Applying for Tax-Exempt Status

To apply for California tax-exempt status, use FTB 3500, Exemption Application or FTB 3500A, Submission of Exemption Request.

Complete the current version of the form available, older versions of the form may not be accepted.

FTB 3500, Exemption Application

The entity must meet all the organizational and operational requirements for the particular section under California Revenue and Taxation Code (R&TC) Section 23701 and be reviewed and approved for tax-exempt status.

Once we determine that an entity qualifies for tax-exempt status, we send an Exempt Determination Letter that shows the R&TC section under which tax-exempt status is granted. You can file FTB 3500 and select the type of exemption that best reflects your entity’s purpose and activities.

Retroactive exemption status is determined by how the entity is organized and operating for nonprofit purposes within the provisions of its exempt code section.

The following are required:

  • FTB 3500, Exemption Application.
  • $25 check or money order, payable to Franchise Tax Board.
  • One copy of the entity’s creating document.
  • One copy of the bylaws or proposed bylaws.
  • A federal determination letter if your organization is a:
    • Foreign organization.
    • Qualifying trust.
    • 23701a (cooperatives only).
    • 23701i (Voluntary Employee Benefit Association).
  • Complete Side 1 through Side 8 and complete the appropriate item listed for the specific R&TC section under which the organization claims exemption.
  • All other required information and supporting data identified in FTB 3500.
  • Determine your organizational type by deciding what section under R&TC 23701 best describes the purpose and activities of your organization. (Refer to Types of Exemptions.)
  • Important: To be recognized for California tax-exempt status, all organizations must receive a determination or acknowledgement letter from us.
  • Political organizations do not apply for tax-exempt status. A written request for tax-exempt status is submitted under R&TC Section 23701r.
  • Churches must apply and be approved for California tax-exempt status.
  • If your organization’s tax-exempt status was revoked or denied, you must use FTB 3500, Exemption Application to reapply for California tax-exempt status.

Specific information requirements

  1. Creating documents
    • California corporation – Submit a copy of the endorsed articles of incorporation and all subsequent endorsed amendments (samples for the different organizational types are in FTB 3500, Exemption Application Booklet).
    • Foreign corporation (organized in a state or country other than California) – Submit a copy of the endorsed articles of incorporation and all subsequent endorsed amendments from the state or country in which incorporated. If qualified through the California Secretary of State, provide the Certificate of Qualification and/or the endorsed Statement and Designation by Foreign Corporation.
    • Unincorporated association – Submit one of the following:
      • A copy of the constitution.
      • Articles of association.
      • Bylaws.
      • Other documents that contain the language required as shown in FTB 3500, Exemption Application booklet and which is signed by the board of directors or other governing body. Samples for different organizational types are in FTB 3500, Exemption Application Booklet.
    • Trust – Submit a copy of the original trust document and any subsequent modifications.
    • California limited liability company – Submit a copy of the endorsed articles of organization.
    • Foreign limited liability company qualified in California – Submit a copy of the endorsed Application for Registration (LLC-5), a copy of the certificate of good standing from the home state, and a copy of the articles of organization from the home state.
  2. Bylaws

    Submit 1 of the following:

    • Copy of bylaws
    • Proposed bylaws
    • Operating agreement
    • Other code of regulations

    For a sample of the bylaws, see FTB 3500, Exemption Application Booklet.

  3. Financial Data

    The organization may use its own gross receipts and expenses statement(s), or use Part III Financial Data worksheet provided in FTB 3500.

    • In operation – Furnish complete statements of receipts and expenditures, assets and liabilities for each accounting period that it has been in existence and for which exemption is requested.
    • In operation but has not had any financial activity – Provide information substantiating operations during the years for which you are requesting exemption. Example, minutes from meetings of the board of directors.
    • Not yet started financial activity – Furnish a proposed budget showing the sources of income and areas of expenditures for the first year of operation. The budget is required before we will process the application and should be based upon the most reasonable expectations.

Important: To retain California tax-exempt status, organizations are required to be organized and operating for nonprofit purposes within the provisions of their exempt code section. An inactive organization is not entitled to exempt status.

FTB 3500A, Submission of Exemption Request

This form can only be used by organizations that have a federal determination letter under Internal Revenue Code (IRC) Section 501(c)(3), (c)(4), (c)(5), (c)(6), or (c)(7). No other IRC sections under 501(a) can be used with the FTB 3500A. There is no filing fee for this form.

With the submission of FTB 3500A and a copy of the federal determination letter, we will send an acknowledgement letter that states the entity is recognized as having California tax-exempt status.

Note:

  • To be recognized for California tax-exempt status, all organizations must receive a determination or acknowledgement letter from the Franchise Tax Board.
  • Political organizations do not apply for tax-exempt status. A written request for tax-exempt status is submitted under 23701r.
  • Churches must apply and be approved for California tax-exempt status.
  • If your organization’s tax-exempt status was revoked or denied, you must use FTB 3500, Exemption Application to reapply for California tax-exempt status.

Effective date of tax-exempt status

For state income tax purposes, the effective date of an organization's tax-exempt status shall be no earlier than the federal effective date. If the federal effective date is later than the incorporation date, the organization should consider filing FTB 3500, Exemption Application.

Example:

ABC organization incorporated on 10/01/1999.

Federal exempt status effective date is 01/01/2002.

ABC organization filed FTB 3500A.

California’s effective date for ABC organization is 01/01/2002. To avoid the minimum franchise tax or annual tax, ABC organization must file FTB 3500, Exemption Application, to request an exemption retroactive to 10/01/1999.

Important: To retain California tax-exempt status, organizations are required to be organized and operating for nonprofit purposes within the provisions of their exempt code section. An inactive organization is not entitled to exempt status.

Reinstatement of revoked tax-exempt status

When an entity's tax-exempt status is revoked for failure to file a return, failure to pay a balance due, or for being suspended, there is an abbreviated process to have the entity's tax-exempt status reinstated.

To qualify for relief from revocation the entity must be incorporated after 1968 and must do the following:

  • File FTB 3500, Exemption Application Side 1 through 8.
  • Complete the appropriate item listed for the specific R&TC section under which the organization claims exemption.
  • Pay the $25 application fee.

A copy of the bylaws and creating documents are required if they have been amended or changed since the tax-exempt status was originally given by the Franchise Tax Board. If no amendments or changes, the documents are not required, unless specifically requested by us.

Send FTB 3500 to the address listed in the FTB 3500 Booklet.

Rush exemption request – This is an exception to our normal processing procedures

Only organizations that meet special criteria can qualify for a rush exemption request. This is not the normal process to obtain tax-exempt status.

These requests can only be submitted at the Sacramento Field Office or the Los Angeles Field Office.

Only R&TC Section 23701d organizations may apply for rush tax-exempt status.

Organizations must be in good standing (not suspended or forfeited).

A $40 fee is assessed to applicants requesting consideration for this type of exemption request. The fee must be made in cash or secured funds (money order or certified check).

What constitutes a rush for tax-exempt status?

  • The organization’s funding will be lost if tax-exempt status is not granted within 15 days from the date the applicant enters the field office.

Requirements for rush tax-exempt status

FTB 3500, Exemption Application

  • Completed FTB 3500, Exemption Application, with original signature.
  • $25 application fee - You must pay this fee in cash or secured funds such as a money order or certified check, and pay separately from the rush fee.
  • All required information and attachments.
  • Organizations must have a pending grant of $3,000 or more.
  • Obtain and complete this form at the field office: Form FTB 3517, Request for Expeditious Handling of Exemption Application.
  • Pending funds must be verified by the field office staff.
  • Organizations must be in good standing (not suspended/forfeited).
  • Foreign corporations and charitable trusts must have a federal determination letter before we issue an exempt determination letter.

FTB 3500A, Submission of Exemption Request

  • Completed FTB 3500A, Submission of Exemption Request, with original signature.
  • Copy of IRS determination letter under Internal Revenue Code Section 501(c)(3).
  • The federal exempt effective date must match the date of incorporation in California.
  • Organization must have a pending grant of $3,000 or more.
  • Obtain and complete this form at the field office: Form FTB 3517, Request for Expeditious Handling of Exemption Application.
  • Pending funds must be verified by the field office staff.
  • Organization must be in good standing (not suspended/forfeited).

If your organization’s tax-exempt status was revoked or denied you must use FTB 3500, Exemption Application, to reapply for California tax-exempt status.

Field office locations

Public counter assistance is available Monday through Friday from 8 a.m. to 4 p.m., except state holidays.

Los Angeles Field Office
300 S. Spring Street, Suite 5704
Los Angeles CA 90013-1265

Sacramento Field Office
3321 Power Inn Road, Suite 250
Sacramento CA 95826-3893

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