Ongoing and Annual Requirements for a Texas Nonprofit Corporation

This is where Texas surprises people coming from other states. Most states make nonprofits file an annual report on a fixed calendar every year. Texas does not. Instead, the Secretary of State can request a periodic report from a nonprofit corporation — but not more often than once every few years, and only when the state actually asks.

How the periodic report works

• The state initiates it. You don't file on a set annual date. The Secretary of State sends a request when it wants updated information, and the clock starts from that request.
• It updates governance information. The report confirms the corporation's current directors and officers and its registered agent and office. It's a snapshot of who's running the organization and where it can be reached.
• There's a fee and a deadline. When the request arrives, you file the report and pay the associated fee within the window the state gives you.

Why you can't just ignore it

Because the report is occasional, it's easy to miss — there's no yearly rhythm to remind you. But failing to respond has teeth. If a nonprofit doesn't file a requested periodic report, the Secretary of State can involuntarily terminate the corporation's existence. That's a serious standing problem. It's generally curable by filing the delinquent report and paying the fees, but it's far cheaper to respond on time. The single best safeguard is a monitored registered agent, since the request goes to your agent of record.

Your most reliably recurring obligation is federal, not state. Almost every tax-exempt organization has to file an annual information return with the IRS in the Form 990 family. Which version you file depends on your size.

Choosing the right 990

• Form 990-N (e-Postcard) — for the smallest organizations, under the gross-receipts threshold. It's a short online filing with no fee.
• Form 990-EZ — for mid-sized organizations within a middle band of gross receipts and assets.
• Form 990 — the full return, for larger organizations above the EZ ceiling.

The deadline and the stakes

The 990 is generally due by the 15th day of the fifth month after the close of your fiscal year — for a calendar-year organization, that's May 15. Extensions are available. The consequence of neglecting it is severe and often misunderstood: an organization that fails to file the required 990 for three consecutive years automatically loses its tax-exempt status. That automatic revocation is one of the most common ways small nonprofits lose their exemption — not through any wrongdoing, just through forgetting a filing. Reinstatement is possible but costs time and money and creates a gap in your exempt status. Treat the annual 990 as non-negotiable.

Once the Texas Comptroller grants your franchise tax and sales tax exemptions, they don't require a lot of routine upkeep — but they're not bulletproof either.

Franchise tax exemption

An exempt nonprofit is generally relieved of the Texas franchise tax that applies to most business entities. That exemption rests on your continued federal exempt status. If you lose your 501(c)(3), the state exemptions are jeopardized, because they were granted on the basis of the federal recognition.

Sales tax exemption

Where granted, the sales tax exemption lets qualifying purchases and certain sales avoid Texas sales tax. It comes with rules — for example, limits on tax-free sale days — so understand the Comptroller's conditions rather than assuming a blanket pass on all transactions.

The dependency chain

The practical lesson is that your Texas exemptions hang off your federal status. Protect the federal exemption by filing your 990s on time, and the state exemptions generally take care of themselves. Let the federal status lapse, and you can find yourself owing state taxes you'd assumed you were clear of.

Beyond the formal filings, keeping a nonprofit healthy involves internal discipline that also protects your standing when someone looks closely.

Board governance

• Hold regular board meetings as your bylaws require, and keep minutes. Minutes are the record that you're actually governing, and funders and the IRS may ask to see them.
• Maintain your conflict-of-interest policy and follow it, particularly around compensation and any transaction involving a director or officer.
• Keep your bylaws current. Amend them through the process your bylaws specify when your governance changes.

Registered agent maintenance

Keep a valid registered agent on file at all times, and file a change with the Secretary of State whenever your agent moves, resigns, or is replaced. An invalid agent is a compliance defect and the reason periodic report requests and legal notices get missed.

Records and receipts

Maintain financial records, board and membership records, and documentation of your programs. Provide donors with proper acknowledgment for their contributions. Good recordkeeping isn't just good practice — it's what you'll rely on at 990 time and if you're ever audited.

Charitable solicitation and other registrations

If your fundraising activities trigger charitable solicitation registration, keep that current too. It's separate from your entity standing and your exemption, and it operates on its own schedule.