State Compliance for Non-Profits

As a non-profit (501 C3) in the state of Minnesota, your PTA is required to maintain Good Standing with the Secretary of State and other agencies which regulate how you are able to conduct business soliciting for sponsorship, asking for donations, running raffles and bingo’s, hosting professional fundraisers and more. Please see the below links for more in-depth information and find the resources your group needs to stay compliant.

Minnesota Secretary of State

Minnesota Attorney General

There are three things that may trigger your local unit needing to file with the Minnesota Attorney Generals (AG) office. Failure to file annually will result in a $50 penalty against your unit, unless you contact the AG and confirm your triggered status has changed and you are currently exempt from the requirement. Your local unit WILL need to file with the AG if you do any of the following:  

– Collect over $25 K in non-taxable donations within one fiscal year – (sample donation request letter coming soon) 

– Hire paid staff – please note definition listed under State of Minnesota withholdings above.

– Hire a professional fundraising group (this can include a “Color Run” sponsor or the like) to solicit contributions (more below).

If your Local PTA Unit hires a professional fundraiser to manage and facilitate a fundraising activity or event (e.g.: A color run organization or similar professional group) you will be required to complete the annual filing. This does not apply to organizations (sellers) that may help you sell clothing or school specific swag through their website, or to groups like General Mills Box Top for Schools program. Currently, is not considered a “professional fundraising” group for the purpose of this required filing. However, local units should be aware that this status could change in the future. For a copy of the filing form, please click on the link above. For more information or specific questions, please refer to the Minnesota AG website.

Please visit the Attorney General website for more information regarding operating a Nonprofit in Minnesota:

MN Department of Revenue 

Units Required to File Withholding with the State of Minnesota 

As noted above, the State of Minnesota relies on the Form 990 filings to perform charitable and other regulatory oversight which satisfy state income tax filing requirements for organizations claiming exemption from Minnesota state income tax. This mean, your Unit is NOT required to file a specific State of Minnesota Income Tax Form in addition to your Federal 990; however, some exemptions apply.  

If your local unit is required to process withholding, you will be required to file with the Minnesota Department of Revenue.  This would apply if your local unit hires an employee. This would NOT apply in the case of an individual contractor or an intern receiving some sort of minimal stipend under $500 for the fiscal year (e.g.: babysitting services during a PTA meeting). There may maybe a few other rare instances in which state withholdings will apply. To determine if your unit is required to file withholding please refer to the MN Department of Revenue What Is Withholding Tax Web Page 

Filing for Exemption from State of Minnesota Sales Tax 

Your PTA Unit, as a 501c(3) non-profit, is eligible to apply for exemption from sales tax in Minnesota. Savings can be significant for units purchasing supplies for fundraising projects, student activity, or supporting administrative needs. Each unit wanting to avoid the need to pay sales tax is required to apply individually for exempt status (Form ST16), and to supply proof of exemption to sellers (Form ST3). More details are below.

Has Your Unit’s Minnesota Sales Tax Exemption Status Been Revoked? 

In 2017, the State of Minnesota overhauled and cleaned up their sales-tax-exempt database.  A new seven (7) digit number has been / will be assigned to all Nonprofits that respond and update their status. If your local unit is using a five (5) digit number starting with EN, the number is now considered invalid and your tax-exempt status has likely been revoked. However, you do have until March 5, 2019, to reverse the status of revocation. The easiest approach would be to contact the MN Department of Revenue directly, explain the situation, and ask them to walk you through your options. This can also be addressed through the Minnesota Department of Revenue Website.

Application for Nonprofit Exempt Status–Sales Tax – Form ST16

Being exempt from federal income tax does not automatically mean an organization is exempt from sales and use tax in Minnesota. To obtain a sales tax exemption your local unit will need to apply to the Minnesota Department of Revenue for authorization (Nonprofit Exempt Status), using Form ST16. Your local unit must apply individually for the state’s sales tax exemption by submitting documents and meeting all requirements specified below: 

  • A copy of the organization’s federal 501(c)(3) letter granting exemption from income tax
  • A copy of Federal Form 1023 submitted to the Internal Revenue Service (please contact MNPTA to discuss obtaining this information)
  • A signed copy of the organization’s Articles of Incorporation or Constitution and Bylaws containing the following statements (again, you can turn to MNPTA to aid you in providing this information and find these documents on the MNPTA website):
    • The organization is nonprofit
    • The organization is operated exclusively for charitable, religious, or educational purposes
    • The earnings of the organization do not benefit any private shareholder or individual member
    • The organization must not attempt to influence legislation
    • A dissolution statement
  • A letter from the principal of the school indicating the organization’s affiliation with the school

The MN Department of Revenue requests up to 90 days to process any applications for exemption status. 

Certificate of Exemption – Form ST3

After your PTA is approved for tax exemption with the state, you will need to supply the businesses you work with (sellers) a completed Form ST3. This form will be used by your sellers to properly apply your tax exemption to your purchases.  However, some specific purchases do not qualify for Exempt Status in Minnesota; they include the following: 

  • prepared food, candy, soft drinks, and alcoholic beverages, including catered food 
  • lodging 
  • gambling equipment and supplies 
  • purchases, leases, and rentals of most motor vehicles 
  • 9.2 percent car rental tax and 5 percent car rental fee 
  • waste collection and disposal services

More resources