BILL ANALYSIS Ó
AB 871
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Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
871 (Brown) - As Introduced February 26, 2015
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|Policy |Banking and Finance |Vote:|11 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: 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) as follows:
1)Requires all corporations to file by March 15th of each year
rather than the calendar month in which the original articles
of incorporation (AOI) were filed.
2)Requires all limited liability companies (LLCs) to file by
April 15th biennially rather than the calendar month in which
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the original AOIs were filed.
3)Requires all nonprofit corporations to file by May 15th
biennially rather than the calendar month in which to original
AOIs were filed.
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, allowing businesses to file
at the same time each year would eliminate confusion with
respect to SOI due dates. The author believes this change
would have a positive impact on small businesses and improve
compliance with the SOI filing requirements.
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
with this section approximately three months prior to the
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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.
4)Prior Legislation. AB 2180 (Brown) of 2014 would have changed
the filing period when a corporation, a nonprofit public
benefit corporation, a nonprofit mutual benefit corporation, a
consumer cooperative corporation a limited liability company,
foreign limited liability company, and a credit union files a
SOI with the SOS to their respective tax filing day. AB 2180
was held on the Suspense File of this committee.
AB 871
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Analysis Prepared by:Joel Tashjian / APPR. / (916)
319-2081