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Navigating State
Charitable Registrations
by Carol Shepherd, Senior Staff
H ave you ever
traveled down
a country road,
crossing from one
small town into
another, without
realizing the speed
limit had changed?
I have. And I got a $125 speeding
ticket! It can be an expensive way to
learn you weren’t paying attention.
Something similar happens to non-
profits as they cross borders from one
state to another, soliciting for their
charity, not realizing the rules have
changed. In my driving scenario, if I
had seen the speed limit sign alerting
me to lower my speed, I would be
$125 richer. Please consider this arti-
cle your speed-limit sign, so to speak,
for cross-state charitable soliciting.
Here in the Mid-Atlantic region, it is
likely that your nonprofit organiza-
tion will be, or is currently, soliciting
contributions from Maryland,
Virginia and Washington D.C. Each
state, and the District, has its own
rules relating to charitable registra-
tions and exemptions. So, it is
important to know the varying defi-
nitions of a charitable solicitation.
In the states of Maryland and Virginia,
charitable solicitation is defined as an
oral or written request for a charitable
UHY LLP brings specialists in nonprofit solutions in accounting and tax.
Columbia, MD 21045 410-423-4800 Fax 410-381-5538
contribution, regardless of whether
the person who makes the request
receives the charitable contribution.
Charitable solicitations include, but
are not limited to —
• Fundraising drives, events, cam-
paigns or other activity,
• An announcement to the news
media that you are seeking chari-
table contributions, and
• Distribution of a publication direct-
ly or implicitly seeking charitable
contributions.
In the District of Columbia charitable
solicitation is the request directly or
indirectly for any contribution or the
plea or representation that such con-
tribution will or may be used for any
charitable purpose. If you are solicit-
ing, take note of some basic rules for
organizations in Maryland, Virginia
and Washington D.C.
In Maryland
If your organization receives more
than $25,000 as direct support from
the public (not just from Maryland),
the charity must register. However,
you are exempt if —
• You are a religious organization. A
copy of the IRS determination let-
ter and other documents may
continued on page 2
November 2010
Vol. 4 • No. 5
L
www.uhyllp-us.com
Payroll Tax Credit
Available for
Smaller Tax-Exempt
Organizations
by Kerry Duvall, Manager
D oes your organ-
ization provide
health insurance to
its employees? If so,
you may be eligible
for a refundable pay-
roll tax credit begin-
ning in 2010. This
credit is part of the massive healthcare
legislation that was passed earlier this
year and is targeted toward smaller
tax-exempt organizations.
For years 2010 through 2012, the
credit is generally equal to 25 percent
of the organization’s non-elective
contributions toward the employee’s
health insurance premiums.
Beginning in 2013, the credit rises to
generally 35 percent of the non-elec-
tive contributions. The full credit is
available to organizations with fewer
than 10 full-time equivalent employ-
continued on page 2
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 November 2010
Vol. 4 • No. 5

Navigating State • You have no office within the • Your solicitations are for the
Commonwealth and are soliciting American Red Cross, or are made
Charitable Registrations through phone or other electronic exclusively from membership.
continued from page 1 medium and have a branch or
Regardless of the reason for your
need to be filed with Maryland to chapter located within the
exemption a form FR-164 must be
obtain this exemption. Commonwealth,
filed with the District of Columbia
• You solicit only from your mem- • You are a nonprofit debt counsel- to claim this exemption. The District
bership. You may need to file your ing service, of Columbia also requires charities
organization’s bylaws and a state- • You are a trade association, and/or to obtain a business license which
ment detailing from whom solici- must be renewed biennially.
• You are 501(c)(3) which solicits
tations are made to obtain this Happy soliciting ... and remember to
contributions only through grant
exemption. watch out for those speed limit signs!
proposals to other 501(c)(3)s, pri-
In Virginia vate foundations or for-profit
organizations. If your organization needs to reg-
You will need to register if you ister or file an exemption, you’ll
intend to solicit contributions with- In Washington, D.C. find useful forms and information
in the Commonwealth, or have on these websites.
You will need to register if you are a
funds solicited on your behalf. In
nonprofit organization soliciting Maryland: Secretary of State
the Commonwealth of Virginia
within the District; however, you www.sos.state.md.us/Charity/
there are several exemptions. To
may be exempt if — CharityHome.aspx.
claim exemption you must submit
to the Commissioner certain forms • You have received less than $1,500 Virginia: Virginia Department
outlining your claim of exemption. in gross receipts in a calendar year of Agriculture and Consumer
Here are some reasons you can resulting from activities carried Services
claim an exemption — out by volunteers, www.vdacs.virginia.gov/
• You are an accredited educational • Your solicitations are for educa-
District of Columbia: Department
institution, tional purposes,
of Consumer and Regulatory
• You solicit only within your mem- • You are a church or religious group, Affairs www.dcra.dc.gov
bership, and/or

Payroll Tax Credit wages of the employees of the 2. Does your organization employ
Available for Smaller Tax- organization as income tax with- less than 25 full-time equivalent
holding, amounts required to be employees for the tax year?
Exempt Organizations
withheld from the wages of the
continued from page 1 3. Are the average annual wages of
employees as Medicare taxes, and
the employees less than $50,000?
ees whose average annual wages are amounts of the taxes imposed on the
less than $25,000. As with many tax organization as the employer por- 4. Does your organization con-
credits, the credit begins to phase out tion of Medicare taxes.” tribute at least 50 percent of the
as these parameters increase. So, is your organization entitled to premiums for the employees’
any of this credit? Let’s find out. If health insurance coverage on a
The credit is claimed against payroll
you answer “yes” to the following uniform basis?
taxes paid during the calendar year
in which the organization’s tax year four questions, you may be eligible If you answered yes to these general
begins. Payroll taxes, for these pur- for at least a partial credit. questions, please give us a call at
poses, are defined as “amounts 1. Is your organization described in 410-423-4800 to determine if you
required to be withheld from the Code Sec. 501(c)? are, in fact, eligible!

The statements contained herein are provided for informational purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal,
state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. Furthermore, such statements are not presented or intended as, and should not be taken
or assumed to constitute legal advice of any nature, for which advice it is recommended that you consult your own legal counselors or professionals.
UHY Advisors, Inc., provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of “UHY Advisors.” UHY Advisors, Inc.,
and its subsidiary entities offer services from offices across the United States. UHY Advisors, Inc., and its subsidiary entities are not licensed CPA firms. UHY LLP is a licensed independent
CPA firm that performs attest services. UHY Advisors, Inc., and UHY LLP are independent U.S. members of Urbach Hacker Young International Limited.