​Not-for-profit companies (or non-profits) are governed by a long and often confusing set of laws. This is particularly true when a non-profit wants to dissolve. New York State has a vested interest in the assets of charitable corporations held for the benefit of the State’s citizens, and as such, there are additional steps that non-profits must take. The Board of Directors and the non-profit’s leadership are responsible for complying with these regulations.

Requirements for Dissolution of a Not-for-Profit Company

The dissolution of a non-profit corporation requires applications to be made to the New York State Department of Taxation and the New York State Attorney General’s Office.

The Department of Taxation requires applicants to complete the Application to Dissolve and the Application for Exemption from Corporation Franchise Taxes by a Not-for-Profit Organization. The form is called the CT-247. Applications are typically processed within 3 weeks.

The application to the Attorney General’s office is usually more time-consuming. The Attorney General’s office conducts a deep and thorough review of the application and may require the applicant to submit additional documentation or statements prior to approval, a process that can take a few months. The timeline can be even longer if the non-profit has assets at the time of its application, as extra steps must be taken.

The Dissolution Process

The first step for the applicant is to petition for the approval of a dissolution plan and the distribution of the non-profit’s assets. The petition submitted by the applicant must be verified by a member of the non-profit entity. The second step is to actually carry out the plan submitted in step one and then apply for a certificate of dissolution.

The initial petition for step one must include the certificates of incorporation, all amendments, latest financial reports, an affidavit from a member of the corporation confirming the purpose of the entity and its tax status, copies of the dissolving corporation’s board resolution or unanimous written consent, and if applicable, the members’ resolutions or unanimous written consent approving the plan for dissolution, a copy of the entity’s bylaws, the approval from the Department of Taxation (or any other government entity’s approval if required) and a proposed approval by the Attorney General. The Attorney General will also require copies of any delinquent annual reports that should have been filed with the Attorney General’s Charities Bureau. Furthermore, the corporation’s accountant must provide a statement explaining the distribution of assets and their role in the dissolution process.

After consents are granted by the Attorney General and the Department of Taxation, a package containing the consents and a certificate of dissolution must also be prepared and filed with the Secretary of State.

The process of dissolution requires knowledgeable and experienced assistance to help ensure compliance with all applicable laws. If you have any questions regarding the dissolution of a non-profit, please contact one of our trusted attorneys.