In an attempt to provide information to individuals desiring to start a non-profit organization in Maryland, the Charitable Organizations Division of the Office of the Secretary of State has gathered information set forth below on the necessary steps to form a non-profit organization. While every attempt has been made to ensure the accuracy of the information, please be advised that specific questions and information should be directed to the appropriate agency.
Maryland Association of Non Profit Organizations, Inc has put together a checklist for starting a nonprofit organization in Maryland. Click here for a pdf copy of their checklist. This is a very helpful resource when attempting to start a non-profit.
Federal Income Tax Exemption
Most charitable organizations are classified by the Internal Revenue Service as tax-exempt organizations. The benefit of obtaining the tax-exempt status is that the organization is not liable for any federal income tax. Applications for this status are made to the Internal Revenue Service. If tax-exempt status is granted, the organization will receive a tax determination letter. It is usually during this process that your organization will be designated an employee identification number or federal identification number. (Please note that these terms are used interchangeably.) This number is also required for many of the exemptions described below
Being a tax-exempt entity does not automatically make donations to your organization tax deductible for the donor. Since most charitable organizations are considered section 501(c)(3) organizations, donations to these charities are generally tax deductible for the donor. Your organization's tax determination letter will state whether contributions to your organization are considered tax deductible.
To obtain the necessary forms to apply for tax exemption, please contact the Internal Revenue Service by calling (toll free) 1-877-829-5500, or downloading the forms from the IRS's website. The required forms are:
- Form SS-4: Application for Employer Identification Number;
- Form 8718: User Fee for Exempt Organization Determination Letter Request; and Either:
- Form 1023: Application for Recognition of Exemption for 501(c)(3) Organizations; or
- Form 1024: Application for Recognition of Exemption for all other exempt statuses.
State Income Tax Exemption
Upon receiving an IRS tax determination letter stating that your organization is exempt from federal income taxes, your organization may also apply for an exemption from state income taxes. The Comptroller of the Treasury is the state agency responsible for acknowledging an exemption from Maryland income tax.
To apply for a state income tax exemption, your organization should submit to the Legal Department of the Revenue Administration Division the following information:
- Request for exemption from Maryland income tax;
- An explanation of the nature, purpose, and scope of your organization;
- A copy of the IRS tax determination letter;
- A copy of your organization's by-laws; and
- A copy of the latest financial statement of your organization.
When the request for an exemption has been granted, no income tax returns need to be filed with the Comptroller unless your organization files an IRS Form 990-T. (The Form 990-T is required if your organization has unrelated business income.)
The request for a state income tax exemption and the supporting documentation should be forwarded to the Comptroller of the Treasury, Revenue Administration Division, 110 Carroll Street, Annapolis MD 21411 and to the attention of the Legal Department. The telephone numbers of the Revenue Administration Division are 1-800-MD TAXES (638-2937) and 410-260-7980.
Formal Structure of a Tax Exempt Entity
Before the Internal Revenue Service can issue your organization tax-exempt status, your organization must be formed as either an association, corporation, or trust. A copy of the organizing document (i.e., articles of incorporation approved and dated by appropriate state official, constitution or articles of association, or signed and dated trust instrument) must be filed with the IRS's Application for Recognition of Exemption.
In Maryland, corporate charter information is filed with the State Department of Assessments and Taxation. To assist non-profit organizations, the agency has prepared a guideline for articles of incorporation for non-profit organizations which can be obtained by contacting the agency. The agency's address is 301 West Preston Street, Baltimore MD 21201, and its telephone number is 410-767-1340. Forms and information can be obtained from the agency's web site.
Registration with the Office of the Secretary of State as a Charitable Organization
Organizations soliciting charitable contributions in Maryland are generally required to register with the Office of the Secretary of State as a charitable organization. Registration is required before soliciting in Maryland begins and continues on an annual basis.
If your newly formed organization will be soliciting Maryland residents for charitable contributions (either monetary or in-kind donations), your organization will probably be required to register with the Charitable Organizations Division. In most cases, the Exempt Organization Fund-Raising Notice will be the appropriate registration form for new organizations. This notice is required for organizations raising less than $25,000 in charitable contributions a year. You should also note that if your organization intends on raising funds in other states, you may also be required to register in the other states
Registration forms may be obtained by visiting the Forms page on our website or:
You may contact us by:
- Mail: Charitable Organizations Division, Office of the Secretary of State, State House, Annapolis MD 21401
- Telephone: 410-974-5534 or 1-800-825-4510 (within Maryland)
- Email: Michael.Schlein@Maryland.gov
Property Tax Exemption
Certain charitable, fraternal, educational, and religious organizations may be eligible for an exemption from state property tax. Once the property tax exemption is granted, the exempt status continues until it is revoked. State law, however, grants the State Department of Assessments and Taxation the authority to conduct periodic reviews of the granted exemptions to ensure continued compliance with the requirements.
While the tax-exempt status issued by the IRS is required to process the exemption application, the status granted by the IRS does not automatically guarantee that the organization's property will be exempt. Based upon the type of organization, there are different standards used to review a property tax exemption.
To receive an exemption application form or information about the exemption, please contact the State Department of Assessments and Taxation office for the county in which the property is located. You may find a list of SDAT local offices, additional information, and copies of the required forms on SDAT's web site.
Sales and Use Tax Exemption
Non-profit charitable, educational or religious organizations, volunteer fire or ambulance companies or volunteer rescue squads may also be eligible for sales and use tax exemptions. In Maryland, the Comptroller of the Treasury is responsible for granting this five-year renewable exemption. In order to be granted an exemption, your organization must have received a determination letter from the Internal Revenue Service stating that your organization is exempt under section 501(c)(3) of the Internal Revenue Code.
The applicable form can be obtained by contacting the Comptroller at 410-767-1313, or downloading the form from the Comptroller's website. The form needed to apply for an exemption from sales and use taxes is the Combined Registration Application.
If you have any questions concerning sales and use tax exemption, please contact the Comptroller of the Treasury at Goldstein Treasury Building, 110 Carroll Street, Annapolis MD 21404-0466 or at 410-767-1318. Forms are also available at the Baltimore branch office located 301 West Preston Street, Room 206, Baltimore MD 21201-2384.