BILL NUMBER: AB 1677	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 22, 2012
	PASSED THE ASSEMBLY  AUGUST 27, 2012
	AMENDED IN SENATE  JUNE 4, 2012
	AMENDED IN ASSEMBLY  MARCH 14, 2012

INTRODUCED BY   Assembly Member Nestande
   (Coauthors: Assembly Members Garrick, Gordon, and Jeffries)
   (Coauthor: Senator Harman)

                        FEBRUARY 14, 2012

   An act to amend Section 23772 of the Revenue and Taxation Code,
relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1677, Nestande. Corporation taxes: filing requirements:
tax-exempt organizations.
   Under the Corporation Tax Law, specific tax-exempt organizations
are exempted from the requirement to file annual information returns,
including those organizations the gross receipts of which in each
taxable year are normally not more than $25,000.
   This bill would increase the gross receipts threshold for the
application of the exemption from the annual filing requirement to
$50,000.



THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 23772 of the Revenue and Taxation Code is
amended to read:
   23772.  (a) For the purposes of this part--
   (1) Except as provided in paragraph (2), every organization exempt
from taxation under Section 23701 and every trust treated as a
private foundation because of Section 4947(a)(1) of the Internal
Revenue Code shall file an annual return, stating specifically the
items of gross income, receipts, and disbursements, and any other
information for the purpose of carrying out the laws under this part
as the Franchise Tax Board may by rules or regulations prescribe, and
shall keep any records, render under oath any statements, make any
other returns, and comply with any rules and regulations as the
Franchise Tax Board may from time to time prescribe. The return shall
be filed on or before the 15th day of the fifth full calendar month
following the close of the taxable year.
   (2) Exceptions from filing--
   (A) Mandatory exceptions--Paragraph (1) shall not apply to--
   (i) Churches, their integrated auxiliaries, and conventions or
association of churches,
   (ii) An organization (other than a private foundation as defined
in Section 23709), the gross receipts of which in each taxable year
are normally not more than fifty thousand dollars ($50,000), or
   (iii) The exclusively religious activities of any religious order.

   (B) Discretionary exceptions--The Franchise Tax Board may permit
the filing of a simplified return for organizations based on either
gross receipts or total assets or both gross receipts and total
assets, or may permit the filing of an information statement (without
fee), or may permit the filing of a group return for incorporated or
unincorporated branches of a state or national organization where it
determines that an information return is not necessary to the
efficient administration of this part.
   (3) An organization that is required to file an annual information
return shall pay a filing fee of ten dollars ($10) on or before the
due date for filing the annual information return (determined with
regard to any extension of time for filing the return) required by
this section. In case of failure to pay the fee on or before the due
date, unless it is shown that the failure is due to reasonable cause,
the filing fee shall be twenty-five dollars ($25). All collection
remedies provided in Article 5 (commencing with Section 18661) of
Chapter 2 of Part 10.2 are applicable to collection of the filing
fee. However, the filing fee does not apply to the organization
described in paragraph (4).
   (4) Paragraph (3) does not apply to: (A) a religious organization
exempt under Section 23701d; (B) an educational organization exempt
under Section 23701d, if that organization normally maintains a
regular faculty and curriculum and normally has a regularly organized
body of pupils or students in attendance at the place where its
educational activities are regularly carried on; (C) a charitable
organization, or an organization for the prevention of cruelty to
children or animals, exempt under Section 23701d, if that
organization is supported, in whole or in part, by funds contributed
by the United States or any state or political subdivision thereof,
or is primarily supported by contributions of the general public; (D)
an organization exempt under Section 23701d, if that organization is
operated, supervised, or controlled by or in connection with a
religious organization described in subparagraph (A).
   (b) Every organization described in Section 23701d that is subject
to the requirements of subdivision (a) is required to furnish
annually information, at the time and in the manner as the Franchise
Tax Board may by rules or regulations prescribe, setting forth all of
the following:
   (1) Its gross income for the year.
   (2) Its expenses attributable to gross income and incurred within
the year.
   (3) Its disbursements within the year for the purposes for which
it is exempt.
   (4) A balance sheet showing its assets, liabilities, and net worth
as of the beginning of that year.
   (5) The total of the contributions and gifts received by it during
the year, and the names and addresses of all substantial
contributors.
   (6) The names and addresses of its foundation manager (within the
meaning of Section 4946 of the Internal Revenue Code) and highly
compensated employees.
   (7) The compensation and other payments made during the year to
each individual described in paragraph (6).
   (8) In the case of an organization with respect to which an
election under Section 23704.5 is effective for the taxable year, the
following amounts for that organization for that taxable year:
   (A) The lobbying expenditures (as defined in Section 4911(c)(1) of
the Internal Revenue Code).
   (B) The lobbying nontaxable amount (as defined in Section 4911(c)
(2) of the Internal Revenue Code).
   (C) The grassroots expenditures (as defined in Section 4911(c)(3)
of the Internal Revenue Code).
   (D) The grassroots nontaxable amount (as defined in Section 4911
(c)(4) of the Internal Revenue Code). For purposes of this paragraph,
if Section 23740 applies to the organization for the taxable year,
the organization shall furnish the amounts with respect to the
affiliated group as well as with respect to the organization.
   (9) Other information with respect to direct or indirect transfers
to, and other direct or indirect transactions and relationships
with, other organizations described in Sections 23701a to 23701w,
inclusive (other than Sections 23701d, 23701k, and 23701t), as the
Franchise Tax Board may require to prevent either of the following:
   (A) Diversion of funds from the organization's exempt purpose.
   (B) Misallocation of revenue or expense.
   (10) Information with respect to qualified disaster relief
activities.
   (11) Any other relevant information as the Franchise Tax Board may
prescribe.
   (12) Each controlling organization, within the meaning of Section
512(b)(13) of the Internal Revenue Code, which is subject to the
requirements of subdivision (a), shall include on the return required
under subdivision (a) all of the following information:
   (A) Any interest, annuities, royalties, or rents received from
each controlled entity, within the meaning of Section 512(b)(13) of
the Internal Revenue Code.
   (B) Any loans made to each controlled entity.
   (C) Any transfers of funds between such controlling organization
and each such controlled entity.
   (13) (A) Any organization, the gross receipts of which in any
taxable year result in the organization being referred to in clause
(ii) of subparagraph (A) of paragraph (2) of subdivision (a), or
subparagraph (B) of paragraph (2) of subdivision (a), shall do both
of the following:
   (i) Furnish annually, in electronic form, and at the time and in
the manner as may be prescribed by the Franchise Tax Board, the legal
name of the organization, any name under which the organization
operates or does business, the organization's mailing address and the
Internet Web site address, if any, the organization's taxpayer
identification number, the name and address of a principal officer,
and evidence of the continuing basis for the organization's exemption
from the filing requirements under paragraph (1) of subdivision (a).

   (ii) Upon termination of the existence of the organization, shall
furnish notice of the termination.
   (B) This paragraph shall apply to notices and returns with respect
to annual periods beginning on or after January 1, 2010.
   (14) (A) If an organization described in paragraph (1) of
subdivision (a) or paragraph (13) of this subdivision fails to file
an annual return or notice required under either paragraph (1) of
subdivision (a) or paragraph (13) of this subdivision for three
consecutive years, that organization's status as an organization
exempt from tax under Section 23701 shall be considered revoked on
and after the date set by the Franchise Tax Board for the filing of
the third annual return or notice. The Franchise Tax Board shall
publish and maintain a list of any organization for which the
tax-exempt status is revoked.
   (B) Any organization for which the tax-exempt status is revoked
under subparagraph (A) must apply for reinstatement of that status
regardless of whether that organization was originally required to
make an application for tax-exempt status.
   (C) If, upon application for reinstatement of status as an
organization exempt from tax under Section 23701, an organization
described in subparagraph (A) can show to the satisfaction of the
Franchise Tax Board evidence of reasonable cause for the failure
described in that subparagraph, the organization's exempt status may,
in the discretion of the Franchise Tax Board, be reinstated
effective from the date of the revocation under that subparagraph.
   (D) This paragraph shall apply to notices and returns with respect
to annual periods beginning on or after January 1, 2010.
   (c) For the purposes of this part--
   (1) In the case of a failure to file a return required under this
section on the date and in the manner prescribed therefor (determined
with regard to any extension of time for filing), unless it is shown
that the failure is due to reasonable cause, there shall be paid (on
notice and demand by the Franchise Tax Board and in the same manner
as tax) by the exempt organization or trust failing so to file, five
dollars ($5) for each month or part thereof during which the failure
continues, but the total amount imposed hereunder on any organization
for failure to file any return may not exceed forty dollars ($40).
   (2) The Franchise Tax Board may make written demand upon a private
foundation failing to file under paragraph (1) of this subdivision
specifying therein a reasonable future date by which the filing shall
be made, and if the filing is not made on or before that date, and
unless it is shown that failure so to file is due to reasonable
cause, there shall be paid (on notice and demand by the Franchise Tax
Board and in the same manner as tax) by the person failing so to
file, in addition to the penalty prescribed in paragraph (1), a
penalty of five dollars ($5) each month or part thereof after the
expiration of the time specified in the written demand during which
the failure continues, but the total amount imposed hereunder on all
persons for the failure to file shall not exceed twenty-five dollars
($25). If more than one person is liable under this paragraph for a
failure to file, all of those persons shall be jointly and severally
liable with respect to the failure. The term "person" as used herein
means any officer, director, trustee, employee, member, or other
individual who is under a duty to perform the act in respect of which
the violation occurs.
   (3) This subdivision shall not apply with respect to any notice
required under paragraph (13) of subdivision (b).
   (d) The amendments made to this section by the act adding this
subdivision shall apply to taxable years beginning on or after
January 1, 2012.