Exempt organizations and filing enforcement notices June 2019 Tax News

We routinely send out filing enforcement (FE) notices to individuals and business entities who may have a filing requirement for a specific tax year, but have not filed a return with us.

One of the questions that comes into our Contact Centers when we send out FE notices to business entities comes from tax-exempt entities or organizations who are asked to file a Form 100 California Corporation Franchise or Income Tax Return when they normally file Form 199 California Exempt Organization Annual Information Return or Form 199N if eligible[1].

There are several reasons why a tax-exempt entity may receive this type of notice. One of the most common reasons is that their exempt status has been revoked due to their failure to file a return or pay an amount due. Alternatively, they have been suspended by the Secretary of State, which can quickly lead to their exempt status being revoked.

Once an entity’s exempt status has been revoked, the entity is subject to the franchise tax provisions – including the requirement to pay at least the minimum tax each year. It is for this reason, we send the request for file Form 100.

FTB’s Introduction to Tax Exempt Status (Publication 927) explains what can lead to suspension or forfeiture and possible revocation of an exempt entity and gives the primary requirements to get back into good standing.


  1. The requirement to file Form 199 is generally based on the normal amount of total gross receipts and pledges. Organizations with gross receipts that are normally $50,000 or less may choose to electronically file FTB 199N but may also file Form 199.