1. B. The Charities Bureau of the New York State Department of Law has developed procedures to assist nonprofit corporations in fulfilling the requirements for a no asset … Your use of this website constitutes acceptance of the Terms of Use, Supplemental Terms, Privacy Policy and Cookie Policy. First, it puts your organization beyond the reach of creditors and other claimants. If your nonprofit does not have members, the board approves the plan of dissolution and distribution of assets. Draft articles of dissolution, which state that the nonprofit is dissolving. Close Your LLC, Corporation or Nonprofit With Just a Few Clicks Let our experienced team review and e-file your dissolution paperwork with the appropriate state agencies. Creditors and claimants generally have at least six months to present claims. For further, general guidance on many of the other steps involved, check Nolo’s 20-point checklist for closing a business and the Nolo article on what you need to know about closing a business. Through the dissolution process, you will cancel that registration and officially end the corporation’s existence. The process and the … Failure to file for a dissolution of the business will result in the LLC or … How to Dissolve a New York Corporation by the Incorporators. Failure to do so in a timely fashion can … A Resolution of Intent to Dissolve … NEW YORK (AP) — New York’s attorney general sued the National Rifle Association on Thursday, seeking to put the powerful gun advocacy organization out of … The telephone number, fax number, and address where you can call … The group, which said it planned to reincorporate in Texas, is currently being investigated by New York’s attorney general, who is seeking to dissolve it. Under the N-PCL, key winding up tasks include fulfilling or discharging contracts, collecting and selling assets, discharging or paying liabilities, and doing any other appropriate acts to liquidate the organization. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. The organization must request a Consent to Dissolution of a Corporation from the New York State Department of Taxation and Finance (“Tax Department”). Steps to Dissolving a Nonprofit File a final form In this type of dissolution, the IRS mandates that the board of directors of the nonprofit organization complete certain … The Tax Department will review the documentation. Among other things, dissolution alone does not: After your nonprofit has formally authorized dissolution, and, if necessary, received court approval for the dissolution, it continues to exist only for the purpose of taking care of certain final matters that are known as “winding up” the company. Sometimes, entrepreneurs need to dissolve their corporation before shares are issued or any business is transacted. By taking certain steps, you can make the winding down … If you have any questions, you should consult with a lawyer. … It may be appropriate to designate one or more officers or directors to handle these matters. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site. The New York State Attorney General is responsible for the supervision of charitable organizations, including not-for-profit corporations. Wayne LaPierre, … In some states, the information on this website may be considered a lawyer referral service. Call the Tax Department at (518) 485-2639 to confirm your organization's tax exempt status and to learn more about the dissolution process. How to Dissolve a Nonprofit Corporation in New York Benefits of Formal Dissolution. New York Corporation Dissolution FAQ Is there a filing fee to dissolve or cancel a New York Corporation? 1. Authorizing Dissolution. The steps for closing a nonprofit organization will vary depending on several basic facts. The Certificate of Dissolution requires the consent of the New York State Department of Taxation and Finance. Along these lines, the N-PCL requires that assets received and held by your nonprofit for certain specified purposes be distributed to one more other nonprofits engaged in substantially similar activities. If at the time of the vote you do not have enough directors in office to constitute a quorum, the plan must be approved unanimously by the directors. (For example, if you’ve done business in New York City, you may need a consent from NYC’s Department of Finance.). It should be signed … All such process may be served at the New York … The process and the documentation you will need to submit will depend on whether your organization has been granted tax exempt status. After getting approval from the attorney general, when filing your certificate with the DOS, you must include the attorney general’s approval of the dissolution. Dissolving a New York State not-for-profit corporation requires a plan approved by the New York State Attorney General. it does not cover various details related to specific subcategories of nonprofits. The process to dissolve … You should consider getting assistance from an attorney for filings with the supreme court and the attorney general. a vote of the directors and a vote of the members; or. The certificate must contain: A blank form for the certificate of dissolution is available for download from the DOS website (currently, it’s Form DOS-1561-f-l). For additional, more specific guidance, check out Every Nonprofit’s Tax Guide, by Stephen Fishman (Nolo), go to the IRS website, or consult with a tax professional. Preparation and Filing of Plan of Dissolution and Distribution of Assets and a Verified Petition to Attorney General (Step 1) 1. The state where you are organized may have its own procedures that apply when a nonprofit organization ceases its activities. Your nonprofit corporation is registered with the State of New York. For nonprofits with assets, the plan must be approved by a two-thirds members' vote. It’s quick, … Get the facts about the COVID-19 vaccine. Under the N-PCL, you generally must pay your liabilities and distribute assets within 270 days from the date your plan was filed with the attorney general, or approved by a justice of the supreme court. (A special exception exists for cases where less than $25,000 in assets have been set aside specifically to pay expenses related to “winding up” the nonprofit.) If the nonprofit retains any assets after paying all liabilities, … Paying the nonprofit’s liabilities. For many people, the process of dissolving a nonprofit organization is emotional and difficult. The plan must include information about the nonprofit's assets and liabilities at the time of dissolution. Whatever the underlying reason, you will need to go through a process called dissolution if you choose to close down a New York nonprofit corporation. One other part of winding up involves giving notice to creditors and other claimants. Hold a Board of Directors meeting and record a resolution to Dissolve the New York Corporation. The plan must include a statement regarding whether or not your nonprofit has assets and liabilities at the time of dissolution. If a Board of Directors has been appointed for the New York Corporation then the … If your nonprofit has assets, then, after the directors (and members) have authorized dissolution, you must also obtain approval from a justice of the supreme court in the judicial district in which your nonprofit’s office is located. Thus the decision must be well informed and thoughtful. Depending on your organization's status, you may be required to send the following documents to the Tax Department: Application for Exemption from Corporation Franchise Taxes by a Not-for-Profit Organization (Form CT-247) A copy of your federal exemption … Under the N-PCL, you may give notice by publication in a newspaper for two consecutive weeks, and by mailing the same notice to known creditors or claimants. Once the corporation has received the consent from the Tax Department, it should send the following to the New York Department of State: NEW YORK STATE DEPARTMENT OF STATEDIVISION OF CORPORATIONSONE COMMERCE PLAZA99 WASHINGTON AVEALBANY NY 12231. If there are assets, your plan must provide additional information, such as the value of the assets, and whether any asset is required to be used for a particular purpose and how those assets will be distributed. Hold a full Board of Directors meeting to vote on dissolution of the Corporation per the organization’s Articles of Incorporation and Bylaws The Dissolution section of the Articles of Incorporation should be read into the minutes and included as an attachment. You can find additional information, such as forms, filing fees, useful FAQ sheets and other guidance, and mailing addresses and phone numbers (including for the New York State Tax Department’s Corporation Tax Dissolution Unit) on the DOS website and the attorney general’s charities website. You must submit a special type of application, known as a verified petition, to the appropriate court, along with the plan of dissolution and distribution of assets, and certified copies of the consents of directors (and members). However, your nonprofit still must file a certified copy of its plan of dissolution with the attorney general. By David M. Steingold, Contributing Author. You must also send notice of the filing to the attorney general along with copies of the petition, plan, and consents. To apply for approval from the attorney general, you must use a verified petition and, along with the certificate of dissolution, include a final financial report showing the disposition of all of your nonprofit’s assets and liabilities, and any required governmental approvals and fees. Hold a Members meeting and record a resolution to Dissolve the New York LLC If the New York LLC has any Members then a meeting should be held and a vote to Dissolve the New … The attorney general’s office, however, states that you should file with them only after you “carried out such plan, satisfied any of its remaining debts, and prepared a final financial report indicating a zero balance.”. … How to Dissolve an LLC in New York If you no longer wish to conduct business with your LLC, it is important to officially dissolve it. The attorney listings on this site are paid attorney advertising. In some cases, charitable organizations may not have been granted tax exempt status by New York State. Procedure for dissolution of not-for-profit with assets, Procedure for dissolution of not-for-profit without assets, Office of the New York State Attorney General. Before you take any steps towards dissolving a New York State not-for-profit, contact the Attorney General's office to develop a dissolution plan: The Attorney General's website has additional information about dissolving not-for-profits: Communicating with the New York State Department of Taxation and Finance (Tax Department). Generally speaking, New York’s Not-for-Profit Corporation Law (“N-PCL”) provides for voluntary dissolution through either: If your nonprofit has voting members, your board must adopt a plan of dissolution and submit it to the members for a vote. The corporation pays the income franchise tax in exchange for the privilege of exercising its corporate franchise, doing business, employing capital, owning or leasing property, maintaining an office, or deriving receipts from activity in the state. In order to avoid penalties and dissolve, both LLCs and corporations must file articles of dissolution with the state. The members then must meet and vote on the resolution. The Board of Directors must approve a Plan of Dissolution … You ultimately must file a certificate of dissolution to complete the dissolution of your nonprofit. Following are the procedures to be followed by dissolving organizations. Some of the rules for giving notice and responding to claims can be hard to understand. However, in general, dissolution of a nonprofit corporation begins with the board of directors (or whatever the governing body is called) resolving to dissolve … You should check with the state attorney general … New York Attorney General Letitia James' office has long been investigating the NRA's status as a nonprofit organization. To dissolve a corporation or LLC in New York… Also, generally speaking, you can only distribute money and property after you have paid off all of your nonprofit’s debts. You can request the consent by calling or writing to the New York State Tax Department’s Corporation Tax Dissolution Unit. Assets to be distributed to creditors who are unknown or can’t be found must ultimately be paid to the state comptroller. A domestic corporation that is in existence must continue to file New York State returns and pay a… If it meets all requirements, the department will send the corporation a Consent to Dissolution of a Corporation. The Tax Department is able to resolve any issues and retroactively grant the organization tax exempt status. However, if there’s a good reason why you can’t complete the process within 270 days, the attorney general may grant you an extension of time up to one year. transfer title to the nonprofit’s property from the corporation to the directors, change quorum or voting requirements for the nonprofit’s board or members, change provisions regarding election, appointment, resignation, or removal of directors or officers, change provisions for amending, repealing, or adopting bylaws, prevent the nonprofit from suing or being sued, or participating in legal proceedings; or. It will entail the preparation and filing of two (2) Verified Petitions. Bearing that in mind, this article is limited in the following ways: Regarding the last point: New York law distinguishes four main types of nonprofit corporation, which it calls Type A, Type B, Type C, and Type D. The type of your nonprofit depends on the purpose for which it was formed. If your nonprofit has voting members, the board first must adopt a resolution to dissolve and submit it to the members. Other distribution rules, contained in your certificate of incorporation, bylaws, or other documents, may also apply. Your nonprofit corporation is registered with the State of New York. Make sure to properly record the plan of dissolution and distribution of assets, the directors’ votes, and, where necessary, the members’ votes. If your nonprofit has no assets or liabilities, winding up should be a much simpler operation—and, according to the attorney general, you shouldn’t need to file anything with their office until it’s completed. Final Note: Dissolving and winding up your nonprofit corporation is only one piece of the process of closing your organization. When completing Form 990 or Form 990-EZ, you’ll need to check the “Terminated” box in the header area on Page 1 of the return. Second, it allows you to fulfill your legal obligations regarding the proper distribution of any remaining corporation assets. A nonprofit may close because the directors or members have irreconcilable differences, the organization simply decides that it has met its goals and no longer needs to exist, or it’s no longer able to get necessary funding. Whatever the underlying reason is, it’s important to follow the proper steps … New York corporate law requires shareholder approval to dissolve a corporation of perpetual duration or to dissolve a corporation of limited duration before its scheduled termination date. State laws differ. You’ll need this information for filings with the state agencies, the IRS, and, potentially, a state court. This article focuses on rules that apply to Type-B nonprofits, which are nonprofits formed for charitable, educational, religious, scientific, literary, or cultural purposes, or for the prevention of cruelty to children or animals. Remember: New York’s law for nonprofit corporations is complex—you should strongly consider getting assistance from an attorney to help you dissolve your organization. The N-PCL states that the plan must be filed within 10 days of your nonprofit authorizing the plan. The Attorney General's dissolution plan will require you to submit documentation to the Tax Department. You must include a completed Schedule N (Liquidation, Termination, Dissolution, or Significant Disposition of Assets), as well as copies of your certificate of dissolution, resolution to dissolve, and plan of dissolution. Distribute any remaining assets. However, before you can file the certificate, you need to get the consent of New York’s Department of Taxation and Finance ("DTF"). State supreme court approval is not required if your nonprofit does not have assets to distribute or any outstanding debts at the time of dissolution, or has less than $25,000 in assets that have been set aside specifically to pay expenses related to winding up the nonprofit. either a statement that the plan of dissolution and distribution of assets was approved by a justice of the state supreme court (in which case a copy of the court’s order must be attached to the certificate), or a statement that a copy of the plan of dissolution and distribution of assets was properly filed with the attorney general. Service of process on the New York Secretary of State in any action or proceeding in which the New York Secretary of State is a party to such action may be accomplished by serving a deputy secretary of state authorized to accept service. if there are no members, a vote of the directors. Steps to Closing a Nonprofit 1. A. For federal tax purposes, you’ll need to file IRS Form 990 or IRS Form 990-EZ. After your plan of dissolution and distribution of assets has been fully authorized and carried out, you must complete a certificate of dissolution, have it approved by the attorney general, and then file it with the New York Department of State ("DOS"). In practice, this usually means distributing assets to one or more other 501(c)(3) organizations. generally affect any legal remedy available to or against the nonprofit, its directors, officers, or members, for any right or claim existing prior to dissolution (a key exception relates to creditors and other claimants who receive notice of the dissolution). A nonprofit organization may wind up its affairs and close its doors for many different reasons. In general, the plan must be approved by a majority of directors, or by the number of directors required under your certificate of incorporation or bylaws. In this situation, the incorporator will need to take responsibility for dissolving the corporation. ... fraud and abuse, which is why, today, we seek to dissolve … If your nonprofit does not have assets, the plan generally must be approved by the number of members specified in your certificate of incorporation or bylaws. An organization’s board and senior management must pick up and carry the burden of this difficult emotional process, coordinate, and follow through on each step. Copyright © 2021 MH Sub I, LLC dba Nolo ® Self-help services may not be permitted in all states. The dissolution of a nonprofit corporation requires compliance with the state nonprofit corporation law under which it was organized. All of your nonprofit’s liabilities, including taxes, need to be … Because of the complexity of New York law for nonprofit corporations (which is not limited to the fact that the state distinguishes multiple “types” of nonprofits), you should strongly consider finding a knowledgeable attorney to assist you with the dissolution of your organization.