Utah law authorizes a business or organization to form as a nonprofit corporation as long as it complies with Utah corporate law. With the exception of insurance, a nonprofit corporation can engage in any lawful business; however, no dividends, profits or other distributions can be made to individual members or shareholders. If the nonprofit corporation intends on obtaining tax-exempt status or soliciting donations, it must register with both federal and state agencies.
Incorporating
Forming a Utah nonprofit corporation requires compliance with the Utah Revised Nonprofit Corporation Act, which is overseen by the Utah Division of Corporations and Commercial Code. The basic step to incorporate is filing a document called articles of incorporation with the division. A pre-printed form of articles with instructions is available on the division's website that can be downloaded, completed and filed by fax or mail with the division (see Resources). The division's website also has a feature called OneStop Business Registration that can be used to file the articles online (see Resources).
Tax-Exempt Status
A Utah nonprofit corporation must first obtain approval from the Internal Revenue Service before filing for an exemption from franchise and income taxes generally imposed on Utah corporations. Form 1023 must be filed with the IRS requesting tax-exempt status and, if approved, a 501(c)(3) Determination Letter indicating approval. To obtain an exemption from Utah franchise and income tax, a copy of the IRS Determination Letter must be submitting along with Form TC-161 to the Utah State Tax Commission. Form 1023 is available on the IRS website and Form TC-161 is available on the commission's website (see Resources).
Sales and Use Tax Exemption
Utah law generally imposes sales and use taxes on business transactions. The law provides for various exemptions from these taxes, such as the exemption for religious and charitable organizations. A nonprofit corporation formed for the purpose of carrying on a religious or charitable organization can apply for a sales and use tax exemption with the State Tax Commission. Form TC-160 must be submitted along with a copy of the IRS Determination Letter (see Resources).
Charitable Organization Permit
All Utah nonprofits that solicit donations must register with the Division of Consumer Protection. Registration requires filing a Charitable Organization Permit Application with the division. The application can be downloaded from the division's website, completed and filed by mail, or it can be submitted online (see Resources).
