate-sanctions.

Have you Who has to do it How and when to do it

 Satised the public

support require-

ment to be classied

as “not a private

foundation” under

Section 501(c)(3) of

the Internal Revenue

Code?

• All 501(c)(3) public charities. • To be treated as a public charity rather than a private

foundation for federal income tax exemption purposes,

a nonprot must demonstrate that it has broad public

support.

• There are two basic tests for public support: (1) a

donative test under Section 509(a)(1) of the Internal

Revenue Code in which at least one-third of a non-

prot’s support comes from contributions from the

general public, or at least 10% of the nonprot’s support

comes from contributions from the general public,

and it also meets a facts and circumstances test; and

(2) a gross receipts test under Section 509(a)(2) of the

Internal Revenue Code in which at least one-third of

a nonprot’s support comes from a combination of

contributions from the general public and mission-

related earned income, and no more than one-third of

the nonprot’s support comes from investment income

or unrelated business income. For more, see www.irs.

gov/charities-non-prots/exempt-organizations-annual-re-

porting-requirements-form-990-schedules-a-and-b-public-

charity-support-test.

• Some other organizations qualify as public charities

because they are organized and operated in support of

another tax-exempt nonprot.

• Hospitals, schools, houses of worship, and medical re-

search organizations are deemed public charities by the

nature of their activities and are not required to meet a

public support test.

Used comparability

data to determine

executive compensa-

tion?

• Nonprots with paid employees.

• On Form 990, nonprots are required to indicate

whether they used comparability data to determine

salaries and benets.

• The Center publishes a biennial report on salaries and

benets in NC nonprots (www.ncnonprots.org/resourc-

es/salaries-and-benets).

Reported and paid

tax on Unrelated

Business Income

(UBIT) and made

your Form 990-T for

the past three years

publicly available?

• Any nonprot with unrelated business income of

$1,000 or more.

• Nonprots with more than one line of unrelated

trade or business must “silo” their tax liability for

each “separate” “trade or business” and pay UBIT on

each of these rather than aggregating all the prots

and losses from all of their unrelated business

income activities.

• See IRS Publication 598, Tax on Unrelated Busi-

ness Income of Exempt Organizations (www.irs.gov/

pub/irs-pdf/p598.pdf). Ask the IRS (877-829-5500,

www.irs.gov/charities-non-prots/unrelated-business-

income-dened) or your CPA for details.

• File IRS Form 990-T (www.irs.gov/pub/irs-pdf/f990t.pdf)

each year by the 15

day of the 5

month after your

scal year ends (e.g., Nov. 15 if your year ends June 30).

• File Form CD-405 with the NC Department of Revenue

by the 15

day of the 5

month after your scal year

ends and pay any applicable state corporate income tax.

• In April 2020, the IRS issued proposed regulations on

siloing of UBIT expenses (www.govinfo.gov/content/pkg/

FR-2020-04-24/pdf/2020-06604.pdf).

• See www.ncnonprots.org/content/new-tax-transportation-

and-parking-benets-problematic-nonprots.

Stayed nonpartisan?

• Under federal tax law, all 501(c)(3) nonprots are

prohibited from supporting or opposing candidates

for ofce or political parties. This means that non-

prots can’t endorse candidates, contribute money

in partisan elections, or coordinate activities with

political campaigns.

• Be certain your staff and board understand that they

may not suggest or imply that they are speaking on

behalf of your nonprot when they engage in personal

political activities.

• Nonprots can (and should) engage in a wide range of

nonpartisan election-related activities, including voter

registration, voter education, and get-out-the vote ef-

forts (www.nonprotvote.org).

• Nonprots also may take positions on ballot measures

such as state constitutional amendments and bond

initiatives.

• For more on what nonprots can and can’t do during an

election year, see www.ncnonprots.org/blog/everything-

you-wanted-know-about-nonprots-and-electionsbut-

were-afraid-ask.

• For more on the nonpartisanship requirement and why

it matters for charitable nonprots, see www.ncnonprof

its.org/blog/why-weakening-johnson-amendment-would-

be-devastating-nonprots.

Have you Who has to do it How and when to do it

Elected 501(h) status

to have clearer and

more generous limits

on your lobbying

than if you stay with

the default option of

“insubstantial part

test”?

• Any charitable nonprot (other than a house of

worship and integrated auxiliaries of houses of wor-

ship) that lobbies can choose to elect 501(h) status.

Under Section 501(h), nonprots can use for direct

lobbying up to 20% of the rst $500,000 of their

exempt purpose expenditures. For larger organiza-

tions, this limit increases on a sliding scale up to $1

million. Under Section 501(h), the limit on grass-

roots lobbying expenditures (i.e., asking members

of the public to contact legislators with a specic

call to action) is 25% of the limit on direct lobbying

expenditures.

• Nonprots that do not take the 501(h) election must

be prepared to demonstrate that lobbying is an

“insubstantial” part of their activities.

• Complete the simple one-page IRS Form 5768 once

(www.irs.gov/pub/irs-pdf/f5768.pdf); the election will ap-

ply for the current and subsequent tax years. See www.

councilofnonprots.org/nonprot-advocacy/501h-election.

• Note that advocacy for or against ballot measures, such

as state constitutional amendments and bond initiatives

is direct lobbying (www.ncnonprots.org/content/501c3-

advocacy-state-constitutional-amendments). A nonprot’s

expenditures advocating for or against ballot mea-

sures are included as direct lobbying expenses for the

501(h) expenditure test. For a nonprot not taking the

501(h) election, ballot measure advocacy activities are

included in the “insubstantial” part determination.

Provided donors with

letters of acknowl-

edgment for “quid

pro quo” gifts of $75

or more and all gifts

of $250 or more?

• Every nonprot that provides goods or services to

donors in exchange for contributions above $75.

Your nonprot must disclose the value of the goods

or services received by the donor. Only the remain-

ing amount is tax-deductible.

• The U.S. Tax Court has denied a donor’s signicant

tax deduction in part because the nonprot didn’t

follow these rules!

• See IRS Publication 1771 (www.irs.gov/pub/irs-pdf/

p1771.pdf) for gift acknowledgement guidelines.

• Donors are responsible for obtaining written gift

acknowledgments for contributions of $250 or more,

but it is a good practice for nonprots to send timely

acknowledgements for all contributions.

Applied for a state

charitable solicita-

tion license, renewed

it every year, and

included the required

disclosure statement

on your fundraising

materials and donor

acknowledgement

letters?

• Most nonprots must contact the NC Secretary

of State each year. Generally, any nonprot that

receives $25,000 or more a year in private grants

and contributions is required to have a charitable

solicitation license.

• If your nonprot receives less than $25,000 per

year in contributions, you may be eligible to apply

annually to become exempt from requiring the

license. Government grants and contracts, fees for

services, and other earned or investment rev-

enues are not included. In 2021, the NC House of

Representatives passed a bill that would increase

the threshold for charitable solicitation exemption

to $50,000 in contributions per year. The bill also

would eliminate notarization requirements for

charitable solicitation lings and would bring the

ling deadlines for charitable solicitation renewals

into alignment with Form 990 ling deadlines and

extensions to help prevent nonprots from having

their charitable solicitation licenses lapse. This

legislation is currently pending in the NC Senate.

• Nonprot churches, hospitals, YMCAs, YWCAs, and

schools are generally exempt. For other statutory

exemptions to this requirement, contact the Chari-

table Solicitation Licensing Section (www.sosnc.gov/

csl) or see www.ncnonprots.org/resources/charitable-

solicitation-faqs.

• Apply at any time, and renew annually by the 15

day

of the 5

month after your scal year ends. Contact the

Charitable Solicitation Licensing Section, NC Secretary

of State, www.sosnc.gov/csl. Online ling is available, but

not required.

• A Unied Registration Statement is acceptable if you

also complete the NC Addendum (www.multistateling.

org).

• Check requirements if you solicit funds in other states.

For more, see www.councilofnonprots.org/tools-resources/

charitable-solicitation-registration. The National Associa-

tion of State Charity Ofcials (NASCO) is working on

developing a single portal that may simplify multi-state

ling for nonprots that solicit funds in more than one

state.

• Conspicuously display (in at least 9-point bold type) this

disclosure statement on every printed solicitation, writ-

ten conrmation, receipt, and contribution reminder:

Financial information about this organization and a

copy of its license are available from the Charitable

Solicitation Licensing Section at 888-830-4989.

The license is not an endorsement by the State.

Conrmed that any

contract fundraisers

or fundraising con-

sultants are licensed?

• Any nonprot that uses a contractor to solicit

contributions or to advise or assist in fundraising-

related activities. Note: All contracts with solicitors

and fundraising consultants are led with the NC

Secretary of State and available to the public.

• Check the registry of licensed solicitors and fundraising

consultants at www.sosnc.gov/search/index/csl.

• Have at least two ofcials of your nonprot (including at

least one board member) sign all contracts with solici-

tors and fundraising consultants.

Requested state

corporate income

and franchise tax

exemption?

• To be exempt from corporate taxes, all North

Carolina nonprots must request these state tax

exemptions from the NC Department of Revenue.

• Send a request to the NC Department of Revenue with

a brief description of your charitable purposes and dis-

solution provision.

• Enclose copies of your articles of incorporation, certi-

ed copy of bylaws, and IRS determination letter.

• Send the request to NC Department of Revenue,

Corporate Income and Franchise Tax Department,

PO Box 871, Raleigh, NC 27602.

Have you Who has to do it How and when to do it

Applied for exemp-

tion from local

property taxes?

• Most nonprots owning real or personal property

(buildings, land, or property such as ofce equip-

ment) used wholly and exclusively for tax-exempt

purposes.

• Apply with your local county tax assessor. Call your lo-

cal county tax ofce for details. You may appeal the local

board’s decision to the State Property Tax Commission.

• Notify the county assessor of any change in the use of

your nonprot’s property.

• A September 2018 article in the North Carolina Law

Review provides a good overview of nonprot property

tax exemption in North Carolina (https://scholarship.law.

unc.edu/cgi/viewcontent.cgi?article=6690&context=nclr).

• Let the Center know if your request for property tax

exemption is unreasonably denied by your county as-

sessor.

Applied for refunds

of state and local

sales and use taxes

that you have paid?

• Any qualifying nonprot that wants refunds of sales

tax it pays on purchases in NC.

• Qualifying nonprots include all 501(c)(3)s except

those properly classied with NTEE codes of Com-

munity Improvement and Capacity Building, Public

and Societal Benet, or Mutual and Membership

Benet organizations (https://nccs.urban.org/project/

national-taxonomy-exempt-entities-ntee-codes).

• Now applies to purchases made directly by the orga-

nization and through staff reimbursement (other

than reimbursement for travel expenses).

• Refunds are capped at $45 million per year (total of

state and local sales taxes paid) per nonprot, start-

ing July 1, 2014.

• Nonprots are generally not exempt from North

Carolina’s 3% highway use tax and are not eligible

for refunds of this tax. Charitable nonprots may

be exempt from highway use tax on vehicles that

are donated solely for the purpose of resale by the

nonprots.

• Apply for an Account ID number from the Central Ex-

amination Division, NC Department of Revenue. Details

at www.ncdor.gov/taxes-forms/sales-and-use-tax/amended-

returns-and-refund-claims/frequently-asked-questions-

regarding-form-e-585-nonprot-and-governmental-entity-

claim-refund-state.

• File Form E-585 semi-annually for refunds: by Oct. 15

for taxes paid Jan.-June; by April 15 for taxes paid July-

Dec.

• If the Internal Revenue Service misclassies your non-

prot’s NTEE code, you may appeal and request refunds

from the NC Department of Revenue based on the

proper classication.

• Note: Under North Carolina’s current tax laws, non-

prots are not eligible for point-of-sale exemption

from sales and use tax, and the NC Department of

Revenue does not issue sales and use tax exemption

certicates to nonprots on the basis of their federal

tax-exempt status. Some businesses erroneously

ask North Carolina nonprots to provide a sales tax

exemption certicate (Form E-595E) when they make

purchases.

• The Center continues to advocate for legislators to

replace the current nonprot sales tax refund process

with a point-of-sale exemption from sales tax for most

501(c)(3) nonprots.

Collected sales tax

on items you sell and

remitted these funds

to the State?

• Any nonprot selling physical or digital retail items

like books, videos, t-shirts, concessions, recordings

of webinars, and e-publications.

• Sales are exempt if conducted on an annual basis to

raise funds and if all products are delivered within

60 days after the solicitation (e.g., Girl Scout cookie

sales). Nonprots may have separate distinct annual

sales events that are exempt from sales tax. Note:

This exemption doesn’t apply to sales tax on admis-

sion charges.

• Other nonprot exemptions from sales tax include:

(a) sales where the proceeds are given to the State

of North Carolina or a state agency (e.g., public

schools); (b) sales of concessions at school events

that benet the school, even if the proceeds go

through a charitable nonprot; (c) nonprots’ sales

of meals to seniors and individuals with disabilities

where the meals are delivered to the individuals’

homes; and (d) food or prepared food sold by a

house of worship where the proceeds are used for

religious activities.

• A nonprot charging admission for entertainment

activities, including live performances or live events

for the purpose of entertainment, motion pictures,

museums, cultural sites, gardens, exhibits, shows,

and similar attractions. Educational, recreational,

and many fundraising events done by nonprots

• Register with the NC Department of Revenue for a

Certicate of Registration.

• File Form E-500 and pay the tax quarterly or monthly,

depending on your volume of sales (www.ncdor.gov/

taxes-forms/sales-and-use-tax/sales-and-use-tax-forms-

and-certicates/tax-returns-schedules/form-e-500-sales-

and-use-tax-return-october-2014-and-forward).

• If your nonprot has collected taxes in more than one

county, also le Form E-536 (Schedule of County Sales

and Use Taxes). The county rate you charge is based on

the delivery location. The tax rate differs by county

(www.ncdor.gov/taxes-forms/sales-and-use-tax/sales-and-

use-tax-rates-other-information).

connued

Have you Who has to do it How and when to do it

connued

Collected sales tax

on items you sell and

remitted these funds

to the State?

are not subject to this tax. A 2019 law claries

that nonprots do not need to charge sales tax on

tuition or registration fees for educational events,

regardless of whether entertainment is offered as

an ancillary feature of these events.

• Admission fees are exempt if they are tax-deduct-

ible contributions, including any tax-deductible

portion of membership fees that would otherwise

be subject to the tax.

• Admission fees are also exempt if they are: (a) events

sponsored by elementary or secondary schools; or

(b) sponsored by “volunteer only” nonprots that do

not pay salary or other compensation to individuals

and that do not compensate anyone for performing

in, placing in, or producing the event.

• Beginning on October 1, 2019, nonprots and

businesses were required to collect and remit

sales tax on digital property, including many online

educational offerings. A 2020 law created an

exemption from the sales tax on digital property

for sales of digital audio or audiovisual works

that consist of the contemporaneous access to

a non-taxable service. Effectively, this means

that nonprots do not need to charge sales

tax on registration fees for online educational

participatory events like webinars, conferences,

workshops, or tness classes. However, nonprots

are required to collect and remit sales tax if they

sell recordings of these types of online offerings.

• Under a law effective November 9, 2019, mar-

ketplace facilitators such as Amazon or Ebay are

required to collect and remit sales tax on sales

made through their platforms. This means that

nonprots may not need to collect and remit sales

tax on goods and services sold through certain

third-party websites.

Properly classied all

employees and inde-

pendent contractors?

• Any nonprot with paid staff, consultants, or con-

tractors. The U.S. Department of Labor, IRS, and NC

Department of Revenue can impose penalties for

improper classication of consultants and contrac-

tors who are really employees.

• See IRS Publication 1779 (www.irs.gov/pub/irs-pdf/

p1779.pdf) to nd specic criteria for classifying em-

ployees vs. contractors for the purpose of federal tax

laws.

• In May 2021, the U.S. Department of Labor rescinded

a recently-changed regulation that had set new stan-

dards for classifying workers as employees or indepen-

dent contractors. The now-rescinded rule, which took

effect on March 8, created a two-prong test focusing

on the employee’s exercise of control over their work

and their opportunity for prot or loss. This “economic

realities” test allowed more employers – including

some nonprots – to classify their workers as contrac-

tors to avoid paying benets and payroll taxes. With

this change, the DOL will once again use a multi-factor

“totality of circumstances” test to determine whether

workers are properly classied as employees or inde-

pendent contractors for purposes of federal employ

ment laws (www.dol.gov/agencies/whd/fact-sheets/13-

sa-employment-relationship).

• Starting in 2021, nonprots that paid individuals $600

or more as independent contractors must le the

new IRS Form 1099-NEC with the IRS and with these

contractors. In the past, nonprots used IRS Form

1099-MISC to report non-employee compensation to

contractors. Nonprots should still use Form 1099-

MISC to report compensation of $600 or more paid

to attorneys and for rafe prizes of $600 or more. See

www.irs.gov/instructions/i1099msc.

Have you Who has to do it How and when to do it

Properly classied

all employees as

either exempt or

non-exempt from

the Fair Labor

Standards Act and

paid overtime where

appropriate?

• All nonprots and foundations with paid employees.

• Under the Fair Labor Standards Act (FLSA) and the

NC Wage and Hour Act, you must provide overtime

pay to all workers unless they are specically ex-

empted from coverage. See p. 20-22 of the Center’s

Employment Law for North Carolina Nonprots (www.

ncnonprots.org/sites/default/les/resource_attach-

ments/EmploymentLawHandbook.pdf).

• Note: In September 2019, the U.S. Department of

Labor issued nal regulations that increased the

salary threshold for exempt employees. Starting in

2020, more nonprot employees were eligible for

overtime pay when they work more than 40 hours

in a work week.

• Employees are exempt from the overtime pay require-

ments of FLSA if they: (1) are paid at least the mini-

mum salary level; (2) are paid on a salary basis; and (3)

exercise job duties that are classied as exempt (i.e.,

executive, administrative, or professional). Through

December 31, 2019, the minimum salary threshold was

$23,660 per year ($455 per week), and highly compen-

sated employees with salaries of at least $100,000 per

year were also exempt from overtime pay requirements

if they regularly perform at least some of the job duties

of executive, administrative, or professional employees.

• Effective January 1, 2020, the salary threshold for

exempt administrative, executive, and professional

employees increased to $35,568 per year ($684 per

week), and the salary threshold for highly compen-

sated employees increased to $107,432 per year. For

more details about the increased salary threshold for

overtime pay and compliance options for nonprots,

see www.ncnonprots.org/resources/2019-dol-overtime-

rule-and-nonprots.

• Nonprots can change an employee’s status any time

during the year.

• Nonprots must pay non-exempt staff 1.5 times their

usual hourly pay rate for any time they work more than

40 hours in one work week.

• The U.S. Department of Labor has a fact sheet with

more details about the duties tests for administrative,

executive, and professional employees at www.dol.gov/

whd/overtime/fs17a_overview.pdf.

Provided paid sick

leave and paid family

and medical leave to

employees need-

ing time off due to

COVID-19 and ap-

plied for tax credits

to reimburse your

nonprot for the cost

of this paid leave?

• Most nonprots with fewer than 500 employees.

• The requirement in the Families First Coronavirus

Response Act (FFCRA) that nonprots and other

employers with fewer than 500 employees must

provide two weeks of paid sick leave at the full rate

of pay and 10 weeks of paid family and medical

leave (FMLA) at two-thirds of the regular rate of

pay for employees who are unable to work for

reasons related to COVID-19 expired on Decem-

ber 31, 2020. Under that requirement, employees

generally could take paid sick leave if they were

sick with COVID-19, in self-quarantine due to gov-

ernment mandate or medical directions, or caring

for others who were sick with COVID-19. Gener-

ally, employees could take paid family and medical

leave if they were caring for someone who was sick

or in self-quarantine due to COVID-19 or if they

were caring for a child whose school or child care

facility was closed due to the pandemic.

• Although nonprots are no longer required to

provide this paid time off, the American Rescue

Plan Act extended through September 30, 2021

the refundable payroll tax credits for nonprots

and other employers that elect to provide paid sick

leave and paid FMLA for employees who are out

of work for reasons that would have made them

eligible for paid leave under the expired FFCRA re-

quired leave provisions. In addition, in April 2021,

the IRS announced that paid leave credits apply

to leave taken by employees to receive or recover

from COVID-19 vaccinations.

• For more information, see www.councilofnonprots.org/

thought-leadership/covid-related-tax-credits-available-

nonprot-employers.

• Nonprots may receive a refund of FFCRA paid leave

offered to their employees through a refundable

payroll tax. The Internal Revenue Service has guid-

ance on the process for applying for these tax credits

at www.irs.gov/newsroom/covid-19-related-tax-credits-

for-required-paid-leave-provided-by-small-and-midsize-

businesses-faqs#sick_leave.

Have you Who has to do it How and when to do it

Followed all

state and federal

employment laws

including: ling I-9,

W-2, and W-4 forms;

withholding tax;

paying employment

taxes; and putting

up posters?

• Any nonprot with paid employees, whether part-

time or full-time.

• Your nonprot must pay Social Security and Medi-

care taxes for all employees.

• State law requires nonprots with 25 or more em-

ployees to use the federal E-Verify system to check

the immigration status of new employees. Legisla-

tion has been led in the NC House of Representa-

tives to extend E-Verify requirements to employers

with ve or more employees and to extend it to all

employers that provide services through contracts

with the state of North Carolina.

• Contact the U.S. Department of Labor, www.dol.gov, or

NC Department of Labor, www.labor.nc.gov.

• Download free employment posters at www.labor.nc.gov/

safety-and-health/publications. You do not need to buy

these posters!

• See the Center’s Employment Law for North Carolina

Nonprots (www.ncnonprots.org/sites/default/les/re-

source_attachments/EmploymentLawHandbook.pdf).

• For more on withholding and paying federal employ-

ment taxes, see www.irs.gov/charities-non-prots/employ

ment-taxes-for-exempt-organizations.

• A temporary federal law allowed employers – includ-

ing nonprots – to defer payment of their share of

Social Security taxes. For nonprots that used this

deferral of payroll taxes, the deferred taxes are due

to the IRS by January 3, 2022. Nonprots that pay

their deferred taxes after this deadline may be subject

to penalties and interest. See www.irs.gov/newsroom/

what-employers-need-to-know-about-repayment-of-

deferred-payroll-taxes.

Applied for an

Unemployment Tax

Number and paid

State Unemployment

Tax?

• Nonprots generally pay state unemployment insur-

ance (UI) taxes.

• Nonprots that have employed four or more people

for any part of 20 different weeks in the current or

previous calendar year.

• Nonprots have the option of electing to reimburse

the state for unemployment claims instead of paying

UI taxes. Nonprots electing to reimburse must

maintain 1% of their total payroll in an escrow ac-

count with the NC Department of Commerce.

• Reimbursing nonprots in North Carolina will not

be charged for UI claims arising due to COVID-19

through September 4, 2021. Reimbursing nonprof-

its may receive statements of their claims from

the Division of Employment Security of the NC

Department of Commerce for weeks ending on or

before September 4, 2021, but these statements

are not bills. The federal and state laws providing

for partial non-charging of benets to reimbursing

nonprots expired on September 4, 2021, so reim-

bursing nonprots will be responsible for the cost

of benets beginning on September 4, 2021.

• Most nonprots with fewer than four employees

and most religious nonprots are exempt from

paying state UI taxes. Employees of exempt non-

prots are generally not eligible for UI benets

if they are out of work. During the COVID-19

pandemic, individuals who worked for exempt

nonprots and were out of work due to COVID-19

were eligible to apply for up to 39 weeks of UI

benets through September 4, 2021 through the

Pandemic Unemployment Assistance program.

• Apply before hiring employees.

• Contact the Division of Employment Security (DES) of

the NC Department of Commerce, http://des.nc.gov.

• The Center’s unemployment tax savings program

for members has already saved nonprots more

than $9 million. For details, see First Nonprot

Group at www.ncnonprots.org/services/money-saving-

partnerships#FirstNonprot and contact Joe Poretto

(312-239-8388, jporetto@rstnonprot.com).

• Effective April 27, 2017, nonprots that elect to reim-

burse the state for unemployment claims may apply

for a refund if they erroneously remit more than the

required 1% of payroll to the state.

• Because unemployment benets are lower in North

Carolina than in other states, electing to reimburse

may be a more cost-effective approach for many North

Carolina nonprots.

• Nonprots that pay state unemployment tax (SUTA)

instead of reimbursing for unemployment claims must

pay SUTA quarterly. The SUTA tax rate is a combina-

tion of the base rate (1.9% in 2021) and employers’

experience rating, which is based on the history of UI

claims by their employees.

Obtained workers’

compensation insur-

ance?

• Any incorporated nonprot with three or more

employees and/or corporate ofcers. Effective

October 22, 2015, nonprots are no longer

required to provide workers’ compensation for

uncompensated board ofcers.

• Contact the NC Industrial Commission, 800-688-8349,

www.ic.nc.gov.

• For more, see www.ncnonprots.org/public-policy/

workers-compensation-good-nonprot-employees-and-

employers.

Properly compensat-

ed your paid interns?

• Charitable nonprots can use volunteer interns as

long as they are unpaid and not provided a stipend.

• If a 501(c)(3) nonprot chooses to pay its interns,

these interns may be classied as employees who

are subject to minimum wage and overtime pay

requirements under the Fair Labor Standards Act.

• In January 2018, the U.S. Department of Labor released

guidance with a seven-factor test to determine whether

paid interns are classied as employees who are subject

to the minimum wage requirements of the Fair Labor

Standards Act (www.dol.gov/whd/regs/compliance/

whdfs71.pdf).

connued

Have you Who has to do it How and when to do it

connued

Properly compensat-

ed your paid interns?

If a nonprot pays an intern a stipend lower than the

minimum wage of $7.25 per hour, it must be certain

that the internship satises the “economic realities”

test that the relationship is not employment.

• See the National Council of Nonprots’ resource on

nonprot interns at www.councilofnonprots.org/tools-

resources/interns-employee-or-volunteer.

Created a plan

document for your

employee retirement

plan and electroni-

cally led a Form

5500?

• Nonprots with 403(b) plans and other retire-

ment plans subject to the Employment Retirement

Income Security Act (ERISA).

• You must le Form 5500 electronically. It is due seven

months after your plan’s year-end date. See www.dol.

gov/agencies/ebsa/employers-and-advisers/plan-adminis

tration-and-compliance/reporting-and-ling/form-5500.

• Those at your nonprot responsible for signing your

Form 5500 need to register on the Department of

Labor’s EFAST2 website, www.efast.dol.gov.

• If your nonprot has a 403(b) plan, you must have a

written plan document. See www.irs.gov/retirement-

plans/irc-403b-tax-sheltered-annuity-plans.

Provided health

insurance for your

employees?

• Any nonprot with 50 or more full-time employees

(including full-time equivalents) on average for the

prior year is a large employer that is required to

offer health insurance to its employees under the

Affordable Care Act.

• Smaller nonprots have the option of offering

health coverage for their employees.

• Nonprots that qualify as large employers are required

to provide health insurance for their employees and

must le Form 1095-C and 1094-C with the Internal

Revenue Service. The IRS has more information about

requirements for large employers at www.irs.gov/

affordable-care-act/employers/aca-information-center-for-

applicable-large-employers-ales.

• Smaller nonprots have a variety of options for provid-

ing (or not providing) health coverage for their employ-

ees. These options include obtaining a group health

insurance for employees and offering a taxable salary

supplement to cover some or all of employees’ health

insurance costs and tax-free Qualied Small Employer

Health Reimbursement Arrangement (QSEHRA).

Healthcare.gov has more information about QSEHRAs

(www.healthcare.gov/glossary/qsehra).

• Some nonprots that offer health insurance for their

employees may be eligible for a refundable tax credit

under the Small Business Health Care Tax Credit

(www.irs.gov/affordable-care-act/employers/small-busi

ness-health-care-tax-credit-and-the-shop-marketplace).

• A new law that took effect on October 1, 2021 allows

nonprots and small businesses to form exclusive

provider benet (EPO) plans for their employees. EPO

benet plans are typically about 0-15% less expensive

than other health insurance plans and allow partici-

pants to use a limited network of local health care

providers while paying the full cost for any out-of-net-

work health services other than emergency care.

• The Center has more information on health insurance

options for nonprots at www.ncnonprots.org/nonprof

it-health-insurance.

Followed state laws

for rafes, bingo

events, game nights,

and alcohol at fund-

raising events?

• Any nonprot that offers a rafe or bingo game as a

fundraising event.

• Any nonprot that offers a game night (or casino

night) as a fundraising event, beginning on June 1,

2019.

• Any nonprot that serves or sells alcohol at a fund-

raising event.

• Nonprots may conduct up to four rafes per year

as fundraising events. The maximum cash prize for

any rafe is $250,000, and nonprots may rafe real

property valued at up to $500,000. At least 90% of the

net proceeds of the rafe must be used for a nonprot’s

mission-related purposes, and none of the net proceeds

can be used to pay a person to conduct a rafe or to rent

a space where the rafe is conducted. Nonprots are

not required to have a license to conduct rafes. See

www.ncnonprots.org/resources/rafes-101.

• Effective October 1, 2018, nonprots may also offer

alcohol in the manufacturer’s original closed container

as a prize for a rafe or auction, as long as the nonprot

has obtained a special one-time alcohol permit for the

event. For more on one-time alcohol permits, see https://

abc.nc.gov/Permit/QualicationSOTNP.

• Beginning on June 1, 2019, a state law makes it legal

for nonprots to offer casino nights or game nights as

fundraising events anywhere east of I-26 in North

connued

Have you Who has to do it How and when to do it

connued

Followed state laws

for rafes, bingo

events, game nights,

and alcohol at fund-

raising events?

Carolina. Nonprots may offer up to four game nights

per year (not more than one per quarter) and must ob-

tain a license from the NC Department of Public Safety

(www.ncdps.gov/our-organization/law-enforcement/alco-

hol-law-enforcement/game-nights). The fee for a game

night sponsor license is $100.

• A nonprot conducting bingo games is required to get

an annual license from the NC Department of Public

Safety (www.ncdps.gov/our-organization/law-enforcement/

alcohol-law-enforcement/bingo). The annual fee for a

nonprot bingo license is $200.

• Nonprots may obtain special one-time permits from

the NC Department of Public Safety to sell or serve

alcohol at fundraising events (https://abc.nc.gov/Permit/

QualicationSOTNP).

• Nonprots must le IRS Form W-2G on rafe prizes of

$600 or more where the payout is at least 300 times

the amount of the wager, and must withhold 25% taxes

on rafe prizes of $5,000 or more. Rafe tickets are not

deductible as charitable contributions. For more, see

www.irs.gov/pub/irs-tege/notice_1340.pdf.

Complied with donor

instructions not to

reveal their identity?

• Nonprots receiving contributions from donors

who provide written instructions prior to, or at the

time of, their donations that the nonprot may not

disclose their identity.

• Under legislation that passed the NC General Assem-

bly but was vetoed by Governor Roy Cooper, nonprof-

its would have been required to keep private (and not

disclose) the identity of donors who provided written

notice requesting that their identity not be disclosed.

Although this limitation is not currently required by

the NC Nonprot Corporation Act, it is a good practice

for nonprots to follow written instructions from

their donors requesting that their identities not be

disclosed.

Studied current

reporting require-

ments for any funds

that your nonprot

receives through the

State?

• Any nonprot that receives state grant funds or

federal grant funds that pass through a state gov-

ernment agency.

• Any nonprot receiving state grants and/or appropria-

tions must provide certication to its granting agency

that its state funds were used for the purposes for

which they were awarded and must provide an account-

ing of all state funds it receives, uses, holds, or spends.

• Any nonprot receiving a state grant must provide the

granting agency a copy of its conict of interest policy

and must certify to the granting agency that it does not

have overdue federal, state, or local tax debts.

• Any nonprot receiving $25,000 or more in state

grants and/or appropriations must report to its granting

agency on its activities and accomplishments, including

reporting on any relevant performance measures.

• Any nonprot receiving $500,000 or more in state

grants and/or appropriations must have a single or

program-specic audit prepared in accordance with

Generally Accepted Governmental Auditing Standards

(also known as a Yellow Book Audit).

• Beginning on July 1, 2016, nonprots receiving state

grants and/or appropriations must submit reports

directly to their granting agencies, not to the NC Ofce

of State Budget and Management.

• Cities and counties may require nonprots receiving

grants or appropriations of $1,000 or more in any scal

year to have an audit.

• The NC State Auditor has the authority to audit any

nonprot receiving $1,000 or more in state funding in

any scal year.

• Under a new law that took effect on October 21, 2021,

any nonprot with a state grant or state contract

that does not provide information requested by the

State Auditor as part of a state verication audit is

presumed to have “failed to meet any condition prec-

edent, classication, or other eligibility or qualifying

standard subject to the verication audit.”

Have you Who has to do it How and when to do it

Followed the federal

grant and contract

rules under the OMB

Uniform Guidance?

• Nonprots with federal grants or contracts − or

state or local grants or contracts that include federal

funds − with effective dates on or after December

26, 2014.

• Nonprots without a federally-approved indirect cost

rate can elect to be paid a de minimis rate of 10% of

modied total direct costs.

• Pass-through entities (state and local governments) are

required to recognize this de minimis rate of nonprots’

federally-negotiated rates.

• More costs (e.g., some program administration costs)

are treated as direct costs under the OMB Uniform

Guidance.

• The threshold for single audits has been raised to

$750,000.

• The OMB Uniform Guidance requires the use of consis-

tent, documented procurement processes for purchases

made with federal funds.

• In August 2020, OMB issued updates to the Uniform

Guidance (www.govinfo.gov/content/pkg/FR-2020-08-

13/pdf/2020-17468.pdf). These changes took effect on

November 12, 2020.

• For more information, see www.councilofnonprots.org/

omb-uniform-guidance.

Complied with

Uniform Prudent

Management of

Institutional Funds

Act (UPMIFA) to in-

vest and spend from

endowed and other

restricted funds?

• All nonprots holding funds with donor-imposed

restrictions.

• These rules do not apply to funds set aside for spe-

cic purposes by the board.

• Restrictions may be released for funds created more

than 10 years ago and with total assets less than

$100,000.

• Adopt a policy that requires the board to analyze statu-

tory “prudence factors” when investing and spending

from endowed and other restricted funds.

• Retain gift agreements creating endowed and other

restricted funds in your permanent records.

Registered with the

state as a lobbyist

principal or solicitor

(organizations) and

as a lobbyist (individ-

uals), as well as led

quarterly reports?

• Nonprot employees (but not volunteers) who

spend at least 5% of their time lobbying members

of the NC General Assembly or NC executive

branch ofcers in any 30-day period must register

as lobbyists. Any paid nonprot contractor who

lobbies must register as a lobbyist. Nonprots

compensating lobbyists need to register as “lobbyist

principals.”

• Nonprots that are not “lobbyist principals” but

that ask members of the general public to engage

in lobbying must register as solicitors if they spend

at least $3,000 in any 90-day period on this type of

solicitation.

• Lobbyists, principals, and solicitors must register

with the NC Secretary of State every year (within one

day of starting to lobby) and pay a $250 annual fee

(separate fees for lobbyists and principals). Principals

must report total compensation paid to lobbyists for

actual lobbying and related activities once a year on

their nal reports. Lobbyists, principals, and solicitors

must le notarized quarterly reports of their lobbying

and solicitation activities. All forms must be submitted

electronically (and, therefore, also include a $3 elec-

tronic ling fee).

• Get forms at www.sosnc.gov/divisions/lobbying. See a

summary of NC lobbying laws at www.ncnonprots.org/

resources/summary-north-carolina-lobbying-law.

Filed for an assumed

business name cer-

ticate?

• Any nonprofit that operates under a name other

than the name identified in its articles of incorpora-

tion.

• Starting December 1, 2017, a nonprot that operates

using a name other than its legal name (e.g., the name

in its articles of incorporation) is required to le for an

assumed business name certicate with the register of

deeds in one NC county where it conducts business. Un-

der a new law passed in 2016, the NC Secretary of State

will maintain a statewide database of assumed business

names so nonprots will no longer need to le in more

than one county.

• All assumed name certicates issued under the current

law (Article 14 of Chapter 66 of the NC General Stat-

utes) will expire on December 1, 2022, so nonprots

with existing assumed business name certicates will

need to rele these under the new law (Article 14A of

Chapter 66 of the NC General Statutes) in one county to

continue to have an assumed business name certicate

after that date.

• More information, assumed business names searches,

and registration forms are available at www.sosnc.gov/

divisions/business_registration/assumed_business_names.

Have you Who has to do it How and when to do it

Provided notice of

actions taken to

limit the spread of

COVID-19 at your

nonprot’s facility?

• Any nonprot that owns or rents a physical space.

• A 2020 state law provides limited immunity for

nonprots and businesses for the contraction

of COVID-19 at their facilities unless the act or

omission leading to the contraction of COVID-19

was due to gross negligence, willful or wanton

conduct, or intentional wrongdoing. This limitation

of liability continues for 180 days after the expira-

tion of the state’s emergency declaration due to

COVID-19.

• The law also requires nonprots and businesses to

provide reasonable notice of the actions they have

taken to reduce the spread of COVID-19 on their

premises.

• Throughout the course of the pandemic, nonprots

should post clear and public notice of the steps they

are taking to reduce the spread of COVID-19 at their

facilities, including policies related to face coverings,

social distancing, and sanitation.

Considered whether

to require your non-

prot’s employees

to have COVID-19

vaccinations?

• Under two new federal regulations, workers

at nonprots with 100 or more employees and

nonprot health facilities with Medicare or

Medicaid reimbursement must be vaccinated

against COVID-19 or be tested at least weekly

for COVID-19. Pending court action, a federal

executive order would require employees at

nonprots with federal contracts or subcontracts

(but not federal grants) to be vaccinated against

COVID-19.

• Any nonprot with employees should consider

whether a vaccination requirement is an appropri-

ate measure to help protect its staff, clients, and

visitors from the spread of COVID-19.

• President Biden issued an executive order requiring

COVID-19 vaccinations for federal employees, con-

tractors, and subcontractors on September 9, 2021.

The implementation is currently on hold due to a fed-

eral court injunction. If it is ultimately upheld in courts,

nonprots with federal contracts – but not those with

federal grants – will be required to have policies in

place to ensure that their employees are vaccinated

against COVID-19.

• On November 5, 2021, the U.S. Department of Labor’s

Occupational Safety and Health Administration

(OSHA) and the Centers for Medicare and Medicaid

Services (CMS) issued Emergency Temporary Stan-

dards (ETS) on COVID-19 vaccinations for employers

with 100 or more employees (OSHA) and for health

facilities that receive Medicaid or Medicare reim-

bursements (CMS). The OSHA ETS requires covered

employers to have policies requiring their employees

to be vaccinated against COVID-19 or to be tested

weekly for COVID-19. The CMS ETS requires cov-

ered health facilities to have policies requiring their

employees to be vaccinated against COVID-19. On

January 13, 2022, the U.S. Supreme Court issued a

stay that temporarily stops the implementation and

enforcement of the OSHA ETS. In a separate ruling on

the same day, the Supreme Court allowed the CMS

ETS to move forward. For more information on the

OSHA Emergency Temporary Standards, see https://

www.osha.gov/coronavirus/ets2. For more information

on the CMS Emergency Temporary Standards, see

https://www.cms.gov/les/document/cms-omnibus-covid-

19-health-care-staff-vaccination-requirements-2021.pdf.

• Federal and state laws give nonprots the option of re-

quiring employees to be vaccinated against COVID-19.

Nonprots that adopt vaccination requirements must

provide exceptions for employees who are unable

to be vaccinated for medical reasons or because of

sincerely-held religious beliefs.

• More information is available at www.ncnonprots.org/

blog/covid-19-vaccination-requirements-considerations-

nonprots.

Provided face cover-

ings for your employ-

ees working outside

of the home?

• Any nonprot with employees or contractors.

• Pursuant to state executive orders related to the

COVID-19 pandemic, North Carolina employers

must make a good faith effort to provide a one

week supply of reusable face coverings or daily

supplies of disposable face coverings for all of their

workers who perform work outside of their homes.

• Nonprots should ensure that their employees and

contractors who are working anywhere other than

their homes have adequate supplies of face coverings

throughout the course of the pandemic.

Have you Who has to do it How and when to do it

Sought forgiveness

of your Paycheck

Protection Program

loan?

• Nonprots with rst draw or second draw Pay-

check Protection Program (PPP) loans.

• The PPP loan program, which was created under

the CARES Act in 2020 and extended and expand

ed under the December 2020 federal COVID-19

relief law and the American Rescue Plan Act, pro-

vides forgivable loans to nonprots and businesses

that retained their workforce during the terms of

their loans.

Note: The Center will continue to provide updates

on any changes to the PPP in our weekly Nonprot

Policy Update newsletter.

• PPP borrowers may apply with their lenders for loan

forgiveness. In August 2021, the Small Business Ad-

ministration (SBA) opened a streamlined application

portal to allow borrowers with PPP loans of $150,000

or less secured through participating lenders to ap-

ply for forgiveness directly through the SBA (https://

directforgiveness.sba.gov/requests/borrower/login). The

SBA has information and forms that nonprots and

other borrowers can use to apply for forgiveness of

their PPP loans at www.sba.gov/funding-programs/loans/

covid-19-relief-options/paycheck-protection-program.

• In October 2020, the SBA issued a simplied loan

forgiveness application for borrowers with loans of

$50,000 or less (www.sba.gov/article/2020/oct/08/

sba-treasury-announce-simpler-ppp-forgiveness-loans-

50000-or-less).

Considered applying

for the Employee

Retention Tax

Credit?

• Nonprots with a 20% drop in revenue for any of

the rst three quarters in 2021 compared to the

same quarter in 2019.

• In December 2020, Congress extended and expanded

the Employee Retention Tax Credit. Eligible nonprots

may now receive this refundable payroll tax credit if

they had a 20% decline in revenue for any of the rst

three quarters of 2021 compared to the same quarter

in 2019. Nonprots that received Paycheck Protection

Program loans may also apply for the ERTC, but they

must use separate expenses for the two federal relief

programs.

• See www.councilofnonprots.org/thought-leadership/

nonprots-don-t-overlook-your-potential-refund-under-

the-employee-retention-tax.

Followed state laws

for remote member-

ship meetings?

• Nonprots with voting members. • From April 24, 2020 through June 1, 2021, an Execu-

tive Order allowed nonprots with voting members to

hold membership meetings remotely.

• A new law that took effect on September 20, 2021

allows nonprots to conduct membership meetings

remotely or in person and allows nonprots to conduct

membership votes by written ballots or electronic

votes without a meeting. For more information, see

www.ncnonprots.org/blog/new-options-electronic-vot-

ing-boards-and-remote-membership-meetings.

This compliance checklist is available as part of membership for current Center members and for a fee for all others.