BILL NUMBER: SB 1341 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 21, 2012
PASSED THE ASSEMBLY AUGUST 16, 2012
AMENDED IN ASSEMBLY JUNE 13, 2012
AMENDED IN SENATE MARCH 27, 2012
INTRODUCED BY Senator Wolk
(Coauthor: Assembly Member Cedillo)
FEBRUARY 24, 2012
An act to amend Section 23778 of, and to repeal and add Section
23703 of, the Revenue and Taxation Code, relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
SB 1341, Wolk. Corporation Tax Law: charitable corporations:
exemptions: revocation.
Existing law provides that no exemption shall be allowed for a
charitable corporation that fails to file required registration or
periodic reports with the Attorney General. Existing law provides
that after the Attorney General has notified the Franchise Tax Board
in writing that a charitable corporation has failed to file required
registration or periodic reports, the exemption will be disallowed
and may only be reinstated when the registration or periodic reports
are filed. Existing law further provides that a charitable
corporation whose exemption is disallowed must pay the minimum tax,
as provided, for any year or years its exemption was disallowed.
This bill would require the Franchise Tax Board to mail a notice
to a charitable corporation that has not filed its required
registration or periodic reports with the Attorney General, stating
the intent of the Franchise Tax Board to revoke the exemption unless
the charitable corporation files all past due and currently due
documents, as provided, within a specified applicable period. This
bill would remove the requirement that a charitable corporation whose
exemption is disallowed pay the minimum tax for any year or years
its exemption was disallowed. This bill would allow a charitable
corporation whose exemption has been revoked to reestablish its
exemption by filing and paying specified applications, fees, returns,
statements, and payments.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 23703 of the Revenue and Taxation Code is
repealed.
SEC. 2. Section 23703 is added to the Revenue and Taxation Code,
to read:
23703. (a) For purposes of this section, "charitable corporation"
means a corporation defined in Section 12582.1 of the Government
Code that is required to comply with the filing requirements set
forth in Article 7 (commencing with Section 12580) of Chapter 6 of
Part 2 of Division 3 of Title 2 of the Government Code.
(b) (1) The exemption granted to a charitable corporation under
the provisions of Article 1 (commencing with Section 23701) shall be
revoked by the Franchise Tax Board in accordance with this section if
the charitable corporation fails to file with the Attorney General
any registration or periodic report required by Article 7 (commencing
with Section 12580) of Chapter 6 of Part 2 of Division 3 of Title 2
of the Government Code.
(2) A revocation shall occur under this section only after the
Attorney General has first notified the Franchise Tax Board in
writing that a charitable corporation has failed to file any
registration or periodic report on or before the due date thereof,
and the Franchise Tax Board has mailed a notice to the charitable
corporation stating that the Franchise Tax Board intends to revoke
the exemption if the charitable corporation does not file with the
Attorney General all past due and currently due documents required by
Article 7 (commencing with Section 12580) of Chapter 6 of Part 2 of
Division 3 of Title 2 of the Government Code.
(3) After receipt of all required documents from a charitable
corporation, the Attorney General shall provide prompt notification
to the Franchise Tax Board and the charitable corporation that the
charitable corporation has filed all past due and currently due
documents required by Article 7 (commencing with Section 12580) of
Chapter 6 of Part 2 of Division 3 of Title 2 of the Government Code.
(c) (1) If the Franchise Tax Board does not obtain notification
from the Attorney General pursuant to paragraph (3) of subdivision
(b) that the charitable corporation has complied with the filing
requirements described in subdivision (b) by the last day of the
applicable period, the Franchise Tax Board shall revoke the exemption
granted to the charitable corporation pursuant to Section 23777 on
the first day after the applicable period.
(2) For purposes of this subdivision, the applicable period means:
(A) For notifications of noncompliance from the Attorney General
that are received by the Franchise Tax Board before the effective
date of the act adding this section, the applicable period shall be
120 days after the effective date of the act adding this section.
(B) For notifications of noncompliance from the Attorney General
that are received by the Franchise Tax Board on or after the
effective date of the act adding this section, the applicable period
shall be 120 days after the Franchise Tax Board mails notification of
the intent to revoke the exemption granted to the charitable
corporation.
(d) For a charitable corporation whose exemption has been
disallowed pursuant to Section 23703, as amended by Section 94 of
Chapter 862 of the Statutes of 2000, prior to the effective date of
the act adding this section, the Franchise Tax Board may reestablish
that charitable corporation's exempt status under Section 23778,
after receipt of notification from the Attorney General pursuant to
paragraph (3) of subdivision (b) that the filing requirements set
forth in Article 7 (commencing with Section 12580) of Chapter 6 of
Part 2 of Division 3 of Title 2 of the Government Code have been
fulfilled. For purposes of reestablishing the charitable corporation'
s exempt status under Section 23778, disallowance under Section
23703, as amended by Section 94 of Chapter 862 of the Statutes of
2000, shall be considered a revocation of exemption.
(e) This section shall apply with respect to notifications of
noncompliance received from the Attorney General before, on, or after
the effective date of the act adding this section.
SEC. 3. Section 23778 of the Revenue and Taxation Code is amended
to read:
23778. An organization whose exemption was revoked under Section
23703 or 23777 may be reestablished as an exempt organization upon:
(a) The filing or payment of both of the following:
(1) A new application for exemption and payment of the filing fee
required under Section 23701.
(2) Any returns, statements, or payment of any amounts due under
this part or Part 10.2 (commencing with Section 18401) which were not
previously submitted or paid and which resulted in the revocation.
(b) When revocation occurred under subdivision (c) of Section
23777, satisfactory proof that all of the following have occurred:
(1) The organization has corrected its nonexempt activities.
(2) That it will operate in an exempt manner in the future.
(3) The payment of any tax for periods the organization was not
qualified for exemption.
SEC. 4. The Legislature finds and declares that the minimum
franchise tax abatement for charitable corporations, and related
penalties and interest, by this act with respect to previous taxable
years serves a public purpose of encouraging charitable corporations
to come into compliance with filing requirements of a charitable
corporation so that all Californians can continue to support and
donate to much needed charitable organizations.