Overview
The IRS issued guidance in 2018 that allows for a nonprofit that is incorporated in a particular state, and has been granted tax-exempt status by the IRS, to relocate corporate headquarters to another state without having to re-apply for tax-exemption.
The Problem
While the IRS allows it, most states do not. The reason is that the corporation IS the entity. 501(c) status is merely the tax structure granted to that corporation by the IRS. And since each corporation is incorporated in only one state, there is really no such thing as moving it. In essence, to truly uproot and move requires forming a new corporation in the state being relocated to, and dissolving the old corporation in the original state.
While that sounds easy enough, it really isn’t. Each state’s Attorney General’s office governs nonprofit dissolution. Dissolving an existing nonprofit corporation usually triggers the IRS-required asset-distribution clause in the Articles of Incorporation, requiring the nonprofit to submit a plan to the AG’s office for giving away its assets. Given that the nonprofit is trying to move and not shut down, this is an obvious problem with no easy solution.
A Better Idea
For most organizations expecting to relocate, but who do not wish to start over, they can simply keep their corporation actively incorporated in the original state, and filing for permission in the new state to set up shop there as a “foreign” corporation (foreign by state, not nationality). This is done by filing for a Certificate of Authority in the new state.
We are an Ohio 501c3 operating in a number of states. Our primary office is now located in Wisconsin.
We have a registered agent (CT Corp – hired) in Ohio; (we are registered in Wisconsin as well). Do I need a physical address in Ohio as well? I have scoured their website and have not been able to find this.
Hi Holly, the good news is that you do not need a physical address outside of the Registered Agent to keep the corporation in good standing in OH.
Hello, I currently run a small non profit organization North Tustin Wrestling Academy in Tustin, California. A small wrestling club for at-risk youth. I am looking to relocate my family to Idaho this spring and would like to continue the non profit in Idaho. Is this possible by using the Certificate of authority?
Hello Eliseo, It is possible to use the Certificate of Authority to register to operate in in Idaho. Just remember, you have to maintain all of your CA filings as well, since that is where the non-profit corporation was formed.
We have a plan to start a new non-profit in NV. We do have a plan to move next year and possibly again move in another 5 years based on our current plans. In this situation is it better to register in Delaware. Even though in your blog you are not recommending to register in Delaware but more in the state we plan to operate. One potential landing place next year is going to be in CA.
Thank You
Hello Mahendran, Yes, registering in Delaware is only advantageous to for-profits for tax purposes, which is why so many corporations form there. For non-profits, they have a serious annual report with financial statements which is more intense than other states. And, though DE does not have a Charitable Solicitation Registration, if you are going to do any soliciting in other states, you are going to have to register there anyway. If your coming move is in CA, it would probably be best to get things off the ground there. Even if you move in the future, reglardless of the state, you will need to maintain a registered agent in that state and be compliant with those state filings. Wishing you the best.
Hi,
Thanks for the very helpful information. I have a nonprofit in Illinois and would like to transfer that to Texas, where I reside. Is there a way for me to do this? Or is it easier for me to file the Certificate of Authority? Thanks!
Most of the time, Joe, it’s easier to file the Certificate of Authority and keep the Illinois corporation active. Yes, it’s a little more paperwork filing ongoing, but it’s not nearly the headache that attempting to change the state of your official corporate location. Knowing how difficult Illinois makes everything else, I can’t imagine they would make that easy.
Hello Greg,
Really appreciate this piece. We have a 501 (3) incorporated in Minnesota. Management of the organisation is moving to Colorado, and our final link with Minnesota will finish when our bookkeeper retires later this year. Domestication would appear to be the easiest route in our case, but my online searches do not reveal whether this is allowed by Colorado law. Do you have any idea of the position in Colorado, please?
Thanks
Colorado is probably not your bigger concern. It’s probably Minnesota. Even though the IRS technically allows the corporate domicile to change, it’s the states that fight it. To officially relocate, it involves incorporating a new entity in CO and dissolving the MN corporation. The problem comes in when state law requires you to follow through with asset distribution upon dissolution, even though the dissolution is a technicality. It’s usually the AG’s office that determines this. I recommend calling the Minnesota State Charities Division and ask them what you would have to do, if anything, if you technically dissolve a MN nonprofit corporation that you are not winding down, but instead moving. Keep in mind that if you can successfully do this, you will be associating your existing EIN with your new corporation. That’s technically a dicey thing, but the IRS doesn’t usually challenge it. They alternative is registering the MN corporation in CO and keeping your MN corporation active. Not always what you want to do, but may be easier.
Hi Greg!
My nonprofit was incorporated in 2020 in the state of VA. The address associated with the nonprofit is a previous home address of mine. I moved to Texas in 2022. The nonprofit is a mentorship program for young girls.
I plan to partner with schools or social services agencies to provide the nonprofit’s services. Do I need register the nonprofit in Texas?
Thank you!
Yes, definitely you need to register with the corporation’s office in Texas as a Virginia corporation. Keep filing your VA corporate report, lest your corporation get dissolved. You will need to maintain a registered agent in both states now, too.
Thanks Greg, I appreciate your answer because I have the similar problem. I’ve had my non-profit mentor organization for at-risk teens for the past 10 years. The building I ran my summer camp and after school problem was sold but my home address was where I received most all my business mail. I moved in July from Georgia to South Carolina one start over. So I will continue to renew in Georgia and file my tax there?
It’s probably easier to do that than to try to actually relocated your incorporation. Just find someone to be your registered agent in GA and continue to file your annual report there. You will probably need to register in SC for charitable solicitation and possibly get a corporate certificate of authority to operate a GA corporation there.
Hi there. Thank you for taking time to respond. I am a Survivor Leader of an anti-human trafficking agency in California, but am looking to move to Baton Rouge, Louisiana. Could you possibly provide the steps I need to take to continue operating the nonprofit in Baton Rouge? Again, thank you so much! Blessings!
It really depends, Ellen. You may be able to apply to Louisiana to allow you to operate your CA nonprofit in Louisiana. You’ll need to maintain your corporate status in CA, including your registered agent. You’ll also have to maintain your CA FTB exemption and fundraising registration in CA, as well as setting up registration in LA.
We are a non-profit association originally incorporated in Massachusetts. Our operations have always been fully remote (no physical office), and the address has typically been attached to the location of the ED, most recently in Kentucky. I am the newest ED located in Florida looking for a stable solution for our physical address. I am assuming since I’m an employee that I do need to register in Florida. I found a remote mail company based in North Carolina and am trying to figure out if just having our physical address – no office, no employees – in NC would required us to register as a foreign entity. Would it be better to try and find an address in Massachusetts to avoid another foreign registry process? I’ve just not been able to find an answer based on virtual office situations.
Late response, Joy…sorry. I’d probably stick with Massachusetts and not add any more states to the mix than necessary. You’re right in that you will have to register as a foreign corporation, as well as for payroll purposes, in Florida.
I looking at starting a non profit, but I live in Hawaii currently. I am expecting to move in the next year to TN. Can I file for non profit status in a state that I don’t currently live in?
Yes and no…there’s a lot to moving once you’re legally established. If you’re moving to our fair state in less than 1 year, I’d wait and form it TN.
Hi Greg,
I have really appreciated your article. In reading it I have concluded that I have jumped the gun a little in wanting to move my nonprofit from one state to another. I have already dissolved the corporation in Idaho, and am now reincorporating in Alaska. My question is, what steps do I now pursue with the IRS to preserve my 501c3 status? Is it even possible?
Thank you for your time.
Sorry for the late reply. The IRS says yes, but most states say “no” because of the distribution of assets clause. If you haven’t already, you can incorporate in Alaska and attempt to keep using the same EIN number, then change your address with the IRS. No guarantee that will work, though.
I learned today that the first 2 #s of my EIN indicate County. We are a nonprofit and do not have a physical address. I used my home address when I set up the 501c3. The fact that our EIN indicates my County and not the county where we operate makes us ineligible for certain donations from a local business. If we update our address to another officer, will our EIN be updated with the county change?
I don’t know who told you that, but that’s not even close to accurate. My state of Tennessee has 95 counties, which would take up all but 5 possible leading digits for EINs if that were true. I’ve heard some weird stuff over the years, but this one is new. Totally, utterly false.
this may be too specific of a question. I am the founder/president of the CA 501(c)(3) and I am not operating in TN. I have a Registered Agent in CA and have foreign entity in TN.
The question is about CA Principal Office. I have to file my Statement of Information for the CA Corporation. I am assuming that I list the TN address as the Principle Office – as we no longer have a principal office in CA.
Does CA allow you to maintain the nonprofit Corp without having a principal office in the state?
Thanks! I really appreciate seeing all of the Q&A above!
Yes, they should without problem. As long as you are maintaining a registered agent there, you should be fine. California requires a principal executive office, but doesn’t really define that. If you don’t have a physical place of business there, you may wish to use your RA’s address.
Hello, this is very helpful info. If moving a rescue 501c3 from NC To NJ, all that is needed is to fill out the Certificate of Authority and to renew it every other year in NJ. What responsibility would need to be taken care of still in NC moving forward? Thanks so much!
You would still need to file your corporate annual report in NC, plus you will probably need to keep your solicitation registration current there, as well.
If a 501(c)(3) (incorporated in IL) completes a Certificate of Authority to operate as a “foreign” entity in KY, will it be required to complete an annual report in the state of incorporation? Are there other forms/ documents that will be required by the state of incorporation on a yearly basis?
Thank you much
You will most likely have to file an annual report in your home state of incorporation, plus any state in which you have a certificate of authority. There’s a good likelihood you’ll need to register with the other state’s division of charities, as well.
If we do the Certificate of Authority in the new state, do we file any annual returns in the new state? Are we only filing annual returns in the old state and federally? Just double-checking. Thank you.
You will have annual reports in all the affected states, plus a federal Form 990. You may also need to register for charitable solicitations in those other states.
BT is a 5013c currently operating in Californa. We are moving to Texas. Our services are online. To apply in Texas as a foreign state, can we use the financial funds we have in the bank in Californa to continue operations in Texas. Can we take all of the money out of the bank in CA and create an account in Texas. Would this change our tax status… do we need to keep some funds in Californa? Help!
It sounds like you’re moving, but keeping the original corporation intact. If so, yes you can set up a new bank account in Texas using your EIN number and new address. It doesn’t change your tax status and there would be no need to keep money in CA. Just make sure you remember to keep filing your annual report in CA and Texas both.
I registered a NPO with 501C3 in Michigan and mainly operate online. We use our residence as registered agent. If we moved our residence to Kentucky, do we need to register in KY if we still do online? Or if we only use the residence in KY for holding some free of charge activities?
You will most likely need to register in KY, as well as get permission to operate a MI charity based in KY (called foreign corporation registration).
Thank you for reply. Some follow up questions. We have already decided to dissolve the business in Michigan and then register again in Ky after the dissolution is completed and approved. We don’t have any liabilities or assets or fund to handle, only leaving the deposit of 600 in the bank to keep the bank account for future use. When we filed the dissolution documents, we need to put down the wind up date. What wind up date we should put? Since we can suspend our activities and business from the date of applying for dissolution till we re-open our business in KY. Should we put the dissolution date as the wind up date? Or we put the wind up date a few months later for the Michigan department to handle the application and approval? will the EIN and tax-exempt status be better kept for a longer winding up date? Will the winding up affect our EIN and tax-exempt status
First, thank you so much for this helpful article! If I may ask a couple of questions:
(1) We are incorporated in CA and want to set up our fulfillment center (pack and ship products from our online store) in TN – do we still need to do a COA?
(2) Any good resources where we can find information on taxes and other requirements for TN? We are in the process of projecting additional costs and resources for this setup.
Thank you in advance!
Hi, Nicole. Many apologies for a late response. Yes, I would recommend a COA for TN since you will have a physical presence there, even if it only for behind-the-scenes work. As far as info sources, the TN Secretary of State’s charities page is a good one. Also, go to the footer of our website and click on the state-by-state guide link. We’ve got a resource page for each state. If you need help with anything, let us know.
We have a NY nonprofit 501(c)(3), which has a NY address registered in NY, but we are physically moving to FL now. If we don’t have a NY physical address anymore, what do we need to do to maintain the NY corporation with nonprofit status and then register as a ‘foreign corporation’ in FL where we want to setup shop now for our nonprofit work? Do we just use the NY Secretary of state’s office as our ‘registered agent’ or do we need to find a ‘service’ which we would have to pay to be our ‘registered agent’ in NY ?
You can’t use the state as your registered agent. Your best choice is a firm that provides that. Contact us if you need that, as we can provide that for you.
Hello, my partner and I have been offered the opportunity to “take over” a stagnant 501c3 that was incorporated in CA. We do not live there. We live in Missouri and IL. The basis behind the 501c3 is to help animal shelters crowdsource funds across the country (so all 50 states) through an event we created/trademarked.
My question is, can the 501c3 stay in CA even though we don’t live there? We simply facilitate the event virtually for the orgs.
Yes, it can. But since operations will be elsewhere, you’ll need a Certificate of Authority to operate a CA charity in the new state. Just remember you will still have reporting requirements that remain in CA.
Super helpful post, thank you.
One thing it doesn’t address though is the cost of operating in certain states compared to others. I was dumb enough to incorporate in NY and I now have to pay for audits and reviews that cost thousands of dollars a year. I would like to move my non-profit to North Carolina where I now live and where such requirements don’t exist but I understand from your post that it would open a big can of worms. Are they no solutions really?
So sorry for the delayed response. It’s not easy to move all this, that’s for sure. Sometimes you’re better off starting a new org in the new location and transitioning from one to the other operationally, then shutting down the original. Other times, just relocating and getting a certificate of authority in the new location makes sense. In your situation, it wouldn’t relieve the burden NY places on you. You might consider a new org, but I would have to know more about your particular situation.
Wow! What awesome information!
We have a current nonprofit 501(c)(3) in CA. We’ve moved to Atlanta, GA, and would like to work the nonprofit from here. I assume, since we don’t want to dissolve the CA nonprofit, we would file the cert. of auth. (foreign corp), register a reg. agent and also register so that we can solicit funds in GA?
Thanks so much!
Very late answer, but yes, Aubrey, you’re right on target!
Hi Greg,
I just came across your site and comment forum while researching this issue online. I’m with a non-profit school that is operating and licensed in CA, but is moving to NV. Based on your article, it sounds like you recommend that we simply register as a foreign entity doing business in NV, and maintain our CA business license. Did I understand that correctly? If so, would that mean that we continue to file all paperwork with CA (I assume so)?
Thank you Greg. The insight you offer is greatly appreciated.
Late reply, but yes to all the above 🙂 .
In addressing this issue of “relocating” the 501c3 from one state to another, I don’t see the recommendation of filing Articles of Incorporation in the new location, then merging the two organizations, and having the newer nonprofit be the surviving organization. Your thoughts? I’m addressing from CA to NC.
Merging two organizations is indeed an option, but not one we recommend to accomplish the move of a single nonprofit. Mergers are legally tricky and usually messy. It’s a necessary reality when it is really two distinct nonprofits combining forces to proceed as one organization. But for one nonprofit moving from one state to another, it isn’t an advisable way to go when the other methods are just as effective, and usually less complicated.
Is it possible to transfer a 501c3 from Vermont to Texas without dissolution or a foreign registration?
Not likely, Bryan. Moving is almost always going to entail dissolving and re-incorporating in the new state, or keeping your Vermont corporation and registering in Texas to do business there. I prefer that latter in most cases, because states often require you to follow through with asset distribution upon dissolution. You could always distribute your assets to the Texas corporation, but you may find any filings you have to do with Vermont to substantiate all that may be more work than simply filing foreign registration with Texas.
Greg, Thank you for this wealth of information regarding the moving of our 501(c)3 organizations from one state to another. A couple questions please:
1. What constitutes a legal registered agent in the former state where the original incorporation remains? Does it need to be another non-profit? Would a Board Member of the nonprofit suffice.? We have operated in CA for 30 years out of our home. Is a brick and mortar business address required to house the registered agent–or simply a friend of the nonprofit willing to receive the mail and ship it to the new location?
2. How would we begin the process of becoming a foreign nonprofit in our new state of TX? Is it a fairly simple process–or would you recommend hiring an attorney to shepherd us through the process?
Thanks in advance for your help.
Great questions, Michael. You don’t have to have a brick and mortar business to act as an RA. Sounds like you have a board member willing to do that from their home address, which is perfectly fine. It just has to be a person or a business with a street address in the state, not a PO Box. Texas, like most states, allow “foreign” charities to register to do business with a location of operations in their state. Start here: https://www.sos.state.tx.us/corp/foreign_outofstate.shtml . It shouldn’t be a terribly difficult process, but let us know if you’d like us to take it on.
We have operated a CA non profit for nearly 20 years, and we do everything virtually with clients. We moved to Arizona several years ago, and have still been filing our form 199 in CA, but haven’t registered in AZ as a “foreign” corporation. Our clients are all over the country, and as I said, all of our business is done virtually. Do I need to file as a foreign corp in AZ… ?
I would recommend that you do. Even though your activities are virtual, they are being performed substantially in the state of Arizona.
We currently have a Certificate of Authority in NJ and would like to Operate out of NC. Can I apply for just a COA in NC?
Most likely, yes. Check with the Corporations Department of NC to make sure.
Can a registered agent’s address also be the principal place of business for a MD nonprofit? Pretty much virtual operations across the country . . .
I don’t think that will be a problem for you. It is common for nonprofits to list their business address as their registered agent address if they are not hiring out that service.
“The act of dissolving a corporation terminates the existence of the legal entity, along with its federal EIN”
Who said it terminate also the Federal EIN, why can’t you open another corporation in the other state with exact same name and keep the original Federal EIN, since the IRS does let you relocate Another state.
Actually, the IRS says so. This is an area of considerable inconsistency on their part. While they say they can accommodate a dissolution and reorganization in another state with the same 501c3 determination letter, their own regs with regard to EINs say otherwise. In reality, our response that you quoted could have been worded better. EINs don’t actually get terminated along with the entity at dissolution, per se. EINs are permanently assigned to the entity that secured the EIN. If the entity dissolves, the EIN remains because it is used to identify past, present, and (potentially) future federal tax filings. However, the IRS clearly states that, “Regardless of whether the EIN is ever used to file Federal tax returns, the EIN is never reused or reassigned to another business entity. Opening a new corporation in another state is, by definition, creating a new business entity. But, Revenue Procedure 2018-15 essentially lets you do this. It’s not consistent, and most states push back on the entire idea anyway.
Can I operate a bingo in the state of California if I have a Delaware 501c (3) ?
We don’t work with gaming, so I cannot speak to California specifically. However, if California allows charities to conduct bingo in the state, being incorporated in Delaware will not cause you problems. You’ll just have to make sure you’re Delaware charity is properly registered in California.
I have a question for clarity purpose: I have a nonprofit organization in New York, they have no financial activity since they have been incorporated for about a year. They would like to move the corporation to Tennessee. They will be totally moving out of New York. They have a 501c3 determination. Can they just dissolve the New York location and start the corporation in Tennessee? Especially if the name is available? or can a domestication or conversion be done in New York then file in Tennessee the documentation? Although, they’ve been around a year, they do not want to lose they corporate status time. Please reply.
Thank you.
This is difficult, because the IRS says you can, but many states won’t let you because of the requirement to distribute assets at termination. But in your case, it may be possible since it sounds like your NY nonprofit has no assets. It can still be a major headache, though, especially with getting the IRS to recognize your EIN as being valid for your Tennessee corporation when it was originally assigned to a NY org. You may find it easier to maintain the NY corporation with a registered agent in NY, then file in Tennessee for a Certificate of Authority to operate a NY nonprofit corporation in Tennessee.
Hi,
We have a non-profit that is incorporated in california. We want to operate in Arizona and have got a local address. It is telehealth – so no physical address is actually needed. What do we need to do ? Do we need to do Domestication in AZ or file any paperwork or add AZ as state ? I would prefer not to dissolve the non-profit since we have a history.
You probably shouldn’t domesticate in AZ because it will dissolve the California corporation. Filing as a foreign (CA) corporation in AZ and maintaining status in both is your best route to go in most cases. You’ll need a registered agent in both, but that’s not a big deal.
We are overseers and founders of a 501c3 ministry with a building as a center of operations in CT. We, as the owner/operators, moved last year from CT to NH. We still operate out of the building in CT through a team (and routine visits) even though we live in NH. The building is used for various nonprofit functions. The lease on the building renews next year, but due to various factors we may no longer have the building even though we still have a strong presence in CT.
My question is can we keep the entity as a CT nonprofit, and what can we do with the problem of not having an address? Basically how would we eliminate the building and operate as we do without a specific address? In essence it becomes a virtual ministry. Can we move the permanent address to one of the ministers in CT? I assume it would be problematic to move the address to NH.
Many nonprofits operate “virtually”. What that really means is the address is probably the same as the home address of the primary leader. If your base of operations leaves NH, you should register with CT’s corporations office as a NH corporation doing business in NH. You will probably use your home address (or someone else’s) as your registered address in NH. Keep you CT corporation alive by filing your corporation annual report every year, as well as your new NH foreign corporation report. You cannot reincorporate in NH without forfeiting your IRS 501(c)(3) determination, since it is permanently tied to the existing organization. It is almost always easier to register in the new state of operations.
“You cannot withdraw your corporate status from California without dissolving the corporation, and thusly, terminating its 501(c)(3) status. ”
what is your source that by dissolving your corporation you lose the 501(c)(3) status. from the IRS?
It’s more a matter of logic than code. The act of dissolving a corporation terminates the existence of the legal entity, along with its federal EIN. It’s dead…permanently. 501(c)(3) determination is a tax-status granted by the IRS to a legal corporate entity (associated with a specific EIN) that qualifies as being organized for a sufficiently charitable purpose. If the corporation no longer exists, the tax status associated with it is not transferrable to another entity. It dies along with the corporation.
I don’t think this is correct in some situations. For example, the IRS specifies various situations where, despite a structure change, an EIN can be retained:
https://www.irs.gov/businesses/small-businesses-self-employed/do-you-need-a-new-ein
The IRS also clarified in 2018 that various situations, like re-incorporation or conversion, would not require new nonprofit applications:
https://www.irs.gov/pub/irs-drop/rp-18-15.pdf
Your points are valid, and these IRS procedures do apply. The problem, however, is that it really doesn’t matter what the IRS says in this case. Corporate law in the vast majority of states require a dissolving 501(c)(3) to divest of all assets by distributing them for charitable purposes, usually to another charity. So even if the IRS allows for continuity of EIN and even 501(c)(3) determination, the states don’t agree…and state corporate law trumps IRS regulations governing tax exemption. You could attempt to get around this by incorporating in the new state, dissolving in the old state, and donating all your assets into NewCo. The problem is, with an asset divestiture overseen by the former state’s AG, you cannot legitimately say there is continuity of operations.
There are other areas of state/federal tension like this, but very few this extreme. We appreciate the IRS attempting to make this easier, but until state corporate law catches up, it’s really a moot point.
“You can only ever be incorporated in a single state”
Where is the source to the statement that you can only be incorporated in a single state?
The source is US corporate law. Under both state and federal law, the act of incorporating creates a legal entity, or legal person (not to be confused with a human). You cannot incorporate in multiple states without creating multiple entities. It’s a one-and-done. Once incorporated, you are free to operate anywhere in the country, but virtually every state will require you to register as a foreign corporation (foreign state, not country) if that is not your state of incorporation.
I understand the article… however, California (CA) has multiple charges and is adding more to be active there. In Florida (FL) they do not charge anything for the nonprofit to function. Can I register in both and then withdraw from CA after being established in FL? I would like a response, please.
It depends on how you define “register”. You can be registered for fundraising purposes in one or many US states, depending upon your activity there. You can only ever be incorporated in a single state, however. If you incorporate in California, then move to Florida, you must get foreign corporation approval in Florida as a California nonprofit doing business in Florida. Both corporate statuses would have to be maintained. You cannot withdraw your corporate status from California without dissolving the corporation, and thusly, terminating its 501(c)(3) status. That’s the equivalent of starting all over again from scratch.