Alabama Nonprofit Compliance: Formation, Fundraising, Taxes, Employment, and Closure

Direct answer: Alabama separates almost everything

The mistake that costs Alabama nonprofits the most is treating one approval as though it carried others. Alabama does not work that way. Chapter 3A creates the state law nonprofit corporation, and that status by itself does not grant federal tax exemption, an Alabama sales tax exemption, a property tax exemption, charity registration status, or a licence for any regulated activity. Each of those is applied for separately, from a different office, on its own timetable.

The separation runs the other way too. Alabama repealed the routine Secretary of State annual report, which for many organizations removes the one recurring corporate filing they were watching for. Nothing else was repealed with it. A soliciting charity still owes the Attorney General an annual report within 90 days after fiscal year close, tax accounts still file on their own schedules, employer accounts still report quarterly when liable, and county and municipal licences still renew.

Our Alabama state guide holds 84 structured compliance facts drawn from 82 official Alabama sources. Seventy of those facts are labeled SOURCE VERIFIED and fourteen are labeled VERIFICATION IN PROGRESS, which means the substantive rule is established but a current operational detail still needs confirmation from the responsible agency. We publish both, and we say which is which on every entry.

Formation: reserve the name first, then file directly with the Secretary of State for $200

Alabama formation has an order to it that trips people up. The name reservation comes first, and the issued certificate is attached to the formation filing. A paper reservation costs $25 and lasts one year, and it may be renewed only during the last 90 days of that year. Reserving a name does not create the corporation and does not confer trademark rights, and a formation filing submitted without the reservation certificate, or with an unavailable name, can be rejected.

The certificate itself goes directly to the Secretary of State. The standard processing fee is $200, and the Secretary of State form explains that the office distributes the county portion rather than sending the applicant to the probate court first. This matters because an official Department of Revenue summary from May 2025 still describes the former probate first workflow. That description conflicts with the current Secretary of State instructions and does not control the process; we keep the older document in our source list precisely so the outdated route is recognizable rather than repeated.

No corporation exists until the filing becomes effective, and online convenience charges can apply on top of the $200 when the supported online service is used instead of mail or delivery.

The 2026 Chapter 3A transition and the December 31, 2026 election

Chapter 3A became the principal Alabama nonprofit corporation law, and a set of amendments to it took effect on August 1, 2026. For most organizations forming now, that is simply the law that applies.

For a corporation that already existed before August 1, 2026, the enacted amendments add a temporary route. A qualifying preexisting corporation may elect, by filing the statutory opt out language in a certificate amendment on or before December 31, 2026, to remain governed by the version of Chapter 3A in force before that date. The amendment fee is $100. Eligibility is limited to the corporations and circumstances the enacted bill actually describes, so read the enrolled act against the organization’s own facts rather than assuming the election is generally available, and note that an election may later be revoked by a further amendment.

The practical point is the calendar. This is a dated transition provision, not a standing option: missing December 31, 2026 removes the temporary election route, and an election made without eligibility can leave governance questions unsettled.

Governance: a board sized by the governing documents, and an officer who owns the records

Alabama requires one or more directors, with the exact number fixed by, or in the manner provided in, the certificate or bylaws. Do not import a three director rule from another state or from federal best practice guidance; a board that falls below the number its own governing documents or the statute require may be unable to act validly. Special purpose corporations and regulated programs can require more directors or particular qualifications.

Officers are appointed as the bylaws or a board action describe. Chapter 3A does not impose a universal president, secretary, and treasurer list, but it does require that an officer have responsibility for preparing and maintaining the corporate records and authenticating them. Additional offices, or separation of duty rules, commonly arrive from the bylaws, a grant agreement, a contract, or a regulated program rather than from the statute.

The registered agent is a continuous duty, not a formation checkbox. Every domestic and registered foreign nonprofit corporation must keep a qualifying registered agent and registered office in Alabama for service of process and official notices. A mailing address alone does not satisfy the statutory registered office, and letting either lapse can mean missed service and supports administrative action against the entity. When the agent or the office changes, a statement of change is filed.

The repealed annual report, and what it does not repeal

Alabama corporations are no longer required to file a routine annual report with the Secretary of State. There is no current routine deadline and no current routine fee, for domestic corporations or for registered foreign ones.

This is a genuine simplification and also a trap. Legacy annual report forms and old tax summaries are still findable, and they should not be operationalized as current requirements. More importantly, the repeal removed one filing and left every other system intact. Confusing the two is how an organization ends up missing an Attorney General charity report, a tax return, or an employer report because it believed its annual obligation had been abolished.

Charter changes still get filed. A domestic nonprofit changing its name, purpose, member structure, or another certificate provision obtains the approvals Chapter 3A requires and files the Domestic Nonprofit Amendment for a standard $100 before treating the change as effective. Bylaw amendments ordinarily stay internal unless the certificate has to change too.

Foreign nonprofits: register before transacting business

A nonprofit corporation formed outside Alabama reserves an Alabama name, appoints an Alabama registered agent, provides recent home jurisdiction evidence, and files the Foreign Corporation Registration before transacting business here, unless a statutory exclusion applies. The standard filing fee is $150, plus the name reservation cost, and the certificate of existence has to be dated within 90 days.

Registering the corporation is not registering the charity. Charity registration, tax registration, and the treatment of internet solicitation are separate analyses on their own facts, and whether a particular pattern of activity counts as transacting business runs through the statutory excluded activity list. An unauthorized foreign corporation can face statutory restrictions and enforcement until it qualifies.

Charity registration: the Attorney General, before solicitation, then annually within 90 days

A charitable organization soliciting contributions in or from Alabama generally completes the Attorney General’s charitable organization registration before solicitation begins and pays a $25 initial fee. Corporate formation does not substitute for it and neither does foreign qualification. Statutory exemptions exist and are screened separately, and internet and multistate solicitation stay fact dependent. Soliciting while unregistered can bring civil, administrative, and criminal enforcement, suspension, or an injunction.

Renewal is annual and the clock runs off the organization’s own fiscal year. The required financial report or the IRS Form 990 information, together with the $25 annual fee, is due within 90 days after the fiscal year closes. This filing is separate from the repealed Secretary of State annual report and it is separate from federal Form 990 filing; neither one satisfies the other. Late or incomplete filing leads to delinquency, suspension, cancellation, and enforcement.

Business Privilege Tax: exempt organizations are not required to file while the exemption applies

Alabama treats a qualifying organization described in 26 U.S.C. Section 501(a) as not required to file the Business Privilege Tax return. That is a distinct conclusion from the corporate income tax exemption and a distinct conclusion from the former Secretary of State annual report, and it is worth stating plainly because the Business Privilege Tax is the filing out of state advisers most often assume every Alabama entity owes.

The condition in that sentence is doing real work. The exemption has to actually apply and be reflected in Alabama’s records. Pending, revoked, or mismatched exemption status needs separate confirmation from the Department of Revenue, and an organization that is not recognized as exempt can face ordinary Business Privilege Tax filing, tax, and penalties. Our guide keeps that pending recognition question as a separate entry and marks it VERIFICATION IN PROGRESS rather than telling a brand new nonprofit it can simply skip the filing.

Sales and use tax: nonprofit status alone exempts nothing

Alabama says this affirmatively, and it is the opposite of what many founders expect. Nonprofit status alone creates no special sales or use tax exemption. Tax is due unless the organization and the specific transaction fit a particular statute and the purchase is supported by valid exemption documentation. Churches and ordinary charities are not automatically exempt, because the exemptions Alabama grants are entity specific and transaction specific rather than general. An unsupported exemption claim comes back as use tax, penalties, interest, and loss of exemption privileges.

Buying and selling are two different questions. A purchase side exemption, where one exists, never eliminates seller side duties. A nonprofit selling taxable tangible personal property, admissions, food, lodging, rentals, or taxable services without a specific exemption registers for the appropriate state and local accounts through My Alabama Taxes, collects tax, and files returns on the assigned frequency, including zero returns while an account stays active when those are required. Marketplace facilitator, occasional sale, wholesale, food, admission, and local rules can all shift who collects.

Property tax: statewide categories, county procedure, no statewide nonprofit deadline

Alabama property tax exemption is category and use specific. The organization has to satisfy the precise constitutional or statutory exemption, and nonprofit ownership or federal recognition alone is not enough. Leased, income producing, partially commercial, or unrelated use property can be taxable in whole or in part, and without an accepted exemption the property stays taxable while appeal deadlines run.

The operational half is county business, and we publish it that way. This entry is labeled VERIFICATION IN PROGRESS because the application form, the filing date, the renewal or annual report rule, the change of use notice, and the appeal route are administered by the county assessing official and the county board of equalization, and no current statewide source consolidates one nonprofit form or one nonprofit deadline. We are not going to invent one. Valuation appeals generally carry a 30 day window after written notice, but exemption filing dates were not confirmed as a single statewide rule, so contact the assessing official for the parcel and get that county’s own calendar. A missed local deadline can leave the property taxable for the year and shorten the appeal options.

Hiring: four employees in each of 20 weeks, and separately five or more

These are two systems with two different numbers, and swapping them is the most expensive employment mistake an Alabama nonprofit can make.

For unemployment compensation, the special Section 501(c)(3) coverage trigger is four or more individuals in employment on a day in each of 20 different weeks in the current or preceding calendar year. Read each element exactly as written: four or more, counted on a day in each of 20 different weeks that need not run back to back, measured across the current or the preceding calendar year. Register with the Department of Workforce so the agency can determine liability, using Form SR 2 or the employer portal, and begin quarterly reporting once covered. Churches and certain services can be excluded, and entity and worker classification matter. Failure to register or report can produce assessments, penalties, interest, liens, and benefit charges.

Workers compensation is a separate division with a separate threshold. Alabama’s general rule is coverage when the employer regularly employs five or more employees, counting full time and part time workers and generally counting corporate officers for threshold purposes. Coverage comes from an authorized carrier or approved self insurance, and proof is kept available. Domestic servants, casual employees outside the usual business, certain farm labor, and other statutory categories can be treated differently. Operating without required coverage can bring penalties, enforcement, and direct liability for benefits.

Licensing: there is no single Alabama nonprofit business licence

Nonprofit entity status does not create one universal exemption from Alabama state and county privilege licences. The question is what the organization actually does: if the activity appears in Title 40, Chapter 12, the licence is obtained from the probate judge or licence commissioner in each county where it is required, at a fee that varies by activity, county, and schedule. The ordinary licence year renewal is generally by October 31 unless a specific schedule differs, and unlicensed activity can bring penalties, interest, closure, and enforcement.

Not every nonprofit activity is licensed, and exemptions and fee schedules are category specific. County privilege licensing is also only one layer. Municipal business licensing is its own separate system, and zoning, occupancy, building, fire, food, event, and professional approvals are screened separately again. One city’s rule is never a statewide rule, and our guide does not present any locality’s requirements as though it were.

Bingo: county authority, and nonprofit status by itself authorizes nothing

Section 65 of the Alabama Constitution generally prohibits lotteries and gift enterprises, and particular county or municipal constitutional amendments authorize limited bingo under local enabling laws and local regulators. That structure is why there is no statewide answer to give. Whether a game is lawful depends on the exact location, and then on the qualifying organization, age, residency, licence, prize, proceeds, and operational rules the controlling local authority sets. Fees vary by amendment, enabling act, and ordinance.

This entry is labeled VERIFICATION IN PROGRESS, and deliberately so: county specific amendments, enabling acts, ordinances, and regulators vary materially, so a location specific legal review comes before any game. Two boundaries are worth stating on their own. A licence in one county authorizes nothing anywhere else. And electronic formats are not ordinary paper bingo, so a local paper bingo authorization should never be read as covering machines. Unauthorized bingo can amount to illegal gambling and expose proceeds and equipment to seizure.

Alcohol at events: ABC licence 140 at $150, plus local approval

A nonprofit event that will sell or furnish alcoholic beverages applies for the Alcoholic Beverage Control licence that matches the event. The current fee schedule lists licence 140, Special Events Retail, at $150, and local fees and taxes can be additional. Licence 150 or 160 may fit a different temporary retail operation.

State approval is not the whole approval. The application sequence includes both ABC and local review, the event location has to be wet and otherwise eligible, and the work has to start early enough for both to finish. Serving alcohol without the right licence carries criminal, administrative, premises, and insurance consequences.

Lobbying and campaign finance are separate systems

Lobbying runs through the Alabama Ethics Commission. An individual who meets Alabama’s lobbyist definition and is not within an exemption registers no later than January 31 each year, or within 10 days after the first undertaking that requires registration, and a lobbyist who is not a public employee pays a $100 annual fee. Each principal is associated through the Ethics Commission system. Legal, media, citizen, and public employee activity can fall inside definitions or exemptions that need careful classification, and unregistered lobbying leads to Ethics Commission enforcement and statutory penalties.

Election spending is a different chapter with a different regulator. Once a political action committee raises or spends more than $1,000 toward influencing an election cycle, it registers and files electronically under the Fair Campaign Practices Act, with committee type, contribution, independent expenditure, and termination rules applying on the current election cycle calendar. The operator matters: the threshold is crossed only when the amount raised or spent is more than $1,000.

One boundary is federal rather than Alabaman, and it is stricter. A Section 501(c)(3) organization is separately prohibited by federal tax law from campaign intervention, whatever Alabama campaign finance law would otherwise permit. Other exempt organizations have different federal limits.

Winding down: dissolution closes the corporation and nothing else

Closure in Alabama is a list, not a filing. The organization authorizes winding up and files dissolution or withdrawal with the Secretary of State for $100, and then separately closes the Attorney General charity registration, the Department of Revenue accounts, withholding, unemployment, workers compensation, the privilege and municipal licences, and the gaming, alcohol, lobbying, and campaign finance accounts. Each final filing follows its own deadline. An omitted account keeps generating reports, taxes, penalties, benefit charges, licence obligations, and public status after the corporation itself is gone, so work agency by agency and keep the written confirmations.

Charitable assets get their own step, before the final distribution. Once liabilities are addressed, the organization identifies donor restricted, grant restricted, trust, and other charitable assets and transfers them only to recipients and purposes permitted by the certificate, the governing documents, the restrictions themselves, Chapter 3A, and applicable Alabama charitable asset law. Charitable assets do not go to insiders. A written plan, documented restrictions and recipient eligibility, and court or agency approval where required are what make the transfers defensible; improper distribution can bring restitution, fiduciary liability, state enforcement, and transfers that are invalid or open to challenge.

One scope note, because it is the kind of thing that gets blurred. Everything in the paragraph above is Alabama law, verified against Alabama sources. An organization holding federal tax exempt status should separately review the applicable federal requirements on dissolution and asset distribution, which sit outside the verified source scope of this Alabama entry and are not established by the sources cited here.

How to read the two verification labels

Every fact in the Alabama guide carries one of two labels. SOURCE VERIFIED means the stated requirement, fee, deadline, or threshold was confirmed against a current official Alabama source that we cite on the entry itself.

VERIFICATION IN PROGRESS means the substantive rule is established but a current operational element is not: a county’s own property tax form and deadline, the reinstatement route for a particular default, the Business Privilege Tax position while federal recognition is pending, a contractor’s purchases on a nonprofit project, the unemployment financing election mechanics, a location specific bingo or raffle authorization, an online ticket method, an event address and its wet or dry status, or a current election cycle calendar. On those entries we publish the verified part, name the unresolved issue, name the agency that can resolve it, and say what goes wrong if the open question is treated as settled. Fourteen of Alabama’s 84 facts sit in that category, and nine of the 82 sources are flagged for recheck. We would rather show you the boundary than paint over it.

None of this is legal advice. It is structured, sourced research meant to tell you which questions to ask and which Alabama office to ask them at.