Tax News
Tax-Exempt Automatic Revocations

An organization that fails to file the required e-Postcard for three consecutive years will automatically lose its tax-exempt status. The revocation of the organization's tax-exempt status is effective as of the filing due date of the third year.

Example: The organization's first California e-Postcard is due on May 15, 2011 (for the tax year 2010), but they did not file in 2011, 2012, or by May 15, 2013. The organization lost their tax-exempt status effective May 15, 2013.

We are currently mailing the automatic revocation notices to organizations that have not filed the required FTB 199N, California e-Postcard.

Tax-exempt organizations with average gross receipts less than $50,000 for tax year 2012 or $25,000 for tax years 2010 and 2011 are required to file the FTB 199N, California e-Postcard.

How to Reapply for Tax-Exempt Status

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

Reinstatement of tax-exempt status may be retroactive if you can show that you had reasonable cause for not filing, and show that you were active and operating for your exempt purpose.

Consequences of not Being Tax-Exempt

Loss of tax-exempt status means an organization must file Form 100, California Corporation Franchise or Income Tax Return. The entity would be subject to the franchise tax that is equal to the larger of your California income multiplied by the appropriate tax rate or the $800 minimum franchise tax (whichever is more).

All non tax-exempt corporations incorporated or qualified in California are required to pay at least the $800 minimum franchise tax whether they are active, inactive, operate at a loss, or file a short period return (less than 12 months).

Contact Information

Website ftb.ca.gov and search for charities
Phone 916.845.4171
Assistance is available from 7 a.m. to 4:30 p.m. weekdays, except state holidays.
Write EXEMPT ORGANIZATION UNIT MS-F120
FRANCHISE TAX BOARD
PO BOX 1286
RANCHO CORDOVA CA 95741-1286

Back to November 2013 Tax News