199: 2017 California Exempt Organization Annual Information Return
2017 Instructions for Form 199
California Exempt Organization Annual Information Return
References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2015, and to the California Revenue and Taxation Code (R&TC).
In general, for taxable years beginning on or after January 1, 2015, California law conforms to the Internal Revenue Code (IRC) as of January 1, 2015. However, there are continuing differences between California and federal law. When California conforms to federal tax law changes, we do not always adopt all of the changes made at the federal level. For more information, go to ftb.ca.gov and search for conformity. Additional information can be found in FTB Pub. 1001, Supplemental Guidelines to California Adjustments, the instructions for California Schedule CA (540 or 540NR), and the Business Entity tax booklets.
The instructions provided with California tax forms are a summary of California tax law and are only intended to aid taxpayers in preparing their state income tax returns. We include information that is most useful to the greatest number of taxpayers in the limited space available. It is not possible to include all requirements of the California Revenue and Taxation Code (R&TC) in the instructions. Taxpayers should not consider the instructions as authoritative law.
For taxable years beginning on or after January 1, 2014, California law requires any business entity that files an original or amended tax return that is prepared using tax preparation software to electronically file (e-file) their tax return with the Franchise Tax Board (FTB). For more information, go to ftb.ca.gov and search for business efile.
For taxable years beginning January 1, 2012, organizations with gross receipts normally equal to or less than $50,000, can fulfill their annual filing requirement using FTB 199N, Annual Electronic Filing Requirement for Small Exempt Organizations (California e-Postcard). FTB 199N is an electronic filing available only on the FTB’s website. For more information, go to ftb.ca.gov and search for 199N.
Revoke Tax-Exempt Status
The organization must notify the FTB when the Internal Revenue Service (IRS) revokes their federal tax-exempt status. The FTB will revoke the tax-exempt status if the entity fails to meet certain state provisions governing exempt organizations. Previously revoked organizations must use form FTB 3500, Exemption Application, to reapply for tax-exempt status. Go to ftb.ca.gov/forms and search for 3500.
Retroactive Tax-Exempt Status
If the organization files Form 3500 the FTB may require the organization to file exempt returns for the period of time the exemption is requested prior to issuing a determination letter. For more information, get form FTB 3500, or go to ftb.ca.gov/forms and search for 3500.
Form 199, California Exempt Organization Annual Information Return, is used by the following organizations:
- Organizations granted tax-exempt status by the FTB.
- Nonexempt charitable trusts as described in IRC Section 4947(a)(1).
B. Who Must File
Answer the following questions to determine if the organization should file Form 199.
- Did the organization receive a letter from the FTB granting tax-exempt status to the organization?
- Is the organization a nonexempt charitable trust as described in IRC Section 4947(a)(1)?
If the answer to both of these questions is “No,” STOP HERE, DO NOT FILE THIS FORM.
If the answer to question 1 or 2 is “Yes,” the organization may be required to file Form 199 depending upon the type of exempt organization. See the tables below and General Information C, Exceptions.
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. For more information, go to ftb.ca.gov and search for 199N.
|Normal gross receipts||File|
|Gross receipts normally $50,000 or less*||FTB 199N|
|Gross receipts more than $50,000||Form 199|
|Private foundations (regardless of gross receipts)||Form 199|
|Nonexempt charitable trusts described in IRC Section 4947(a)(1) (regardless of gross receipts)||Form 199|
*Organizations eligible to file FTB 199N may choose to file Form 199.
Normally less than $50,000 means if the organization has been:
|IN EXISTENCE FOR –||GROSS RECEIPTS/PLEDGES EQUAL|
|1 year or less||$75,000 or less|
|More than 1 year but less than 3 years||$60,000 or less (average for current year and immediately preceding year)|
|3 years or more||$50,000 or less (average for current year and 2 immediately preceding years)|
Simple trusts which received a letter from the FTB granting tax-exempt status under R&TC Section 23701d are considered to be corporations for tax purposes. The trust may be required to file Form 199.
Religious or apostolic organizations described in R&TC Section 23701k must attach a completed Form 565, Partnership Return of Income, to Form 199.
Charitable Remainder Trusts (CRT) file Form 541-A, Trust Accumulation of Charitable Amounts, or Form 541-B, Charitable Remainder and Pooled Income Trusts, depending upon the type of CRT. Get Form 541-A and Form 541-B for more information.
For detailed information about state filing requirements, fees, and penalties, get FTB Pub. 1068, Exempt Organizations – Filing Requirements and Filing Fees, or go to ftb.ca.gov/forms and search for 1068.
The following organizations are not required to file Form 199:
- Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of churches.
- Religious orders.
- Organizations formed to carry out a function of a state, or a public body that is carrying out that function and is controlled by the state, or a public body.
- Political organizations exempt under R&TC Section 23701r.
- Qualified state tuition programs exempt under R&TC Section 23711.
- Coverdell ESA exempt under R&TC Section 23712.
- Stock bonus, pension, or profit-sharing trusts exempt under R&TC Section 17631.
D. Homeowners’ Associations
Homeowners’ associations exempt under R&TC Section 23701t include condominium management associations, residential real-estate management associations, cooperative housing corporations, and timeshare associations.
Gross receipts for a homeowners’ association are defined as gross receipts from all sources before deductions.
Use the chart under General Information B, Who Must File, to determine whether the homeowners’ association must file FTB 199N or Form 199. Also, homeowners’ associations with gross nonexempt function income in excess of $100 are required to file Form 100, California Corporation Franchise or Income Tax Return. Nonexempt function income is taxable and is defined as all income received during the taxable year other than amounts received from membership fees, dues, or assessments.
For more complete details regarding filing requirements, get FTB Pub. 1028, Guidelines for Homeowners’ Associations.
E. Gross Receipts
Gross receipts are the total amounts received by the organization during the annual accounting period from all sources before subtracting costs or expenses. Gross receipts include, but are not limited to:
- The gross amount received as contributions, gifts, grants, and similar amounts.
- The gross amount received as dues and assessments from members or affiliated organizations.
- Gross sales or receipts from business activities, including business activities unrelated to the purpose of the organization.
- The gross amount received from the sale of assets.
- The gross amount received as investment income such as interest, dividends, rents, and royalties.
F. Payment of Filing Fee
Organizations required to file Form 199 (including private foundations) must pay a $10 filing fee. If the $10 fee is not paid by the due date (including extensions), an additional $15 is assessed for a total fee of $25. If the return is filed on or before the original due date, there is no extension of time in which the fee may be paid.
Exception. The filing fee does not apply to the following organizations exempt under R&TC Section 23701d:
- Exclusively religious organizations.
- An exclusively educational organization if the organization normally maintains a regular faculty and curriculum and normally has a regularly organized body of students in attendance at the place where its educational activities are regularly carried on.
- An exclusively charitable organization, or an organization for the prevention of cruelty to children or animals, if the organization is classified as a public charity by the IRS, or can be classified as public charity based on the public support test as defined in IRC Section 509(a)(2).
- An organization operated, supervised, or controlled by or in connection with an exclusively religious organization.
Organizations required to file Form 199 but not required to pay the filing fee must check the box to Question L on Form 199, Side 1.
G. Miscellaneous Forms to File
- Form 109, California Exempt Organization Business Income Tax Return, must be filed by:
- Exempt organizations when gross income derived from unrelated business is $1,000 or more. (Form 109 must be filed whether or not Form 199 is filed.)
Withholding Credit – Exempt organizations that have received Form 592-B, Resident and Nonresident Withholding Tax Statement, or Form 593, Real Estate Withholding Tax Statement, to claim the withholding credit.
Exception. Political organizations (exempt under R&TC Section 23701r), homeowners’ associations (exempt under R&TC Section 23701t), and organizations controlled by the state or other governmental municipalities are not required to file Form 109.
- Stock bonus, pension, or profit-sharing trusts exempt under R&TC Section 17631 with unrelated business income of $1,000 or more.
- Exempt organizations when gross income derived from unrelated business is $1,000 or more. (Form 109 must be filed whether or not Form 199 is filed.)
- Form 100, California Corporation Franchise or Income Tax Return, must be filed by:
- Political organizations (exempt under R&TC Section 23701r) with taxable income in excess of $100. There is no requirement to file Form 199.
- Homeowners’ associations (exempt under R&TC Section 23701t including unincorporated homeowner’s associations) with homeowners’ association nonexempt gross income in excess of $100. Form 100 must be filed whether or not Form 199 is required to be filed. See General Information D, Homeowners’ Associations.
- Some mutual and cooperative organizations that are exempt under federal law but not exempt under California law.
- Form 565, Partnership Return of Income, must be completed by all religious or apostolic organizations described in R&TC Section 23701k, and attached to Form 199.
- Federal Form 1099 series, information returns, the organization must file the form with the FTB as well as the IRS to report certain payments made or received by your organization. Reportable payments include, but are not limited to:
- All amounts paid to an attorney whether or not the services are performed for the payer, and all amounts paid by a broker or barter exchange.
- Payments exceeding $10 annually for interest (earned) and dividends.
- Payments exceeding $600 annually for compensation for services that are not subject to withholding, commissions, fees, prizes and awards, payments to independent contractors, rents, royalties, legal services (whether or not the payee is incorporated), interest (such as interest charged for late payment), and pensions.
- Federal Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business.
For more information, see the instructions for federal Forms 1099 series, 1098, Mortgage Interest Statement, 5498, IRA Contribution Information, W2-G, Certain Gambling Winnings.
- SOS Form SI-100 (Domestic Nonprofit, Credit Union and General Cooperative Corporations) or Form SI-350 (Foreign Corporation), Statement of Information, all corporations and exempt organizations incorporated or qualified to do business in California must file a Statement of Information with the California Secretary of State (SOS).
In addition, every domestic nonprofit corporation formed to manage a common interest development must file a Statement by Common Interest Development Association (Form SI-CID) with the California SOS.
R&TC Section 19141 requires the FTB to assess a penalty for failure to file a Statement of Information (Form SI-100 or Form SI-350) and Statement by Common Interest Development Association (Form SI-CID). The FTB has no authority to waive this penalty except as directed by the California SOS.
For more information regarding the Statement of Information, contact:STATEMENT OF INFORMATION UNIT
CALIFORNIA SECRETARY OF STATE
PO BOX 944230
SACRAMENTO CA 94244-2300
or, go to sos.ca.gov.
- Attorney General Form RRF-1, Annual Registration Renewal Fee Report to Attorney General of California, must be filed if the organization is organized for public benefit purposes. R&TC Section 23703 requires the FTB to revoke the organization’s tax-exempt status if the organization fails to properly file this form.
For more information, contact the California Attorney General’s Office:REGISTRY OF CHARITABLE TRUSTS
PO BOX 903447
SACRAMENTO CA 94203-4470
or, go to oag.ca.gov.
H. When and Where to File
File Form 199 by the 15th day of the 5th month after the accounting period ends.
Using black or blue ink, make all checks or money orders payable in U.S. dollars and drawn against a U.S. financial institution.
If payment is included with the completed form, mail it to:FRANCHISE TAX BOARD
PO BOX 942857
SACRAMENTO CA 94257-0501
If the return is e-filed: Mail form FTB 3586, Payment Voucher for Corporations and Exempt Organizations e-filed Returns, with payment to:FRANCHISE TAX BOARD
PO BOX 942857
SACRAMENTO CA 94257-0531
Include the California corporation number and “2017 Form 199” on the check or money order.
If payment is not required with the completed form, mail it to:FRANCHISE TAX BOARD
PO BOX 942857
SACRAMENTO CA 94257-0500
If the organization is sending more than one return, use separate envelopes and separate checks or money orders to make sure the returns and payments are processed correctly.
Organizations can make payments online using Web Pay for Businesses. Organizations can make an immediate payment or schedule payments up to a year in advance. Go to ftb.ca.gov/pay for more information.
Organizations can use a Discover, MasterCard, Visa, or American Express Card to pay businesses taxes. Go to officialpayments.com. Official Payments Corp. charges a convenience fee for using this service.
I. Extension of Time to File
If Form 199 cannot be filed by the 15th day of the 5th month after the accounting period ends, the exempt organization has an additional six months to file without filing a written request for extension. However, an organization that is not in good standing or suspended on the original due date of the return will not be given an extension of time to file. For more information, get form FTB 3539, Payment for Automatic Extension for Corporations and Exempt Organizations.
If the return is not filed and/or the filing fee is not paid by the extended due date, penalties, additional fees, and interest may be imposed as explained in General Information J, Penalties.
Failure to File a Timely Return – An organization that fails to file the return on or before the original due date, or extended due date, is assessed a penalty of $5 for each month, or part of the month, the return is late. If the return is not filed by the extended due date, the automatic extension will not apply. The penalty may not exceed $40.
Organizations exempt from the $10 filing fee are not exempt from this penalty. See General Information F, Payment of Filing Fee.
Late Payment of Fee – An organization that fails to pay the $10 filing fee by the original due date, or extended due date, is assessed an additional filing fee of $15.
Failure to Furnish Information – In the case of a private foundation, the FTB may make a written demand that a delinquent return or foundation report be filed within a reasonable amount of time after mailing a demand notice. The person who fails to file after such demand is subject to a penalty of $5 for each month, or part of the month, (not to exceed $25) after the period expires. The penalty is in addition to the late filing penalty described above.
Waiver – The law provides the FTB with the authority to waive the above penalties and late payment fee if it is shown that the failure was due to reasonable cause and not due to willful neglect.
Suspension/Revocation – The corporate rights, powers, and privileges may be suspended, or the exemption from tax may be revoked, for failure to file a return or pay the filing fee, penalties, or interest.
Interest – Interest accrues on the delinquent penalty from the original due date of the return until the penalty is paid. Get FTB Pub. 1138, Business Entity Refund/Billing Information, for more information.
K. California Use Tax
The use tax has been in effect in California since July 1, 1935. It applies to purchases of property from out of state sellers and is similar to the sales tax paid on purchases made in California. If the exempt organization has not already paid all use tax due to the California Department of Tax and Fee Administration, it may be able to report and pay the use tax due on its state income tax return. However, organizations required to hold a California seller’s permit or to otherwise register with the California Department of Tax and Fee Administration for sales and use tax purposes may not report use tax on their state income tax return. See the information on this page and the instructions for line 12 of the income tax return.
In general, exempt organizations must pay California use tax on purchases of merchandise for use in California, made from out of state sellers, for example, by telephone, online, by mail, or in person.
Exempt organizations must pay California use tax on taxable items if:
- The seller does not collect California sales or use tax, and
- The organization uses, gives away, stores, or consumes the item in California.
Example: The exempt organization purchases a conference table from a company in North Carolina. The company ships the table from North Carolina to the organization’s address in California for the organization’s use and does not charge California sales or use tax. The organization owes use tax on the purchase.
However, not all purchases require the exempt organization to pay use tax. For example, the organization would include purchases of office equipment, but not purchases of food products or prescription medicine. For more information on nontaxable and exempt purchases, you may refer to Publication 61, Sales and Use Taxes: Exemptions and Exclusions on the California Department of Tax and Fee Administration’s website at cdtfa.ca.gov.
For more information about California use tax, please refer to the California Department of Tax and Fee Administration’s website at cdtfa.ca.gov. Under the heading How Do I, click on Find Information About Use Tax.
Complete the Use Tax Worksheet on page 6 to calculate the amount due.
Extensions to File – If the exempt organization requests an extension to file the tax return, wait until the exempt organization files the return to report the purchases subject to use tax and to make the use tax payment.
Interest, Penalties, and Fees – Failure to timely report and pay the use tax due may result in the assessment of interest, penalties, and fees.
Application of Payments – The application of payments and credits for use tax reported on an income tax return has changed. Beginning with taxable years starting on or after January 1, 2015, payments and credits will be applied first to the use tax liability, instead of income tax liabilities, penalties, and interest.
Changes in Use Tax Reported. Do not file an Amended California Exempt Organization Annual Information Return to revise the use tax previously reported. If the exempt organization has changes to the amount of use tax previously reported on the original tax return, contact the California Department of Tax and Fee Administration.
For assistance, go to the California Department of Tax and Fee Administration’s website at cdtfa.ca.gov or call their Customer Service Center at 800.400.7115 or (TTY) 711 (for hearing and speech disabilities). For California income tax information, contact the FTB at ftb.ca.gov.
L. Group Filing
A central, parent, or like organization can file a group return for two or more local organizations that:
- Are tax-exempt under a group exemption letter that is still in effect or obtained tax-exempt status on their own.
- Are affiliated with the central organization at the time its annual accounting period ends.
- Are subject to the central organization’s general supervision or control.
- Have the same accounting period as the central organization.
- Do not have unrelated trade or business income in excess of $1,000.
Every year, each local organization must authorize the central organization in writing to include it in the group return and must declare, under penalty of perjury, that the authorization and the information it submits to be included in the group return are true and complete.
If the central organization prepares a group return for its subordinates/affiliates, check the “Yes” box in Question G, and attach a roster. The roster must include for each subordinate:
- Legal name
- Federal Employee Identification Number (FEIN)
- Entity ID number if known
- Mailing address
All subordinates/affiliates must have tax-exempt status before being included in a group return. A separate form FTB 3500, or form FTB 3500A, Submission of Exemption Request, can be filed with the FTB to request tax-exempt status for all subordinates. Otherwise, subordinates must file form FTB 3500 and be granted tax-exempt status before it can be included in the group return. The parent organization’s income cannot be included in the group return. The parent organization must file a separate Form 199 to report their income.
M. Subordinate/Affiliate Filing Return
If the return is being filed by an organization that is covered by their parent’s group exemption, check the “Yes” box in Question H and give the name of the parent organization.
Subordinate units with unrelated trade or business income in excess of $1,000 cannot be included in a group filing return.
N. Questions About Filing
If the organization has questions about filing, write to:EXEMPT ORGANIZATIONS UNIT MS F120
FRANCHISE TAX BOARD
PO BOX 1286
RANCHO CORDOVA CA 95741-1286
Organizations may also call 916.845.4171 or refer to page 11 of these instructions for telephone assistance and the FTB internet address.
Include the organization’s identifying number and telephone number on all correspondence.
Specific Line Instructions
If filing Form 199 on a fiscal year, fill in the taxable year information including the month, day, and year in the spaces provided at the top of Side 1.
Make sure entries have been made for the following:
- California corporation or organization number
- Organization’s legal name
Use the Additional information field for “Owner/Representative/Attention” name and other supplemental address information only.
Private mail box (PMB)
Include PMB number in the address field. Write “PMB” first, then the box number. Example: 111 Main Street PMB 123.
If the exempt organization has a foreign address, follow the country’s practice for entering the city, county, province, state, country, and postal code, as applicable, in the appropriate boxes. Do not abbreviate the country name.
Questions A through P
Use the following instructions when answering:
Question C – IRC Section 4947(a)(1) trust
If the organization checked “Yes,” attach Federal Schedule A (Form 990 or 990-EZ), Public Charity Status and Public Support, or federal Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as a Private Foundation.
Question E – Accounting method
The method used to compute income should be made in accordance with the accounting regularly used by the organization in maintaining its books and records.
Question G – Group return
If the central organization prepares a group return for its subordinates, check the “Yes,” box and attach a roster of all organizations included in the group return. The roster must include:
- Legal Name
- Mailing Address
- California corporation number if known
Question I – Changes in activity
If the organization had significant changes in its activities, governing instrument, articles of incorporation, or bylaws that have not been reported to the FTB, attach copies of the revised documents.
Question J – Influencing legislation
If exempt under R&TC Section 23701d, and the organization during the year: (1) participated in any political campaign, or (2) attempted to influence legislation or any ballot measure, or (3) made an election under R&TC Section 23704.5 (relating to lobbying by public charities) check box J “Yes” and complete and attach form FTB 3509, Political or Legislative Activities by Section 23701d Organizations.
Question P – Federal Form 1023/1024 pending
Mark the box yes, if the organization is not currently tax-exempt with California but has filed for federal exempt status. Enter the date the federal Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, or federal Form 1024, Application for Recognition of Exemption Under Section 501(a), was mailed.
Line 1 – Gross sales or receipts from other sources
Enter the amount from Side 2, Part II, line 8.
See General Information E, Gross Receipts, for the definition of gross receipts. Homeowners’ associations see General Information D, Homeowners’ Associations.
Do not include amounts for gross dues and assessments from members and affiliates or amounts from gross contributions, gifts, grants, and similar amounts received. These amounts are reported on Part I, line 2 and line 3.
Line 3 – Gross contributions, gifts, grants, and similar amounts received
Attach an itemized schedule if money, securities, or other property aggregating $5,000 or more is received directly or indirectly from one person in one or more transactions during the year. The schedule must show the name, address, date received, and the total amount received from each person.
In determining whether a person has contributed $5,000 or more, organizations must total gifts of $1,000 or more from that person. Separate and independent gifts need not be totaled if less than $1,000. Also, if a contribution is in the form of property (other than securities), the organization must furnish a description of the property. If the property consists of securities for which market quotations are readily available, the description and fair market value of the securities must be submitted.
Person means individuals, fiduciaries, partnerships, corporations, associations, trusts, and exempt organizations.
Organizations that are not private foundations must report the name and address of the contributor who gave more than $5,000 in money, securities, or other property during the year only if it has actual knowledge of the contributor. For example, an organization need not require an employer who withholds contributions from the compensation of employees and pays over to the organization periodically the total amounts withheld, to specify the amounts paid over with respect to a particular employee. In such case, unless the organization has actual knowledge that a particular employee gave more than $5,000, the organization must report only the name and address of the employer and the total amount paid over by the employer.
Organizations described in R&TC Sections 23701b, 23701g, and 23701l that receive contributions or gifts to be used exclusively for the purposes described in IRC Section 170 must attach a statement with respect to all gifts which total $1,000 from any one person showing:
- The name of the donor.
- The amount of the contribution.
- The specific purpose of the contribution.
- The specific use of the contribution.
If the contribution or gift is transferred to another organization, the statement must include:
- The name of the transferee organization.
- A description of the nature of the transferee organization.
- A description of the relationship between the transferee and transferor organizations. Such organizations must also attach a statement showing the total dollar amount of contributions and gifts received.
Line 12 – Use tax
As explained under General Information K, California use tax applies to purchases of merchandise from out of state sellers (for example, purchases made by telephone, online, by mail, or in person) where sales or use tax was not paid and those items were used in California. For questions on whether a purchase is taxable, go to the California Department of Tax and Fee Administration’s (formerly know as the Board of Equalization) website at cdtfa.ca.gov, or call their Customer Service Center at 800.400.7115 or (TTY) 711 (for hearing and speech disabilities).
Note: The following businesses are required to report purchases subject to use tax directly to the California Department of Tax and Fee Administration and may not report use tax on their income tax return:
- Businesses that have, or are required to have, a California seller’s permit.
- Businesses that are not required to hold a California seller’s permit, but receive at least $100,000 in gross receipts.
- Businesses that are otherwise required to be registered with the California Department of Tax and Fee Administration for sales or use tax purposes.
An exempt organization that is not required to report purchases subject to use tax directly to the California Department of Tax and Fee Administration may, with some exceptions, report use tax on it’s California Exempt Organization Annual Information Return. To report use tax on the tax return, complete the Use Tax Worksheet on this page.
Note: An exempt organization may not report use tax on its income tax return for certain types of transactions. These types of purchases are listed on this page in the instructions for completing Worksheet, Line 1.
If the exempt organization owes use tax but does not report it on the income tax return, the exempt organization must report and pay the tax to the California Department of Tax and Fee Administration. For information on reporting use tax directly to the California Department of Tax and Fee Administration, go to their website at cdtfa.ca.gov. Under the heading How Do I, click on Find Information About Use Tax.
Failure to timely report and pay the use tax due may result in the assessment of interest, penalties, and fees.
Use Tax Worksheet
Round all amounts to the nearest whole dollar.
- Enter purchases from out-of-state sellers made without payment of California sales/use tax. See worksheet instructions.
- Enter the applicable sales and use tax rate. See worksheet instructions.
- Multiply line 1 by the tax rate on line 2. Enter result here.
- Enter any sales or use tax you paid to another state for purchases included on line 1. See worksheet instructions.
- Total Use Tax Due. Subtract line 4 from line 3. Enter the amount here and on line 12. If the amount is less than zero, enter -0-.
Worksheet, Line 1, Purchases subject to use tax
Report purchases of items that would have been subject to sales tax if purchased from a California retailer unless your receipt shows that California tax was paid directly to the retailer. For example, generally, purchases of clothing would be included, but not purchases of food products or prescription medicine. For more information on nontaxable and exempt purchases, visit the California Department of Tax and Fee Administration’s website at cdtfa.ca.gov.
- Include handling charges.
- Do not include any other state’s sales or use tax paid on the purchases.
- Enter only purchases made during the year that correspond with the tax return the exempt organization is filing.
Note: Report and pay any use tax the exempt organization owes on the following purchases directly to the California Department of Tax and Fee Administration, not on the exempt organization‘s income tax return:
- Vehicles, vessels, and trailers that must be registered with the Department of Motor Vehicles.
- Mobile homes or commercial coaches that must be registered annually as required by the Health and Safety Code.
- Vessels documented with the U.S. Coast Guard.
- Leases of machinery, equipment, vehicles, and other tangible personal property.
- Cigarettes and tobacco products when the purchaser is registered with the California Department of Tax and Fee Administration as a cigarette and/or tobacco products consumer.
Worksheet, Line 2, Sales and use tax rate
Enter the sales and use tax rate applicable to the place in California where the property is used, stored, or otherwise consumed. If the exempt organization does not know the applicable city or county sales and use tax rate, go to the California Department of Tax and Fee Administration’s website at cdtfa.ca.gov and type “City and County Sales and Use Tax Rates” in the search bar. You may also call their Customer Service Center at 800.400.7115 or (TTY) 711 (for hearing and speech disabilities).
Worksheet, Line 4, Credit for tax paid to another state
This is a credit for tax paid to other states on purchases reported on Line 1. The organization can claim a credit up to the amount of tax that would have been due if the purchase had been made in California. For example, if the organization paid $8.00 sales tax to another state for a purchase, and would have paid $6.00 in California, the organization can claim a credit of only $6.00 for that purchase.
Corporations and associations – A corporate officer such as the president, vice president, treasurer, assistant treasurer, chief accounting officer, or trustee must sign the return. In the case of homeowners’ association, a person who has similar authority and who is authorized to sign must sign the return.
Trusts – The return must be signed by the individual fiduciary or by the authorized officer of the trust receiving or having custody or control and management of the income of the trust. If two or more individuals act jointly as fiduciaries, the return may be signed by any one of them. A receiver, trustee, or assignee must sign any return that must be filed on behalf of the organization.
Paid Preparer’s Information – Anyone who is paid to prepare an information return must sign the return and complete the “Paid Preparer’s Use Only” area of the return.
The paid preparer must do all of the following:
- Complete the required preparer information. Tax preparers must provide their preparer tax identification number (PTIN).
- Sign in the space provided for the preparer’s signature.
- Give you a copy of the return in addition to the copy to be filed with the FTB.
If an officer of the organization, or a trustee of the trust, completes Form 199, leave the “Paid Preparer’s Use Only” area of the return blank.
If someone prepares this return and doesn’t charge you, that person should not sign the return.
Paid preparer authorization – If the organization wants to allow the FTB to discuss its 2017 return with the paid preparer who signed it, check the “Yes” box in the signature area of the return. This authorization applies only to the individual whose signature appears in the “Paid Preparer’s Use Only” section of the return. It does not apply to the firm, if any, shown in that section.
If the “Yes” box is checked, the organization is authorizing the FTB to call the paid preparer to answer any questions that may arise during the processing of its return. The organization is also authorizing the paid preparer to:
- Give the FTB any information that is missing from the return.
- Call the FTB for information about the processing of the return or the status of any related refund or payments.
- Respond to certain FTB notices about math errors, offsets, and return preparation.
The organization is not authorizing the paid preparer to receive any refund check, bind the organization to anything (including any additional tax liability), or otherwise represent the organization before the FTB.
The authorization will automatically end no later than the due date (without regard to extensions) for filing the organization’s 2018 tax return. If the organization wants to revoke the authorization before it ends, notify the FTB in writing or call 800.852.5711.
If the organization wants to expand or change the paid preparer’s authorization, go to ftb.ca.gov/poa.
Exempt organizations must either:
- Complete Part II of Form 199.
- Attach a completed copy of federal Form 990, Return of Organization Exempt From Income Tax, including all appropriate schedules.
Private foundations must either:
- Complete Part II of Form 199
- Attach a completed copy of federal Form 990-PF for private foundations, including all appropriate schedules.
- Attach a complete copy of the current report filed with Registry of Charitable Trusts.
Labor organizations exempt under R&TC Section 23701a, attach a copy of the Department of Labor Form LM-2 or LM-3, Labor Organization Annual Report, as appropriate, in lieu of completing Part II.
Line 1 – Gross sales or receipts from all business activities
See General Information E, Gross Receipts, for the definition of gross receipts. Homeowners’ associations see General Information D, Homeowners’ Associations.
Do not include amounts for gross dues and assessments from members and affiliates or amounts from gross contributions, gifts, grants, and similar amounts received. Report these amounts on Side 1, Part I, line 2 and line 3, respectively.
Line 6 – Gross amount received from sale of assets
Attach a schedule for each asset (whether or not depreciable) sold or exchanged:
- The date acquired, manner of acquisition, date sold, and to whom sold.
- The gross sales price.
- The cost or other basis, or value at time of acquisition if received by donation (state how received).
- The expense of sale and cost of improvements subsequent to acquisition.
- If depreciable property, depreciation since acquisition.
Enter the gross sales price on Side 2, Part II, line 6 and total and enter the cost or other basis, expenses, etc. (less depreciation if applicable), on Side 1, Part I, line 6.
Line 7 – Other income
Attach a schedule showing other income not listed in line 1 through line 6.
Line 8 – Total gross sales or receipts from other sources
Add line 1 through line 7. Enter on line 8 and on Side 1, Part I, line 1.
Line 9 – Contributions, gifts, grants, and similar amounts paid
Private foundations, regardless of gross receipts, and other organizations required to file Form 199, must attach a schedule to support contributions, gifts, grants, scholarships, etc., showing all of the following:
- Each class of activity.
- Separate totals for each activity.
- Name and address of the donee and the amount of the distribution to the donee.
- Relationship of the donee, if related by blood, marriage, registered domestic partnership, adoption, or employment (including children of employees) to any person or corporation having an interest in the organization (such as creator, donor, director, trustee, officer, etc.).
Classify activities according to purpose in greater detail than merely charitable, educational, religious, or scientific. For example, payments for nursing service, laboratory construction, fellowships, or assistance to indigent families should be so identified.
Private foundations making contributions, etc., to a trust, association, or corporation shall also indicate the organizational status of each donee; such as private foundation, operating private foundation, or other public charity, etc.
When the fair market value of the property at the time of disbursement is used to measure a contribution, the schedule must also show all of the following:
- Description of the contributed property.
- Book value of the contributed property.
- Method used to determine the book value.
- Date of the gift.
In such a case, the difference between fair market value and book value should be reflected in the books of account.
Line 11 – Compensation of officers, directors, and trustees
Enter the total compensation paid to current officers, directors, trustees, and key employees for the organization’s taxable year. Compensation includes all forms of income and other benefits earned or received in return for services rendered, including pension plan contributions, and other employee benefits, but does not include non-compensatory expense reimbursements or allowances. Report all compensation amounts relating to such an individual, including those related to services performed in a capacity other than as an officer, director, trustee, or key employee.
Line 12 – Other salaries and wages
Enter the total amount of employee salaries, wages, fees, bonuses, severance payments, and similar amounts not reported on line 10 or 11.
Line 16 – Depreciation and depletion
Corporations and associations – California law is generally the same as federal law.
- California has not adopted the federal Modified Accelerated Cost Recovery System (MACRS).
- California prohibits the use of the 20% Asset Depreciation Range (ADR). Only the mid-range asset guideline period is allowed.
- California allows the special additional first-year depreciation and modified IRC Section 179 expense election. (R&TC Section 24356.)
Complete form FTB 3885, Corporation Depreciation and Amortization. Enter the total from form FTB 3885, line 16 and line 20 on Form 199, Side 2, Part II, line 16. Attach form FTB 3885 to Form 199.
Trusts – Estates and trusts are not eligible to take the IRC Section 179 deduction.
Complete form FTB 3885F, Depreciation and Amortization. Enter the total from form FTB 3885F, line 6, on Form 199, Side 2, Part II, line 16 and attach form FTB 3885F to Form 199.
Line 17 – Other expenses and disbursements
Attach a schedule showing expenses and disbursements not listed in line 9 through line 16.
Schedule L – Balance Sheets
The balance sheets should agree with the books of account. Any difference should be reconciled on Schedule M-1, Reconciliation of income per books with income per return, of Form 199.
How To Get California Tax Information
(Keep this page for future use)
Automated Phone Service
Use our automated phone service to get recorded answers to many of your questions about California taxes and to order current year California business entity tax forms and publications. This service is available in English and Spanish to callers with touch-tone telephones.
Have paper and pencil ready to take notes.
- 800.338.0505 from within the United States
916.845.6500 from outside the United States
Where to get General Tax Information
You can get answers to Frequently Asked Questions at ftb.ca.gov.
You can hear recorded answers to Frequently Asked Questions 24 hours a day, 7 days a week. Call our automated phone service at the number listed above. Select “Business Entity Information,” then select “Frequently Asked Questions.” Enter the 3-digit code, listed below, when prompted.
- Filing Assistance
- If my actual tax is less than the minimum franchise tax, what figure do I put on the Tax line on Form 100 or Form 100W?
- What are the tax rates for corporations?
- How do I get an extension of time to file?
- When does my corporation have to file a short-period return?
- Is my corporation subject to franchise tax or income tax?
- S Corporations
- Is an S corporation subject to the minimum franchise tax?
- Are S corporations required to make estimated payments?
- What forms do S corporations file?
- The tax for my S corporation is less than the minimum franchise tax. What figure do I put on the Tax line on Form 100S?
- Exempt Organizations
- How do I get tax-exempt status?
- Does an exempt organization have to file Form 199?
- Does an exempt organization have to file the FTB 199N, California e-Postcard?
- I have exempt status. Do I need to file Form 100 or Form 109 in addition to Form 199?
- Minimum Tax and Estimate Tax
- What is the minimum franchise tax?
- My corporation is not doing business; does it have to pay the minimum franchise tax?
- Billings and Miscellaneous Notices
- I received a bill for $250. What is this for?
- Limited Liability Companies (LLCs)
- How do I organize or register an LLC?
- What tax forms do I use to file as an LLC?
- When is the annual tax payment due?
- I need a state Employer ID number for my business. Who do I contact?
- How do I incorporate?
- Where do I send my payment?
If you write to us, be sure your letter includes the California corporation number, or FEIN, your daytime and evening telephone numbers, and a copy of the notice with your letter. Send your letter to:EXEMPT ORGANIZATIONS UNIT MS F120
FRANCHISE TAX BOARD
PO BOX 1286
RANCHO CORDOVA 95741-1286
We will respond to your letter within ten weeks. In some cases we may need to call you for additional information. Do not attach correspondence to your tax return unless it relates to an item on the return.
Your Rights As A Taxpayer
The FTB’s goals include making certain that your rights are protected so that you have the highest confidence in the integrity, efficiency, and fairness of our state tax system. FTB 4058, California Taxpayers’ Bill of Rights, includes information on your rights as a California taxpayer, the Taxpayers’ Rights Advocate Program, and how you request written advice from the FTB on whether a particular transaction is taxable. See “Where To Get Tax Forms and Publications,” on this page.
Where To Get Tax Forms and Publications
You can download, view, and print California tax forms and publications at ftb.ca.gov/forms.
You can order current year California tax forms from 6 a.m. to 10 p.m. weekdays, 6 a.m. to 4:30 p.m. Saturdays, except holidays. See the list below and find the code for the form you want to order. Call 800.338.0505 and follow the recorded instructions.
Allow two weeks to receive your order. If you live outside California, allow three weeks to receive your order.
- California Corporation Tax Forms and Instructions. This booklet contains Form 100, California Corporation Franchise or Income Tax Return
- Form 109, Exempt Organization Business Income Tax Return
- Form 199, Exempt Organization Return
- Form 100-ES, Corporation Estimated Tax
- FTB 3500, Exempt Application Booklet
- FTB 3500A, Submission of Exemption Request
- FTB 4058, California Taxpayers’ Bill of Rights
Write to:TAX FORMS REQUEST UNIT
FRANCHISE TAX BOARD
PO BOX 307
RANCHO CORDOVA CA 95741-0307
General Phone Service
Telephone assistance is available year-round from 7 a.m. until 5 p.m. Monday through Friday, except holidays. Hours subject to change.
- 800.852.5711 from within the United States
916.845.6500 from outside the United States
- 800.822.6268 for persons with hearing or speech disability.
711 or 800.735.2929 California relay service
Asistencia en español:
Asistencia telefónica está disponible durante todo el año desde las 7 a.m. hasta las 5 p.m. de lunes a viernes, excepto días feriados. Las horas están sujetas a cambios.
- 800.852.5711 dentro de los Estados Unidos
916.845.6500 fuera de los Estados Unidos
- 800.822.6268 para personas con discapacidades auditivas o del habla
711 ó 800.735.2929 servicio de relevo de California