Morristown, TN asked in Business Formation, Business Law and Tax Law for Tennessee

Q: Does a DE nonprofit have to file a foreign qualification in TN if the sole member/directors merely lives in Tennessee?

No business will be conducted in TN. The DE Nonprofit will not actively be seeking out donations or soliciting donations particularly from TN residents, although the NP may accept donations from TN residents. Solicitation of charitable donations will be passive from the NP website.

1 Lawyer Answer
James L. Arrasmith
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  • Tax Law Lawyer
  • Sacramento, CA

A: Based on the information provided, it is unlikely that the Delaware nonprofit would need to file a foreign qualification in Tennessee solely because one of its directors or members lives there, as long as the nonprofit is not actively conducting business in the state.

However, there are a few additional considerations:

1. Passive solicitation of donations: If the nonprofit accepts donations from Tennessee residents through its website, it may still be required to register with the Tennessee Secretary of State's Division of Charitable Solicitations and Gaming. Tennessee law requires most nonprofits that solicit charitable contributions in the state to register, even if the solicitation is passive.

2. Defining "conducting business": Each state has its own definition of what constitutes conducting business. While merely having a director or member living in Tennessee does not typically qualify as conducting business, it's essential to review Tennessee's specific requirements to ensure compliance.

3. Other activities: If the nonprofit engages in any other activities in Tennessee, such as holding meetings, events, or maintaining an office, it may need to register as a foreign entity.

To ensure full compliance with state regulations, it is advisable to consult with a legal professional familiar with Tennessee nonprofit law. They can provide guidance tailored to the nonprofit's specific circumstances and help determine if any additional registrations or filings are necessary.

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