BILL NUMBER: AB 2497 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Wagner
FEBRUARY 19, 2016
An act to amend Section 23701 of the Revenue and Taxation Code,
relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
AB 2497, as introduced, Wagner. Corporation Tax Law.
The Corporation Tax Law exempts various types of organizations
from taxes imposed by that law. Existing law establishes a method by
which an organization that has obtained a ruling or determination
from the Internal Revenue Service that it is exempt from federal
income taxes as an organization described in Section 501(c)(3), (c)
(4), (c)(5), (c)(6), or (c)(7) of the Internal Revenue Code may
obtain exemption from state taxes, as provided.
This bill would make nonsubstantive changes to that provision.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 23701 of the Revenue and Taxation Code is
amended to read:
23701. (a) Organizations which
that are organized and operated for nonprofit
purposes within the provisions of a specific section of this article,
or are defined in Section 23701h (relating ,
relating to certain title-holding companies)
companies, or Section 23701x (relating
23701x, relating to certain title-holding
companies), companies, are exempt from
taxes imposed under this part, except as provided in this article or
in Article 2 (commencing with Section 23731) of this chapter,
if: if all of the following occur:
(a)
(1) An application for exemption is submitted in the
form prescribed by the Franchise Tax Board; and
Board.
(b)
(2) A filing fee of twenty-five dollars ($25) is paid
with each application for exemption filed with the Franchise Tax
Board after December 31, 1969; and 1969.
(c)
(3) The Franchise Tax Board issues a determination
exempting the organization from tax.
(d)
(b) (1) Notwithstanding subdivisions (a), (b),
and (c) subdivision (a) , an organization
organized and operated for nonprofit purposes in accordance with
Section 23701a, 23701d, 23701e, 23701f, or 23701g shall be exempt
from taxes imposed by this part, except as provided in this article
or in Article 2 (commencing with Section 23731), upon its submission
to the Franchise Tax Board of one of the following:
(A) A copy of the determination letter or ruling issued by the
Internal Revenue Service recognizing the organization's exemption
from federal income tax under Section 501(a) of the Internal Revenue
Code, as an organization described in Section 501(c)(3), (c)(4), (c)
(5), (c)(6), or (c)(7) of the Internal Revenue Code.
(B) A copy of the group exemption letter issued by the Internal
Revenue Service that states that both the central organization and
all of its subordinates are tax-exempt under Section 501(c)(3), (c)
(4), (c)(5), (c)(6), or (c)(7) of the Internal Revenue Code and
substantiation that the organization is included in the federal group
exemption letter as a subordinate organization.
(2) (A) Upon receipt of the documents required in subparagraph (A)
or (B) of paragraph (1), the Franchise Tax Board shall issue an
acknowledgment that the organization is exempt from taxes imposed by
this part, except as provided in this article or in Article 2
(commencing with Section 23731). The acknowledgment may refer to the
organization's recognition by the Internal Revenue Service of
exemption from federal income tax as an organization described in
Section 501(c)(3), (c)(4), (c)(5), (c)(6), or (c)(7) of the Internal
Revenue Code and, if applicable, the organization's subordinate
organization status under a federal group exemption letter. The
effective date of an organization's exemption from state income tax
pursuant to this subdivision shall be no later than the effective
date of the organization's recognition of exemption from federal
income tax as an organization described in Section 501(c)(3), (c)(4),
(c)(5), (c)(6), or (c)(7) of the Internal Revenue Code, or its
status as a subordinate organization under a federal group exemption
letter, as applicable.
(B) Notwithstanding any other provision of this subdivision, an
organization formed as a California corporation or qualified to do
business in California that, as of the date of receipt by the
Franchise Tax Board of the documents required under paragraph (1), is
listed by the Secretary of the State or Franchise Tax Board as
"suspended" or "forfeited" may not establish its exemption under
paragraph (1) and shall not receive an acknowledgment referred to
under subparagraph (A) from the Franchise Tax Board until that
corporation is listed by the Secretary of State and the Franchise Tax
Board as an "active" corporation.
(3) If, for federal income tax purposes, an organization's
exemption from tax as an organization described in Section 501(c)(3),
(c)(4), (c)(5), (c)(6), or (c)(7) of the Internal Revenue Code is
suspended or revoked, the organization shall notify the Franchise Tax
Board of the suspension or revocation, in the form and manner
prescribed by the Franchise Tax Board. Upon notification, the board
shall suspend or revoke, whichever is applicable, for state income
tax purposes, the organization's exemption under paragraph (1).
(4) This subdivision shall not be construed to prevent the
Franchise Tax Board from revoking the exemption of an organization
that is not organized or operated in accordance with California law,
this chapter, or Section 501(c)(3), (c)(4), (c)(5), (c)(6), or (c)(7)
of the Internal Revenue Code.
(5) If the Franchise Tax Board suspends or revokes the exemption
of an organization pursuant to paragraph (3) or (4), the exemption
shall be reinstated only upon compliance with this section,
regardless of whether the organization can establish exemption under
paragraph (1).
(e)
(c) This section shall not prevent a determination from
having retroactive effect and does not prevent the issuance of a
determination with respect to a domestic organization which was in
existence prior to January 1, 1970, and exempt under prior law
without the submission of a formal application or payment of a filing
fee. For the purpose of this section, the term "domestic" means
created or organized under the laws of this state.
(f)
(d) The Franchise Tax Board may prescribe rules and
regulations to implement the provisions of this article.