Nonprofit Tax Forms

What is a Nonprofit?

A nonprofit is similar to a corporation, but its purpose is to engage in activities that provide no financial profit to its members.

To qualify properly as a nonprofit, a business must secure tax exempt status from the Internal Revenue Service. The IRS provides a nonprofit organization with a Federal Determination letter that shows the exemption from federal tax.

Nonprofits who wish to have the sales tax exemption must:

• Be recognized by the IRS as a nonprofit,
• File a Nonprofit Application for Sales Tax Exemption (Form NP-20A, available through INTIME), and
• File a Nonprofit Organization’s Report (Form NP-20R) by May 15 every five years in order to remain registered.

Effective July 1, 2023, if the organization is not on the list of nonprofit exceptions and reaches $100,000 in sales, it must remain registered and collect sales tax each year until the organization makes less than $100,000 for two consecutive years.

If the organization reaches this $100,000 threshold, it must file a Nonprofit Organization Unrelated Business Income Tax form (Form IT-20NP).

Nonprofits that are not required to collect sales tax

The following nonprofits are not required to collect sales tax, even once they’ve reached $100,000 in sales:

• Churches and other places of worship
• Monasteries
• Convents
• Indiana public schools
• Parochial schools regularly maintained by a recognized religion
• Youth organizations focused on agriculture

If a nonprofit reaches $20,000 in sales between January 1 and June 30, 2023, the nonprofit is required to register and collect sales tax. However, effective July 1, 2023, the nonprofit that was required to register because they met the $20,000 threshold may unregister. They would only be required to register when they reach $100,000 in sales in the current or previous calendar year.

Example

Jane operates an after-school youth center in Indianapolis that has a small administrative staff, two counselors, and a bookstore. The center also holds an annual fundraiser for two weeks in the summer.

Since the center and bookstore both have employees, they must register with DOR for withholding tax. The center must also register with DOR as a merchant and collect sales tax at their bookstore and during their fundraiser if it exceeded $100,000 in sales in the current or previous calendar year. They are not required to register and collect tax until the next business day if they did not reach $100,000 in sales in the previous year but exceeded $100,000 in fundraising sales or on a day during the bookstore’s business hours.

The center must file Form NP-20R by May 15 every five years to remain registered.

Form NP-20R will be uploaded to our website soon. For information on due dates, see the Nonprofit FAQs.

Note: This example shows just one possibility for nonprofits; it is not meant to provide legal advice for organizing your nonprofit or any other business.

Forms

Additional Resources

• Application of Sales Tax to Nonprofit Organizations
• Taxation and Filing Requirements for Nonprofit Organizations
• Utility Sales Tax Exemption (Form ST-109NPG)
• New and Small Business Education Center