A homeschool group in Illinois formed in 2020. They filed paperwork with the Illinois Secretary of State to form a nonprofit corporation, got an EIN (Employer identification Number) from the IRS to open a checking account, and started running their homeschool program. They thought that was all that needed to be done.
Unfortunately the group never registered as a charitable trust with Illinois.
These kinds of situations come up fairly frequently here at HomeschoolCPA. I help homeschool groups understand their required reporting to their states.
So I helped this group understand Illinois reporting requirements. When I do that I always search the state laws for exceptions–situations where the nonprofit can avoid more government paperwork.
Most states want nonprofit organizations to register in their state and then most states have annual reporting requirements as well.
Did I find an exemption to registering as a charitable organization (called a charitable trust in Illinois) for this homeschool group? And what about the annual reports?
Maybe!
Illinois requires every charitable trust to resister with the Attorney General. They do allow an exception for religious organizations (churches), but even they must submit an application to be exempt from annual reports.
So this homeschool group should be registered with the Illinois Attorney General. And every homeschool nonprofit organization in Illinois should be registered with the Illinois Attorney General
But it may not need to file annual reports!
The Illinois Charitable Trust Act says this:
https://codes.findlaw.com/il/chapter-225-professionsoccupations-and-business-operations/il-st-sect-225-460-3.html
Exception: ” Any charitable organization which does not intend to solicit and receive and does not actually receive contributions in excess of $15,000 during any 12 month period ending December 31 of any year. However, if the gross contributions received by such charitable organization during any 12 month period ending December 31 of any year shall be in excess of $15,000, it shall file reports as required under this Act and the provisions of this Act shall apply.
“Contributions” includes donations and proceeds from fundraisers. It does not include your income from tuition, fees for offering your program, membership fees or dues.
Additionally, Illinois offers an exemption from annual reports to several specific types of organizations (Boys Club, school parent-teacher associations, etc), but not a homeschool program.
Research showed…
This homeschool group needed to register with the Illinois Attorney General, but since they did not receive more than $15,000 in donations and fund raisers, they did not have to file annual reports with the Illinois Attorney General.
Conclusion: Illinois nonprofit homeschool groups should register with the Attorney General.
Additionally, if your Illinois homeschool organization receives more than $15,000 in “contributions” it must file annual reports with the Illinois Attorney General as a charitable organization.
What about your state?
This reference guide lists the charitable solicitation requirements by state.
https://www.lowenstein.com/media/4152/final-charitable-solicitation-survey.pdf
You should look up your state and see if your homeschool group needs to register and see also if they should be filing annual reports.
Alarming stats
The Illinois Attorney General lists 8 organizations with “homeschool” or “home school” in its name. Yet the IRS Exempt Organization database lists 18 organization in Illinois with “homeschool” or “home school” in its name.
That means 55% of Illinois homeschool organizations never registered with the Illinois Attorney General!
Why have these homeschool groups not registered with the State of Illinois?
- Ignorance of the Illinois Attorney General requirements.
- The homeschool group did not use a professional who walks them through all issues of state compliance. HomeschoolCPA can do that. See below.
- The homeschool group didn’t want to know about the state forms since the paperwork is a headache. But willful ignorance of the law is not a good excuse!
- They thought they were exempt from registering since they don’t “solicit funds.”
So what?
Illinois can assess a fee for failure to register or failure to file reports of $500 to $1,000. Source: (760 ILCS 55/5)(from Ch. 14, par. 55)
In general, the states don’t want to assess fines; they just want your homeschool group to be compliant, resister and file annual reports.
What should you do now?
- Watch Homeschool CPA’s IRS and State filings webinar. This 60 minute webinar ($10), explains the typical filing requirements for states and the IRS. It’s a great place to understand your filing requirements and launch the research for your specific situation.
- Look up your state’s charity registration requirements.
Here’s a good resource (a pdf from 2017) for charitable solicitation registration (but there may be more state reports than just this one!): https://www.lowenstein.com/media/4152/final-charitable-solicitation-survey.pdf
I’ve also done research using this site: Harbor Compliance https://www.harborcompliance.com/information/nonprofit-compliance-guide - If you’d rather not do the research yourself, you can hire HomeschoolCPA to do the research and compose a letter, gather all the forms and help you know what to do.
Carol Topp, CPA
HomeschoolCPA.com
