For a nonprofit organization, losing tax exempt status is one of the more devastating things that can happen. There is a particular problem—private inurement—that can create a beeline to losing exempt status. In short, private inurement (also called an excess benefit transaction) is one of those activities about which the management team of nonprofits should be acutely aware: both aware of what it is and aware of how to safeguard against it.
To maintain corporate good standing status in most states, nonprofits are required to file annual or periodic reports with the Secretary of State, just like their for-profit counterparts. Though the forms and procedures are similar in every state, there is very little uniformity in how states handle due dates, fees, signature requirements, filing methods (paper vs. online), and additional filing requirements of other state agencies.