Michigan Nonprofit Compliance Guide: Formation, Annual Reports, Charity Registration, Taxes, and Closure

What the Michigan guide covers

The Michigan guide (/states/michigan/) documents the ordinary nonprofit lifecycle under the Michigan Nonprofit Corporation Act, 1982 PA 162: entity formation and classification, governance, the corporate Annual Report and post-dissolution renewal, corporate changes and fundamental transactions, foreign qualification, charitable solicitation and professional fundraising under the Charitable Organizations and Solicitations Act, charitable-trust registration and accounting under the Supervision of Trustees for Charitable Purposes Act, Michigan Corporate Income Tax, sales and use tax, property tax, unemployment insurance and workers' compensation, charitable gaming, millionaire parties, alcohol licensing, general business and activity-specific licensing, lobbying and campaign finance, and dissolution with multi-agency closure.

It is built from 133 individually sourced facts citing 83 official Michigan and federal sources — the Department of Licensing and Regulatory Affairs (LARA) Corporations Division, the Department of Attorney General's Charitable Trust Section, the Department of Treasury, the Unemployment Insurance Agency and Workers' Disability Compensation Agency, the Department of Health and Human Services, Michigan Lottery's Charitable Gaming Division, the Michigan Gaming Control Board, the Michigan Liquor Control Commission, the Department of State's Bureau of Elections, and the IRS for federal interaction.

How SOURCE VERIFIED and VERIFICATION IN PROGRESS work

Every fact in the guide carries one of two labels. SOURCE VERIFIED means current official evidence directly supports the fact's applicability, agency, deadline or formula, fee, filing method, exceptions, and consequences. VERIFICATION IN PROGRESS means the official evidence is incomplete or conflicting, or a modern question is not yet resolved — those facts stay fully visible with their safe, hedged wording preserved, rather than being hidden or silently resolved by assumption.

114 of Michigan's 133 facts are currently SOURCE VERIFIED and 19 are VERIFICATION IN PROGRESS. A fact's label is never upgraded just because neighboring facts are verified, and each unresolved item states plainly what official confirmation is still needed and from which agency.

Form 502 versus Form 503: two different corporate filings

An ordinary Michigan nonprofit incorporates by filing Form CSCL/CD-502 with LARA's Corporations Division. A church or religious society instead uses Form CSCL/CD-503, a separate ecclesiastical Articles filing made under 1931 PA 327 — its own statute, distinct from the Nonprofit Corporation Act — and the two forms must never be merged or treated as interchangeable. Both carry the same $10 filing fee plus $10 franchise fee, for a $20 total transaction amount before optional expedited-service charges, and both create only a state-law corporation: state incorporation does not itself grant federal 501(c)(3) recognition, Attorney General charitable-solicitation registration, or state tax exemption.

Michigan nonprofit corporations are further classified as membership or directorship (who ultimately controls corporate action) and as stock or nonstock — classifications kept separate from federal 501(c)(3) status, Attorney General registration, and tax exemption, which are each independent legal systems layered on top of the state corporate form.

One-or-more directors under general corporate law versus the Attorney General's three-person charity forms

Michigan corporate law generally permits a nonprofit board of one or more directors; the Articles or bylaws may require a larger board, but there is no general statutory minimum of three. This is a different rule from the Attorney General's charitable-solicitation paperwork: CTS-01 (initial registration) requires the names of at least three current officers or directors, CTS-02 (renewal) separately states that Michigan organizations require three directors, and a Form 990-N filer must list at least three officers or directors on renewal. Those are Attorney General disclosure and registration instructions, not a change to the general corporate-law minimum under MCL 450.1505 — a one-director Michigan nonprofit corporation remains valid under corporate law even though its Attorney General filings ask it to name three people.

Michigan also requires every ordinary nonprofit corporation to appoint a president, secretary, and treasurer. One person may generally hold two or more of those offices, but that same person cannot execute, acknowledge, or verify one instrument in multiple capacities when Michigan law, the Articles, or the bylaws require two or more officers — a distinction the Articles or bylaws, or a bank, real-estate, or federal form, may reinforce with additional signature requirements.

The October 1 corporate Annual Report, automatic dissolution, and renewal

Every domestic nonprofit corporation and every authorized foreign nonprofit corporation files a corporate Annual Report each year by October 1, beginning in the calendar year after incorporation or foreign qualification. The online workflow generally opens June 15, the current on-time fee is $20, and the report is filed through MiBusiness Registry. This LARA filing is entirely separate from Attorney General charity renewal, the federal Form 990, and Michigan tax returns — filing one does not substitute for the others.

A domestic nonprofit that neglects or refuses for two consecutive years to file its report or pay the required fee is automatically dissolved. Current LARA guidance describes the equivalent consequence for a foreign corporation as arising after one year, subject to the statutory notice and revocation procedure that still applies before authority is actually revoked. Renewal after automatic dissolution or revocation uses the MCL 450.2925 formula: file reports for the last five years (or any lesser number actually required) and pay $25 for each prior-year report plus a $5 penalty per delinquent report. Reports older than that five-report window are not separately required by the restoration formula itself.

Current official sources conflict on one point: the LARA renewal page states that the current-year report is also charged at $25 when renewal is submitted on or after October 1, while the ordinary current annual-report fee schedule lists $20 for that same report. This guide preserves both figures rather than silently picking one — confirm the live portal amount before paying. Separately, Form CSCL/CD-525 (Certificate of Renewal of Corporate Existence) concerns renewal after expiration of a stated corporate term and is not the ordinary MCL 450.2925 delinquency-restoration filing; the two must not be merged. And renewal itself does not automatically restore Attorney General registration, tax accounts, payroll accounts, unemployment insurance, workers' compensation, charitable-gaming or millionaire-party authority, alcohol permission, or local permits — each of those must be checked and restored separately.

Charitable solicitation registration versus charitable-trust registration

A charity generally must register with the Attorney General's Charitable Trust Section before soliciting or receiving contributions in Michigan unless it is exempt, filing CTS-01 with organizing documents, IRS information, governance detail, financial information, and fundraising disclosures. Registration expires one year and seven months after the end of the financial period submitted with the last registration — not a universal calendar date — and renewal (CTS-02) should be filed at least 30 days before that Attorney General-confirmed expiration date; a written extension request, made before the current registration expires, can add up to five months.

Separately, the Supervision of Trustees for Charitable Purposes Act requires charitable-asset registration and a six-month annual accounting for corporations, associations, trusts, and other holders of Michigan charitable assets. A Michigan organization that is registered to solicit is generally treated as automatically registered as a charitable trust as well, with its solicitation renewal serving as the charitable-trust annual report — but only while every integration condition is met; a COSA-exempt corporation or association holding charitable assets otherwise generally uses CTS-05 with CTS-03, and a trust uses CTS-06.

The small-organization solicitation exemption is described in current Attorney General shorthand as raising funds exclusively through volunteers and receiving less than $25,000 a year, while the underlying statute, MCL 400.283(b), is phrased around not actually receiving contributions of more than $25,000 in any 12-month period — a formulation that appears to include exactly $25,000. Both versions require every fundraising function to be performed by unpaid persons; paying anyone to fundraise can require registration even below the monetary threshold. An organization near the exact boundary, or with government grants, dues, program revenue, donated goods, or related-chapter receipts, should obtain CTS-03 exemption confirmation rather than assume gross revenue alone decides the question.

Financial-statement thresholds: the exact-$575,000 conflict

CTS-02's Attachment B requires reviewed or audited financial statements once a charity's calculated "line F" exceeds $325,000 — internally prepared statements may be accepted at or below that figure absent some other rule requiring more. Above $575,000, an audit is unambiguously required. The current April 2026 form, however, states in one place that an audit is required at $575,000 or more, and in another that reviewed or audited statements are permitted up to and including $575,000 — the same exact figure appears in both instructions. This guide does not silently resolve that overlap: an organization whose line F equals exactly $575,000 should obtain an audit or written Attorney General confirmation as the conservative approach. CTS-02 separately allows a one-time audit waiver or conditional registration (with an engagement letter) when a threshold was met but the engagement was not completed before renewal.

Form 3372: a purchaser certificate, not a universal exemption

Michigan does not issue a general nonprofit sales-tax exemption number. Form 3372 is a certificate a qualifying nonprofit completes and gives directly to a seller for its own direct exempt-purpose purchases, supported by qualifying federal exemption evidence or — for a narrower set of organizations — a grandfathered Treasury exemption letter issued before July 17, 1998 for sales tax or June 13, 1994 for use tax. Form 3372 is not a universal exemption application, does not register the organization as a seller, and generally cannot be passed through to a construction contractor purchasing materials for the nonprofit's real-property improvements. Occasional-sale and isolated-transaction treatment for a specific fundraising sale remains unresolved as a universal rule and should be confirmed rather than assumed.

The purchase exemption is entirely separate from the nonprofit's own retail sales: a nonprofit making taxable sales — merchandise, certain meals, admissions, or other taxable transactions — must register as a seller and collect and remit Michigan's 6% sales tax like any other seller, subject only to whatever specific statutory exemption actually applies to that transaction.

Property tax, unemployment insurance, and workers' compensation

Property-tax exemption for a nonprofit charitable institution is administered by the local city or township assessor under MCL 211.7o, based on ownership, occupation, and actual charitable use — not a statewide application process. Category-specific statutes cover religious, educational, hospital, housing, and conservation property separately, and leased, mixed-use, vacant, under-construction, or employee-housing property depends on fact-specific local review rather than one universal rule; Form 2368 (the Principal Residence Exemption Affidavit) is an individual homeowner program, not the ordinary charitable-institution filing.

Unemployment insurance and workers' compensation use different coverage tests and must not be merged. A 501(c)(3) nonprofit generally becomes subject to unemployment insurance once it has four or more individuals in employment in each of 20 different weeks in a calendar year, and may then elect contribution financing or reimbursing-employer status. A reimbursing nonprofit's required security is 4% of payroll once annual gross payroll reaches $100,000 — but the current UIA toolkit and webpage use "equal to or exceeds $100,000" while the older, still-officially-posted Schedule A uses "more than $100,000"; the exact boundary at $100,000 is unresolved and should be confirmed with UIA. Workers' compensation, by contrast, generally applies once an employer regularly employs three or more employees at one time, or one or more employees at least 35 hours a week for 13 or more of the preceding 52 weeks — a separate test administered by the Workers' Disability Compensation Agency, with its own fact-specific rules for classifying officers, volunteers, compensated volunteers, and contractors.

Three separate regulators for gaming and alcohol

Michigan Lottery's Charitable Gaming Division licenses raffles (small raffles capped at $500 in daily prizes, large raffles above that boundary), bingo, and charity game tickets — a nonprofit must first qualify with Charitable Gaming, then obtain the specific game license; qualification alone authorizes nothing. Internet ticket sales and other electronic raffle-delivery methods are not comprehensively resolved by a single current directive and should be confirmed with Charitable Gaming in writing before use, as should any nonstandard alternative raffle format (duck races, wine pulls, progressive raffles, and similar formats) that is not already covered by statute, rule, or a current directive.

The Michigan Gaming Control Board separately licenses millionaire parties (poker and other authorized casino-style games), each event license running up to four consecutive days with generally up to four licenses per qualified organization per year at $50 per event day — a Lottery raffle or bingo license never authorizes a millionaire party, and a millionaire-party license never authorizes alcohol service.

The Michigan Liquor Control Commission administers the nonprofit Special License for temporary alcohol sales or service. The ordinary nonprofit Special License does not require local legislative-body approval, but it does require approval from local police or the county sheriff and a certified internal board or membership resolution. Apply at least 10 business days before the event; each license generally covers one event day, multiple dates at one location may be requested in a single application, and no organization (including its auxiliaries) may hold more than 12 Special Licenses in a calendar year. The current daily fee is $25 for an organization established at least one year, or $50 per day for a newer organization or a municipality. Donated alcohol, auctions, tastings, wine pulls, and alcohol raffle prizes do not automatically avoid liquor licensing — written MLCC (and, where a raffle is involved, Lottery) approval should be obtained rather than assumed.

Lobbying, campaign finance, and dissolution

For 2026, a person compensated more than $800 in any 12-month period to lobby a Michigan legislative or executive official must register as a lobbyist agent within three calendar days, and a lobbyist principal must register when its lobbying expenditures exceed $3,200 total in 12 months, or exceed $800 to lobby a single official, within 15 calendar days. Local lobbying registration is a separate question the state Lobby Act materials do not resolve uniformly across every Michigan local government. Michigan campaign-finance committee registration is likewise a distinct system from the federal prohibition on 501(c)(3) campaign intervention — an organization can trigger one, both, or neither depending on the specific activity.

Dissolution is not reducible to a single Form 531 filing. A charitable-purpose corporation generally needs Attorney General consent or no-objection, a qualifying court order, or the statutory affidavit route (available after the Attorney General does not respond within 120 days) before LARA will accept the dissolution — though current official materials do not use identical scope language for noncharitable and religious organizations, and written confirmation should be obtained rather than assumed either way. Winding up must address known and unknown claims, donor restrictions, and charitable assets; Michigan Treasury tax clearance should be requested within 60 days after filing dissolution; and — separately from the corporate filing itself — the organization must close its Attorney General registration, charitable-trust accounting, tax accounts, payroll withholding, unemployment insurance, workers' compensation coverage, charitable-gaming and millionaire-party licenses, alcohol permissions, foreign-state registrations, and local permits, each with its own final filing.

What remains under verification

19 of the guide's 133 facts are currently labeled Verification in Progress, including: whether any special-purpose formation subtype could still require newspaper publication or a separate initial report; the $20/$25 current-year restoration-fee conflict; whether Form 525 could ever substitute for MCL 450.2925 restoration; the fact-specific transacting-affairs standard for foreign corporations and internet activity; whether an organization may solicit while a first-time or defective registration is pending; the exact-$25,000 small-organization exemption boundary and how mixed receipts should be classified against it; the seven-month-versus-one-year-seven-month charity-renewal shorthand conflict; the exact-$575,000 CTS-02 audit overlap; occasional-sale tax treatment for a specific fundraiser; mixed-use, leased, vacant, or under-construction property tax questions; the exact-$100,000 UIA reimbursing-employer security boundary; worker classification for volunteers and contractors under workers' compensation; internet and electronic raffle-ticket sales; donated-alcohol and combined-fundraising liquor questions; whether a universal Michigan business license exists; local lobbying registration; and the exact breadth of Attorney General dissolution review across charitable, noncharitable, and religious organizations.

Every other fact in the guide — including Form 502/503 formation, the one-or-more-director corporate minimum, the October 1 Annual Report and its automatic-dissolution consequence, the five-report renewal formula, CTS-01/CTS-02 charitable-solicitation registration and renewal, charitable-trust registration and accounting, the $325,000 CTS-02 lower boundary, Form 3372's purchaser-certificate treatment, sales-tax collection on taxable retail sales, the general UI and workers'-compensation thresholds, raffle/bingo/millionaire-party/alcohol licensing frameworks, and the 2026 lobbying thresholds — is source-verified against current official Michigan materials. The guide keeps every Verification in Progress item visibly labeled rather than resolving it by assumption.