If you're the treasurer, board member, or chief of a volunteer fire company in Maryland, you already know that running a fire company is a full-time job — and keeping the books clean is a job on top of that. Most of your members signed up to fight fires, not file Form 990s. But the IRS and the State of Maryland don't make exceptions for volunteers.
This guide is written specifically for independent and volunteer fire companies across Maryland — with extra detail for Frederick County fire companies we work with directly. Whether you're in Urbana, Hagerstown, Mount Airy, or anywhere else in the state, the rules are the same and the stakes are real: lose your tax-exempt status and you lose your ability to fundraise, apply for grants, and operate without paying income tax.
We've worked with fire companies and nonprofits in central Maryland for decades. Here's what you need to know.
Many volunteer fire companies in Maryland operate under 501(c)(4) status — social welfare organizations — rather than 501(c)(3) charitable status. Both are tax-exempt, but they are not the same, and the difference affects your fundraising, your grants, and your donors.
501(c)(4) fire companies:
501(c)(3) fire companies:
Many Maryland fire companies that started as 501(c)(4) organizations have converted to 501(c)(3) status specifically to expand their grant eligibility and donor appeal. If you're not sure which status your fire company holds, we can help you find out — and if a conversion makes sense, we can guide you through it.
Contact Mercer Flanagan CPA to review your tax-exempt status →
Every tax-exempt organization — including volunteer fire companies — must file an annual information return with the IRS. Which form you file depends on the size of your organization:
For fire companies with gross receipts of $50,000 or less. This is the simplest filing — it's done online and only takes a few minutes. But don't skip it. Failing to file the 990-N for three consecutive years automatically revokes your tax-exempt status.
Important: Gross receipts means all money coming in — bingo proceeds, fundraiser income, dues, donations, and grants — before any expenses are subtracted. A lot of fire companies underestimate this number.
For fire companies with gross receipts under $200,000 and total assets under $500,000. More detailed than the 990-N but still manageable. Requires a balance sheet, revenue and expense statement, and information about your programs and officers.
For fire companies with gross receipts of $200,000 or more, or total assets of $500,000 or more. This is the full return — 12 pages plus schedules. If your fire company owns real estate, significant equipment, or has grown its fundraising operation, you may be here. A CPA should be preparing this for you.
Your Form 990 is due on the 15th day of the 5th month after your fiscal year ends. For most fire companies operating on a calendar year (January–December), that means May 15. Extensions are available but must be requested before the deadline.
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Federal filing is only half the picture. Maryland has its own requirements for nonprofit and tax-exempt organizations.
All Maryland nonprofit corporations must file an Annual Report with the Maryland Department of Assessments and Taxation by April 15 each year. This is separate from your IRS filing and is filed electronically.
If your fire company solicits donations from the public — which virtually all do — you must register with the Maryland Secretary of State's Office and renew annually. The renewal is due within 6 months of your fiscal year end.
Here's the good news: If your fire company files a Form 990 or 990-EZ with the IRS, a signed copy of that form is generally all Maryland requires for your charitable registration renewal. One filing does double duty.
If you only file a 990-N, you'll need to complete Maryland's Form COF-85 separately.
This is one most fire company treasurers don't know about. Volunteer fire companies in Maryland are eligible for a sales and use tax exemption on purchases made to carry on the work of the organization — equipment, supplies, materials. The exemption is renewable every five years and is administered by the Maryland Comptroller's Office.
If your fire company doesn't have this exemption certificate, you've likely been paying sales tax you didn't have to. Call us — we can help you get it sorted.
See our nonprofit and tax-exempt organization services →
Bingo nights, crab feasts, car washes, casino nights, gun raffles — fire company fundraisers are a staple of Maryland community life and a critical revenue source for many volunteer departments. But they come with tax considerations that catch a lot of treasurers off guard.
Maryland has specific licensing requirements for bingo and gaming fundraisers, and the IRS has its own rules about gaming income for tax-exempt organizations. Generally, bingo conducted by a nonprofit as a fundraiser is not considered unrelated business income — but it must be run primarily by volunteers and reported correctly on your Form 990.
If your fire company earns income from an activity that is:
...that income may be subject to Unrelated Business Income Tax (UBIT) and require filing a Form 990-T.
For most fire companies, the typical fundraising activities — bingo, dinners, auctions, raffles — are exempt from UBI rules when run by volunteers. But if your fire company rents out its hall regularly, operates a bar open to the public, or runs other commercial activities, you may have a UBI issue worth reviewing.
For any donation of $250 or more, your fire company is required to provide the donor with a written acknowledgment letter. This is something many volunteer organizations skip — and it puts your donors at risk of losing their deduction. We can help you set up a simple system so this happens automatically.
The treasurer role in a volunteer fire company is one of the most important and most underappreciated positions in the organization. You're responsible for keeping the books clean, the board informed, and the IRS satisfied — often with no accounting background and no staff.
Here's what clean books look like for a Maryland fire company:
Separate bank accounts for separate funds. If your fire company has a general operating fund, an apparatus fund, a building fund, and a bingo fund — each should have its own account. Commingling funds is one of the fastest ways to create compliance problems and board disputes.
Track all income by source. The IRS wants to know exactly where your money came from — dues, donations, grants, bingo, events, interest. Your bookkeeping system needs to categorize income at the transaction level, not just lump it together.
Document every expense. Keep receipts. Record what the purchase was for and how it relates to the fire company's mission. For equipment purchases, keep the invoice and note whether it was funded from a specific fund or grant.
Reconcile monthly. Bank statements should be reconciled every month, not just at year end. If your treasurer is doing this quarterly or annually, you're setting yourself up for errors and potential fraud vulnerability.
Use accounting software. QuickBooks is the standard we recommend and support. If your fire company is still running on spreadsheets or a paper ledger, it's time to upgrade. We provide QuickBooks setup and training specifically for nonprofits and can get your treasurer up and running quickly.
Not every fire company needs a CPA for every task — but there are situations where professional help is not optional:
You should have a CPA prepare your taxes if:
Maryland charitable solicitation requirements for larger fire companies:
These thresholds catch more fire companies than you'd expect — especially those with active fundraising programs, bingo operations, or county government funding.
Book a consultation with our nonprofit CPA team →
We're a Frederick, Maryland CPA firm and we work with fire companies and nonprofits right here in Frederick County. We understand the local landscape — the county funding relationships, the community fundraising culture, and the specific challenges that volunteer fire and rescue organizations in our area face.
Whether your company is in Frederick City, Urbana, Middletown, Thurmont, Mount Airy, or anywhere else in the county — we're local, we're accessible, and we're not going to hand your books off to a junior staff member or an overseas preparer.
We serve fire companies and nonprofits across central Maryland, including:
Our fire company hasn't filed a 990 in a few years. What do we do?Don't panic, but don't wait either. The IRS has a Voluntary Compliance Program for organizations that have lost their exempt status due to missed filings. In many cases, penalties can be abated if you proactively get back into compliance before the IRS contacts you. We've helped organizations in exactly this situation. Call us and let's figure it out together.
Do our volunteer firefighters get any tax benefits?Yes. Volunteers who purchase equipment, pay for training, or incur other out-of-pocket expenses directly related to their volunteer service may be able to deduct those expenses on their personal tax returns. Maryland also has a volunteer fire and rescue tax credit for qualifying volunteers. We handle individual tax returns for first responders and can make sure they're getting every benefit they're entitled to. See our individual tax preparation services.
We received a large grant this year. Does that change our filing requirements?Possibly. A large grant can push you into a higher Form 990 tier, trigger the Maryland CPA review or audit requirement, and may come with its own reporting strings attached. Let us know before you spend the money so we can help you set up the right tracking systems from the start.
Can the fire company pay its treasurer a salary?Yes, but it must be reasonable and properly documented. Compensation to officers of a tax-exempt organization is scrutinized by the IRS and must be disclosed on the Form 990. We can help you structure this correctly.
We want to build a new station. How does that affect our taxes?Major capital projects can affect your asset totals (and therefore your Form 990 tier), may involve grants with specific compliance requirements, and could have implications for your sales tax exemption. Talk to us before you break ground.
You serve your community without pay. The least we can do is make sure the accounting and tax side of your organization is handled correctly, affordably, and without adding stress to your board.
Mercer Flanagan CPA has been serving nonprofits, fire companies, and small organizations in Frederick County and across central Maryland since 1971. We know Form 990 filing, we know Maryland's nonprofit compliance requirements, and we know how to keep a volunteer organization's books clean on a tight budget.
View our nonprofit tax and bookkeeping services →
Book a free consultation → or call us at (301) 662-6992.
Mercer Flanagan CPA is located at 1509 Homestead Avenue, Frederick, MD 21702. We serve nonprofit organizations, volunteer fire companies, small businesses, and individuals across Frederick County and central Maryland.