Are you considering starting a nonprofit organization in Puerto Rico? Most nonprofits are formed for religious, charitable, scientific, literary, or educational purposes and are often eligible for federal and state tax exemptions.
The procedures begin with the State Department:
Step 1: Choose a name for your organization and make sure it is available so that you do not infringe on the rights of others. If in doubt, to check availability and register the name, click HERE.
Step 2: To register your organization's brand and logo, complete the Trade Name Registration Application and file it with the State Department with your proper proof. The application cost is $150.
Step 3: Then complete the Application for the Certificate of Incorporation and file it in the Department of State with proper proof. The application fee is $5 and does not apply to organizations of a fraternal, charitable, religious and educational nature.
Please note that once the State Department grants you the Certificate of Incorporation, the initial board of directors of the NPO must create and ratify the by-laws and regulations governing the internal administration of the NPO and then you must return to the Department of State to file them. These should be consistent with the laws of Puerto Rico that govern corporations, which include NPOs.
It is important that you know that registering with the State Department alone does not exempt the organization from tax liability. The Department of the Treasury is the agency that grants tax exemption to NPOs.
Step 4: Once you complete the paperwork with the State Department, you must request an employer identification number with the Internal Revenue Service (IRS) of the United States. You can request it for free HERE.
Obtaining the employer identification number does not mean that you have registered your NPO as a nonprofit entity for IRS purposes.
Step 5: You have already requested the employer identification number, now you must go to the Department of the Treasury.
You must complete and file Form SC 4809 to inform the Department of the Treasury of the employer identification number assigned to you by the IRS.
You must also complete and file the Merchant's Registration Certificate Application to obtain authorization to carry out operations in Puerto Rico.
Remember! The fact that your organization is registered with the State Department does not exempt the organization from tax liability. The Department of the Treasury is the agency that grants tax exemption to NPOs.
To request tax exemption from the Department of the Treasury, you must complete and file the Tax Exemption Application. The cost of filing is $300 if the annual gross income is less than $50,000 or $400 if the annual gross income is $50,000 or more. If the requesting entity is newly created and has not started operations, an estimate of the projected revenues must be made to cover the operations. If the entity has been operating prior to the tax exemption request, you must present evidence of your income. Click HERE for the Tax Exemption Application applicable to Cooperatives.
Local IRS offices do not provide customer service. For corporate issues, which includes NPOs, call 1-800-829-4933, there is an option for help in Spanish, or you can go to the IRS website.
Department of State
Assistant Secretary of Services
Extension: 6485, 6486, 6487, 6488
Trademark Registration Office
Extension: 6418, 6419
Department of Finance
Tax Incentives Division