This topic contains 2 replies, has 3 voices, and was last updated by  Thomas Wrobel, Attorney for Nonprofit Organizations 2 months ago.

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  • #5702
     jpatter5 
    Participant

    Hello, I was really excited to start my non-profit in Colorado and filed the articles without doing much research and realizing there is certain language required/recommended from the IRS (I’ve learned a lot since then). My current distribution of assets upon dissolution reads: “In the case of dissolution, assets belonging to the institution will be distributed to each stake holder according to their percentage of investment.” I called the secretary of state and they said there’s no way to remove this from the original document I can only amend it. Is there another way to remove this statement and add the correct one? If not, will the IRS see this and reject our 1023 application? Are there any example documents showing the correct way to write an amendment passable to the IRS?

  • #5704
     Steve Vick 
    Keymaster

    Hey there,

    Sorry for the delay in responding to your question.

    So – I did the exact same thing. Here in Alaska the incorporation process is so easy I missed a heap of stuff the IRS wanted to see.

    The only way to fix it was to ammend my articles. It is actually a pretty painless process. I struck out what I didn’t want and added what I did want. Paid a small fee. Waited a couple weeks. And it was done.

    Ammending is an official process that has to be documented. It is, as far as I know, the only way to update your Articles of Incorporation.

    I will forward your question to our resident expert (Tom Wrobel – nonprofit lawyer) and see if he has anything to add.

    Steve
    Nonprofit Ally Founder/Admin

  • #5712

    The IRS definitely has statutory language requirements. Here is the language that the IRS requires to be in a 501c3’s organizing document, i.e., Articles or Certificate of Incorporation:

    A. This corporation is organized and operated exclusively for charitable, religious, educational, and scientific purposes, including, for such purposes, the making of distributions to organizations that qualify as exempt organizations under Section 501(c)(3) of the Internal Revenue Code, or corresponding section of any future federal tax code. This Corporation shall be a nonprofit corporation. The specific purpose of the organization is:

    [Insert specific purpose language here]

    B. Notwithstanding any other provision of these Articles, the corporation shall not carry on any other activities not permitted to be carried on (1) by a corporation exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code or (2) by a corporation, contributions to which are deductible under Section 170(c)(2) of the Internal Revenue Code.

    C. No substantial part of the activities of this corporation shall consist of carrying on propaganda, or otherwise attempting to influence legislation, and the corporation shall not participate or intervene in any political campaign (including the publishing or distribution of statements) on behalf of, or in opposition to, any candidate for public office.

    D. Upon the dissolution of the organization, assets shall be distributed for one or more exempt purpose within the meaning of sections 501(c)3 of the Internal Revenue Code, or corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose. Any such assets not disposed of shall be disposed of by a Court of Competent Jurisdiction of the county in which the principal office of the organization is then located, exclusively for such purpose or to such organization or organizations, as said Court shall determine, which are organized and operated exclusively for such purpose.

    Thomas Wrobel
    Attorney for Nonprofit Organizations

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