BILL ANALYSIS �
AB 1677
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1677 (Nestande)
As Amended June 4, 2012
Majority vote
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|ASSEMBLY: |74-0 |(April 26, |SENATE: |36-0 |(August 22, |
| | |2012) | | |2012) |
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Original Committee Reference: REV. & TAX.
SUMMARY : Revises the annual filing requirements for certain
small tax-exempt organizations.
The Senate amendments make technical nonsubstantive changes.
EXISTING STATE LAW :
1)Conforms to provisions of the Internal Revenue Code (IRC) on
the taxability of exempt organizations by providing that an
organization organized and operated for nonprofit purposes
shall be exempt for California purposes upon submission to the
Franchise Tax Board (FTB) a copy of the notice issued by the
Internal Revenue Service (IRS) approving the organization's
tax-exempt status under IRC Section 501(c)(3).
2)Requires the organization to notify FTB of a federal
revocation of tax-exempt status.
3)Requires the FTB to rescind the organization's tax-exempt
status for state tax purposes, upon receipt of the federal
revocation.
4)Specifies that the California approval of tax-exempt status
based upon notification of federal approval does not prevent
FTB from revoking the exemption of an organization that is not
operated in accordance with California or federal laws.
5)Requires an exempt organization to file a two-page annual
information return and pay a $10 filing fee, unless the
organization's gross receipts for the taxable year are less
than $25,000. Provides that the exempt organization, instead,
must submit certain basic information to the FTB
electronically, by filing a California e-Postcard.
AB 1677
Page 2
6)Exempts from the annual filing requirements, in conformity
with the federal law, churches, their integrated auxiliaries,
conventions or associations of churches, the exclusive
religious activity of any religious order, and certain
governmental and political organizations.
AS PASSED BY THE ASSEMBLY , this bill:
1)Expanded the current exemption from the annual informational
return filing requirement for small tax-exempt organizations,
by increasing the gross-receipt threshold for filing from
$25,000 of average gross receipts to $50,000.
2)Would become effective on January 1, 2013, but would apply to
taxable years beginning on or after January 1, 2012.
FISCAL EFFECT : The FTB staff estimates that this bill will
result in annual loss of $90,000 in the fiscal year (FY)
2012-13, $100,000 in FY 2013-14, and $100,000 in FY 2014-15.
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098
FN: 0005122