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Tax News Small Business

New Reporting Requirements for Small Tax-Exempt Organizations Begins 2011

Beginning January 1, 2011, California conforms to the 2006 federal law that requires smaller tax-exempt organizations with normal gross receipts of $25,000 or less annually, other than churches and church-related organizations, to electronically file an annual informational notice with us under R&TC Section 23772.

Annually, these smaller tax-exempt organizations must provide us with the following information in electronic form:

  • Organization’s legal name.
  • Any name under which the organization operates or does business.
  • Organization's mailing address.
  • Internet website address, if applicable.
  • Organization's taxpayer identification number (both federal and state).
  • Name and address of a principal officer.
  • Total gross receipts for the year.
  • Tax year begin and end dates.
  • Contact person name and phone number.
  • If the organization has terminated or gone out of business.

Smaller tax-exempt organizations subject to this new filing requirement have the same due date for state and federal purposes — by the 15th day of the fifth month after an organization’s tax year ends. Therefore, calendar year organizations must file by May 15.

If the organization does not file on time, we will send a reminder notice, but will not assess a penalty for late filing.

Although there is no monetary penalty for failure to file the notice, any organization that fails to file for three consecutive years automatically loses its California tax-exempt status.

Under existing law, we may revoke an organization’s state tax-exempt status if the IRS suspends or revokes the organization’s tax-exempt status.

If an organization loses its California tax-exempt status, it must reapply using the FTB 3500, Exemption Application, and have approval to regain its tax-exempt status. Any income received between the revocation date and renewed exemption date may be taxable.

For more information, contact our Exempt Organizations Unit at 916.845.4171.

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