Steps to Forming a Nonprofit: Minnesota Filing

Step 12: Apply for Sales Tax Exemption

Some nonprofits qualify for exemption from sales tax on purchases through the Minnesota Department of Revenue. This exemption allows purchases on office supplies, furniture, vehicles, computer equipment and other taxed items to be purchased without a 6.5 percent (7 percent in Minneapolis and St. Paul) sales tax. Most exemptions are given to purely educational or direct service organizations.

To apply for sales tax exemption, organizations must complete and submit Form ST16, Application for Nonprofit Exempt Status – Sales Tax

Step 13: Receive Tax Identification Number

If the organization will sell products or services subject to Minnesota sales tax, withhold Minnesota income taxes from employees, pay MinnesotaCare taxes or special taxes, or is a vendor of goods or services to a state government agency, the organization must receive a tax identification number from the Minnesota Department of Revenue.

To obtain a tax identification number, complete and submit Form ABR, Application for Business Registration. Organizations must submit this form if they register for at least one type of tax, including sales and withholding taxes, income tax, and excise and gross receipts taxes. The package also includes registration forms for each of these taxes and instructions.

Step 14: Register as a Charity

The Charitable Solicitation Act, Chapter 309 of the Minnesota Statues, states that nonprofits must register as a charity with the Attorney General’s Office, Charities Division. An organization does not need to register only if it meets one of the following three conditions:

  1. does not hire staff or a professional fundraiser and does not plan to receive more than $25,000 in total contributions;
  2. is a purely religious organization; or
  3. 3. is a private foundation that does not solicit contributions more than 100 persons during a fiscal year.

An organization must register with the Attorney General before soliciting contributions. File a Charitable Organization Registration Statement with a copy of the organization's articles of incorporation, IRS determination letter, and most recent financial statement. The filing fee is $25.

 

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