BILL ANALYSIS Ó
AB 2180
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Date of Hearing: May 14, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2180 (Brown) - As Amended: May 1, 2014
Policy Committee: Banking &
FinanceVote: 11-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill changes the filing date for statements of information
(SOIs) that various corporate entities file annually or
biennially with the Secretary of State (SOS), requiring that
filing date to be the same date on which the corporate entities
must file tax returns. For nonprofit public benefit
corporations that do not file tax returns, the filing date is
May 15.
FISCAL EFFECT
One time GF costs of approximately $2.5 million to implement
systems and procedure changes, conduct outreach, and notify
businesses; ongoing annual GF costs of approximately $1.0
million to staff the peak periods created by the common filing
deadlines.
COMMENTS
1) Purpose. According to the author, reminders to file from the
SOS appear as junk mail and are often missed. As a result,
many businesses miss filing their SOI and are penalized and
suspended, in some cases without the business' knowledge.
2) Existing Filing Requirements. Current law requires corporate
entities to file, within 90 days after the filing of its
original incorporating documents and annually or biennially
thereafter, an SOI with the SOS. The filing date for
subsequent SOIs coincides with the anniversary of the date on
which the entity's original incorporating documents were
filed. The SOS provides a notice to each entity to comply
AB 2180
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with this section approximately three months prior to the
close of the applicable filing period. As a result, SOI
filings with the SOS are spaced relatively evenly over the
course of a calendar year. Currently, the SOS processes over
a million SOIs annually.
3) Penalties for Late Filing. Failure to file an SOI results in
a $250 penalty levied by the Franchise Tax Board and a
suspension of the entity by SOS, during which time the limited
liability protections afforded to corporate entities are
suspended and contracts entered into during the suspension
period are potentially null and void. According to the
author, approximately 141,000 entities were assessed a penalty
for not filing their annual SOI between 2010 and 2011. Of
these businesses, 25,000 were suspended.
Analysis Prepared by : Joel Tashjian / APPR. / (916) 319-2081