Maryland Booster Club Filing Requirements

Forming a Nonprofit Corporation in Maryland

A booster club incorporates as a nonstock corporation (one with members instead of shareholders) by filing Articles of Incorporation with SDAT. The charter must state that the corporation cannot issue capital stock (Corporations and Associations 5-202), and the club must keep a Maryland principal office and a resident agent who accepts legal papers (2-108). The IRS-required purpose and dissolution language is covered in How to Incorporate a Booster Club.

The fee for a nonstock corporation organized under 501(c)(3) (the Internal Revenue Code section for tax-exempt charities) is $150, including $50 for the Maryland Nonprofit Development Center Program Fund, plus a $20 organization fee: $170 total. Online filing through Maryland Business Express adds a $50 expedited fee.

Every Maryland corporation files an annual report with SDAT by April 15 (Tax-Property 11-101). It is free for a nonstock corporation but mandatory; SDAT can forfeit the charter of a corporation that does not file (Corporations and Associations 3-503).

State Tax Exemption

Maryland automatically exempts from income tax any organization exempt under Internal Revenue Code section 501 (Tax-General 10-104). No application or fee is required. The exception is unrelated business taxable income (UBTI, income from a regular business unrelated to the club’s purpose); a club with UBTI files Maryland Form 500 (Tax-General 10-812).

Sales Tax

Purchases. The Comptroller issues a Sales and Use Tax Exemption Certificate to nonprofit charitable and educational organizations located in Maryland or an adjacent jurisdiction. The club applies through Maryland Tax Connect with its IRS determination letter, articles, and bylaws; no fee is listed. Certificates renew every five years, with renewal due August 1. Purchases must carry on the club’s work, and a vendor that does not record the certificate number charges tax (COMAR 03.06.01.22).

Sales. Tax-General 11-204(b)(6), effective July 1, 2013, exempts sales by a parent-teacher organization “or other organization within an elementary or secondary school in the State or within a school system in the State.” Comptroller guidance defines “other organization” as a formal group of students, teachers, administrators, or parents, recognized by a school, that supports an educational or extracurricular activity and raises funds.

School recognition is the condition that matters. A club the school does not recognize must obtain a sales and use tax license and collect tax on taxable sales; Maryland has no occasional-sale exemption.

Charitable Solicitation Registration

A charity must register with the Secretary of State’s Charitable Organizations Division before soliciting. Texts, social media, and email count, so an online donation page triggers the rule. Religious and members-only groups are exempt; a booster club generally is not.

Contributions include donations, grants, and special event revenue. Contributions of $400,000 to $1,000,000 require a review by an independent certified public accountant (CPA); $1,000,000 or more requires a CPA audit. A 990-N filer attaches state form COF-85 instead of a Form 990.

The fiscal year is the 12-month accounting period in the bylaws. The Annual Update is due six months after it ends, extended automatically to the 15th day of the 11th month: June 30, extended to November 15, for a calendar-year club; December 31, extended to May 15, for a June 30 fiscal yearFiscal yearThe club’s 12-month accounting year, set in the bylaws. Many booster clubs use July 1 through June 30 to match the school year, and the club’s filing deadlines count from the day it ends.All terms. The Fund-Raising Notice is due within eight months: August 31, or the last day of February. Delinquent registrations owe a $25 late fee that grows $25 each month.

Raffles and Gaming

Raffles are legal for a qualified 501(c)(3) booster club, under the rules of the county where the raffle is held. Title 13, Subtitle 2 allows a bona fide charitable or civic organization to hold a “gaming event” (a carnival, bazaar, or raffle) in 15 listed counties if no individual profits. Examples:

• Montgomery County. A county permit is required for each raffle except a 50/50 raffle (half the ticket money goes to the winner). The club must be located in the county, those running the raffle must be county residents and members, and a club is limited to 12 raffles a year. 50/50 raffles50/50 raffleA raffle in which the winner receives half of the ticket sales and the club keeps the other half, usually sold and drawn during one game or event. It is legally a raffle with a cash prize, so state raffle law applies.All terms are unlimited if each prize is $300 or less.
• Baltimore County. A county permit is required before any gaming event, and most net proceeds must be spent in the county.
• Prince George’s County. A written county permit is required before a “benefit performance” where games award prizes.

Real property may be raffled no more than twice a year (Criminal Law 12-106). No Maryland statute authorizes online raffle ticket sales, and member-and-resident rules make them doubtful; the club should get written county approval first. Bingo needs a separate county license.

Annual Compliance Calendar for Maryland